Save for down payment | Find a real estate agent | Get preapproved for a mortgage | Choose your neighborhood | Go house hunting | Make an offer | Inspections and appraisal | Final walkthrough and closing
Buying a house in New Mexico is an exciting milestone, but the process can take some time. Several factors, like your financial situation, market conditions, and the local economy can affect both how long it takes you to find a home and how much it costs you.
For example, homes in Albuquerque are hitting the market at $397,000 and selling within 35 days — 18 days faster than the state average! — so you'll need to move quickly if you want to beat out the competition.
The more you know about the home buying process and New Mexico's current real estate trends, the more prepared you'll be to navigate this complicated process as quickly and smoothly as possible.
No matter where you are in your home buying journey, Clever can connect you with local real estate pros who will help you purchase your New Mexico dream home!
The best part? When you buy with a Clever real estate agent, you could earn a cash-back refund worth up to 0.5% of the home price. On a qualifying $300,000 purchase, you'd get $1,500. That's real money back in your pocket!
Step 1: Save for a down payment
Your down payment is the first part of your home's purchase price that you pay at closing. Your mortgage lender will pay the remaining balance.
Typically, mortgage lenders in New Mexico want you to contribute 20% of the purchase price as a down payment. That would be $59,562 for a $297,808 home — the typical home value in New Mexico.
However, you have options to lower your down payment amount.
Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).
Minimum down payment (%)
Down payment ($)
Based on typical home values from Zillow (August 2022)
But making a down payment of less than 20% comes with some risks.
First, because you're borrowing more money, you'll have a higher monthly payment and pay more in interest over the life of your loan.
Based on home values from Zillow (August 2022) and a 5.56% interest rate for a 30-year loan.
Second, you may have to purchase mortgage insurance.
Conventional loans require private mortgage insurance (PMI) until your loan balance reaches 80% of the purchase price. FHA loans, on the other hand, require a mortgage insurance premium (MIP) for the life of your loans.
Mortgage insurance costs around 1% of your mortgage balance annually. However, rates vary based on your down payment and credit score. Typically, your mortgage insurance payment is added to your mortgage payment each month.
VA loans don't charge mortgage insurance. Instead, you'll pay a VA loan funding fee at closing, which can range from 1.4% to 3.6% of the purchase price.
New Mexico down payment assistance programs
There are numerous down payment assistance (DPA) programs available to low-income and first-time homebuyers in New Mexico. Financial assistance may be available as a grant or second mortgage that can help with closing costs or a down payment.
Here are a few DPA programs in New Mexico that you might be eligible for:
MFA FirstDown Program
The New Mexico Mortgage Finance Authority (MFA) offers its FirstDown Program to first-time homebuyers with a FirstHome mortgage loan. The FirstDown Program can provide up to $8,000 as a second mortgage for any single-family property.
Eligible borrowers must have a credit score of at least 620, contribute a minimum of $500 from their own funds, and receive pre-purchasing counseling.
MFA HomeNow Program
The MFA HomeNow Program can be used in tandem with a FirstHome mortgage. First-time homebuyers can receive up to $8,000 or 8% of the home's purchase price in down payment assistance. The HomeNow Program accrues no interest and is forgiven after ten years.
Participants are required to contribute $500 towards the purchase of the home and have a credit score of at least 620.
MFA NextHome Program
The MFA NextHome Program is a combination of a first and second mortgage, with the second loan equal to 3% of the first mortgage. It's available to first-time and repeat homebuyers, requires no monthly payments, and may be forgiven under certain circumstances.
Minimum income limits and purchase price restrictions apply depending on which area the home is located. Eligible borrowers also need to have a credit score of at least 620 and contribute $500 towards the down payment.
U.S. Department of Housing and Urban Development
Additional DPA programs can be found on New Mexico's HUD page here.
Step 2: Find a great real estate agent in New Mexico
Your real estate agent will be your main ally during the home buying process. Besides finding and showing you properties, your agent will help you make offers, negotiate contracts, and navigate the closing process. Plus, they can recommend other service providers like title companies and inspectors to help you buy your home in New Mexico.
Don't rush into choosing an agent. Instead, take the time to research and interview multiple real estate agents who have experience in the neighborhoods you're interested in. You should pay attention to a realtor's:
- Years of experience
- Number of transactions in the last year (the more the better!)
- Experience in your price range
- Overall review score
- Individual reviews and complaints
Clever matches you with multiple agents in your area so you can interview, compare, and choose the best one to help you buy your next home.
Step 3: Get preapproved for a mortgage
A mortgage preapproval letter is an offer to lend you up to a certain amount of money to purchase a home. It shows sellers that you are a serious buyer who is financially qualified to make an offer on a home.
Most sellers in New Mexico will require preapproval before showing you their home.
You don't have to decide on one lender right now. In fact, you should compare interest rates and preapproval amounts from several lenders to make sure you're getting the absolute best terms when you buy your New Mexico home.
Get Pre-approved Today!
Get matched with a lender who can tell you how much house you can afford. To get started, where do you plan on buying?
Step 4: Choose the right location
Currently, the typical home value in New Mexico is $297,808, but don't worry if that doesn't perfectly match your budget. Home prices vary dramatically from city to city and even from neighborhood to neighborhood!
Also, look at past home value trends. This will give you an idea of how much your home's value could go up over the next few years.
