Published 16 February 2018
LAS CRUCES – The New Mexico Mortgage Finance Authority served more first-time and non-first-time home buyers in 2017 than in any other year on record, according to MFA Homeownership Representative Teri Baca. MFA was created by the state legislature in 1975 and has provided mortgage loans and down payment assistance to more than 50,000 low and moderate-income home buyers throughout the state.
In addition to making $370.5 million in low-interest mortgage loans to over 2,500 New Mexico home buyers, MFA also provided $14.5 million in down payment and closing cost assistance. In Doña Ana County alone, MFA made mortgages and down payment assistance loans and grants totaling $34.6 million.
FIRSTHome buyers utilized $23.9 million worth of mortgages, with mortgages to NEXTHome buyers accounting for another $8.9 million. The 240 Doña Ana County buyers who utilized MFA financing took out mortgages averaging $136,667. FIRSTHome and NEXTHome buyers also took advantage of $1.07 million and $267,802, respectively, in down payment assistance loans and grants.
MFA offers programs for both first-time and non-first-time buyers. The organization’s FIRSTHome program is available to first-time buyers with low-to-moderate income. A first-time buyer is defined as a buyer who has never owned a home or owns a home in which they have not lived during the past three years. FIRSTHome can be used in conjunction with MFA’s down payment assistance second-mortgage loan program, FIRSTDown, which lowers the amount of cash buyers have to bring to the table at closing. MFA requires that buyers invest a minimum of $500 of their own funds when purchasing.
For example, a first-time buyer, purchasing a home costing $150,000 who chooses to finance using an MFA-FHA mortgage would typically need a down payment of 3.5 percent of the purchase price ($5,250), plus closing costs of around $3,000, for a total of $8,250 to swing the deal. MFA’s FIRSTDown assistance is a second mortgage program designed to bridge the gap between the $8,250 and MFA’s minimum cash requirement of $500. In this case, the $7,750 required to bridge the gap would be repaid at the rate of $6 per month for every $1,000 borrowed, adding just $46.50 per month to the normal mortgage payment. None of MFA’s loan products contain prepayment penalties.
The NEXTHome program is designed to assist current homeowners who want to move up, as well as first-time buyers who exceed the FIRSTHome income limits. According to Baca, “The NEXTHome program allows move-up buyers with annual incomes up to $90,000 to buy a home with a sales price of up to $340,000 anywhere in New Mexico. If a buyer would prefer to retain the majority of proceeds from the sale of their existing home rather than using them towards their next purchase, they may, since the required minimum investment from the borrower’s own funds is only $500.”
NEXTHome is a combination first-mortgage loan and down payment assistance grant. The grant, equal to 3 percent of the buyer’s total loan amount, does not have to be repaid and may be applied to down payment, closing costs, and reserves for taxes and insurance.
The FIRSTHome/FIRSTDown and NEXTHome programs may be used to finance single-family residences, which include detached site-built homes, townhomes, approved condominiums and permanently attached doublewide manufactured homes. Buyers must invest at least $500 of their own funds, none of which can be derived from a gift or loan. MFA requires a minimum credit score of 620, however in some cases, a borrower with no credit score may still be able to qualify by using alternative credit.
VA and USDA Rural Housing loans both require zero down payment, whereas FHA requires 3.5 percent down and HFA Preferred (conventional) requires three percent down. MFA’s goal is to keep interest rates as competitive as possible in order to enhance affordability. In the case of zero-down loans, MFA’s second mortgage or grant can be utilized to pay all but $500 of the required closing costs.
Income limits for first-timers purchasing in the Las Cruces Metropolitan Statistical Area, which includes all of Doña Ana County, are currently set at $58,996 for 1-2 person households, and $67,845 for households of three or more. The total sales price of the home may not exceed $253,809. As with all MFA programs, down payment assistance loans and grants can only be used for the purchase of a home which will be owner-occupied. Funds cannot be used to refinance an existing loan or purchase a rental property.
These terrific benefits are as real as they come and only accessible through MFA approved lenders, a list of which is available at housingnm.org/homebuyers/find-a-participating-lender. Not all approved lenders carry the full lineup of MFA products or charge the same fees, so it pays to shop around before making your final selection.
See you at closing!
Gary Sandler a full-time Realtor and president of Gary Sandler Inc., Realtors in Las Cruces. He can be reached at 575-642-2292 or Gary@GarySandler.com.