To give you an idea of how appreciation could impact what your house is worth in the future, consider these examples from three neighborhoods in Albuquerque:
Home value appreciation in Albuquerque
Step 5: Start house hunting in New Mexico
Searching for homes in New Mexico is the fun part of the home buying process! You'll get to look at a variety of homes and discover what you really want in a home.
Make a list of everything you want in a home and prioritize them. At the top of the list should be the items that are most important to you. This will help you separate your "must-haves" from your "nice-to-haves."
Your agent can help you understand if your wants are realistic for your budget and favorite neighborhoods or if you need to rethink what you're looking for.
Look at current housing inventory
The timing of your house hunt in New Mexico can have a big impact on your number of options. For example, in New Mexico, May has historically seen the most homes for sale. Searching in this season could give you more options and a greater likelihood of finding your dream home.
On the other hand, December gives you the fewest choices in New Mexico. Historically, there are 42.7% fewer homes for sale than during New Mexico's peak season.
Housing inventory in New Mexico by season
New listings per month
Based on data from Realtor.com (August 2022)
Step 6: Make an offer
Once you find a New Mexico house you love, it's time to make an offer. Your real estate agent will help you write a compelling offer that gives you the best shot of convincing the homeowner to sell to you.
Currently, in New Mexico, homes stay on the market for 82 days before going under contract. However, every market goes through seasonal changes. During busier months, homes get snatched up more quickly than others.
Historically, New Mexico homes sell fastest in July, where the average property is only on the market for 68 days. If your home search falls around this time, you should be prepared to move quickly and potentially make offers on several homes before yours is accepted.
On the other hand, if you buy in February, you have a bit more time to search. Homes typically stay on the market 18 days longer than New Mexico's annual average.
Average time homes spend on market in New Mexico
Based on data from Realtor.com (August 2022)
» LEARN MORE: What should an offer include?
Step 7: Inspections and appraisals
Inspections and appraisals are an opportunity for you to better evaluate the home's condition and value before officially purchasing it. You may have an opportunity after this step to renegotiate the terms of your contract with the seller if something unexpected pops up.
Home inspections in New Mexico
Having your New Mexico home inspected by a licensed inspector gives you peace of mind about the condition of the property before you commit thousands of dollars to purchase it.
Your inspector should check out the following parts of the property:
- Electrical system
- HVAC system
If the home has a septic system, you should also pay for a septic inspection to make sure it doesn't have any problems that wouldn't be covered in a typical home inspection.
New Mexico-specific inspections
New Mexico law requires sellers to disclose known property issues to buyers, but it’s highly recommended to conduct more specialized tests for good measure. In addition to a general home inspection, consider getting these tests done before closing on a home:
- Radon testing: Although it isn't required by law, it's strongly suggested to conduct a radon test annually. If the seller hasn't done a radon test in the past year, consider testing for this dangerous substance before purchasing a home. You can find a discount radon test kit from the New Mexico Environment Department here.
- Termite inspection: Certain lenders may require you to have a pest inspection done, but it's a smart move even if you're not obligated to do so. Infestations can cause property damage and pose health hazards, so it's important to catch potential problems early.
Appraisals determine the value of the property. If you're using a mortgage to buy your new home, your lender will order an appraisal to make sure the home is worth the money that it's loaning you.
Step 8: Close on your new home!
The closing process in New Mexico requires you to meet at the title company to complete your paperwork and settle your closing costs
On the closing date, you'll need to review and sign several legal documents to finalize your title transfer. Take your time to carefully read each page and ensure that all of the information is correct.
Just a few key documents you'll be asked to sign will include:
- Your final loan application
- The deed
- The mortgage promissory note
- The disclosure statements
After you finish the documentation, you'll need to pay closing costs. In most cases, you'll give the total amount you owe to the title company, and then they'll take care of distributing the funds to the correct parties.
Buyers can generally sort their closing costs into four separate categories:
- Lender fees: Fees paid to your mortgage lender. Lender fees often cover the costs of preparing your loan, as well as the appraisal and survey fees.
- Title and escrow charges: Fees that the title company charges for conducting the closing process, performing the title search, and providing title insurance.
- Prepaid costs: Ongoing costs of homeownership that must be paid in advance. Most lenders require homeowners to pay for certain predictable expenses up front, such as property taxes and homeowners insurance.
- Other closing costs: Miscellaneous expenses that can differ for every homebuyer. Natural disaster certification fees and real estate attorney fees are a few common extra costs.
Buyers in New Mexico typically pay 3–5% of the purchase price in closing costs. For a $297,800 home — the typical home value in New Mexico — that's between $8,934 and $14,890!
» LEARN MORE: Closing costs for buyers in New Mexico
Frequently asked questions
- Save for down payment
- Get pre-approved for a mortgage
- Choose your preferred New Mexico neighborhoods
- Partner with the right real estate agent in New Mexico
- Go house hunting
- Make a strong offer
- Inspections and appraisals
- Do a final walkthrough and close
Yes, the New Mexico Mortgage Finance Authority offers the FirstHome program for eligible first-time buyers. The program provides buyers with an affordable first mortgage, along with the option to apply for a down payment assistance program.
To qualify, you must meet the income and purchase price limits set for your county. If you're accepted, you'll also have to contribute at least $500 towards the down payment and complete pre-purchase homeowner counseling.