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New Mexico USDA Rural Development Loans

USDA Loans in New Mexico - Rural Development Guaranteed Mortgage
Rural Housing Loans - No Down Payment - Competitive Rates

New Mexico USDA Loans

Are you looking to purchase a home in a rural area of New Mexico? The USDA provides an unbeatable opportunity to buy a home with 100% financing, low interest rates, and other special loan terms. Why does the USDA provide these types of loans? The purpose of the USDA home buying program is to promote homeownership in rural areas, especially for low-to-moderate income families.  By providing special homeownership programs, rural communities can develop faster and thrive.

The way the program works is if you can meet certain qualifications you can get a home loan through the USDA directly or through a USDA lender (such as us). There are two types of USDA loans:

  • USDA Guaranteed Loan – The guaranteed loan is the more common loan program and accommodates to many more ranges of income. In fact, in some areas, household incomes can be as high as $120,000.  This rural housing program is known by a few different names, such as the “502 USDA Guaranteed Mortgage”, “Single Family Housing Guaranteed Loan Program”, or just “USDA Guaranteed Loan”.  These all mean the same thing and are the same program.
  • USDA Direct Loan – The direct loan is for the lowest end of the income spectrum, and has a lot more limitations for who will qualify. It is for individuals or families with the very low income.  These loans are originated and funded by the USDA directly.  We do not issue these loans, nor does any New Mexico USDA lender.  You must apply through the Department of Agriculture.  Again, this is only for the lowest end of the income spectrum.

New Mexico USDA Loan Requirements

A great aspect of USDA loans is that the way you qualify is actually very different than other loans, such as conventional and FHA mortgages. While other programs require you to show more income, better credit, and more assets, the USDA is actually looking for those who have a harder time getting a loan.

  • Credit – Minimum credit score of 620. Occasional exceptions are made, but this is the standard credit requirement.
  • Income – Income is limited to 115% of the median income in the applicable county. This means your household income can not be more than 15% above the median income for your county.  The income limits for USDA loans depends on your county and how many people live in your household.  The number of persons includes you, your spouse, your children, and anyone else living in your home.  The USDA has a very useful income eligibility tool which allows you to calculate your eligible income, make certain deductions, and then see if your income qualifies.
  • Owner Occupied – No rental properties are allowed.  You must occupy the home you want to buy with a USDA loan.  Another requirement is that the home be either a single family residence, or a condo.  Some USDA lenders in MN will allow mobile or manufactured, but we do not offer USDA loans for these property types.
  • Property Eligibility – USDA loans are intended for rural development and therefore exclusively available for homes in rural and select suburban areas. You can look up properties by address on the USDA property eligibility search.  This tool also allows you to view a map with ineligible areas shaded in.   USDA loans are intended for rural development and are not available to finance a home purchase in larger cities.

So Where in New Mexico Can You Get a USDA Loan?

USDA loans are available throughout the majority of the land in NM, including all rural areas.  The only excluded parts of the state which are not eligible are larger cities and suburbs, such as: Albuquerque, Clovis, Farmington, Las Cruces, Rio Rancho, and Santa Fe.  If you want to buy a home in an urban area, and are looking for another great option, consider an FHA home loan.  For the rest of NM, including both remote areas and smaller towns, USDA loans are almost surely your best home financing option.  This is just a small sampling of some of the towns that USDA loans are commonly utilized in.  To find out if the home or area you want is eligible, use the property search or give us a call and we can help you determine property eligibility.

A Few Benefits of USDA Loans Are:

  • No savings or assets are required.
  • Rates are lower than FHA or conventional loans.
  • Mortgage insurance is cheaper than FHA MIP.  Use the calculator below to calculate mortgage insurance costs and your estimated monthly payment:

USDA Mortgage Calculator

%

Total Monthly Payment

$0

USDA base loan amount$0
USDA MIP $0
USDA total loan amount$0
Principal & interest$0
USDA guarantee fee 2.75%$0
Monthly escrow$0
Down payment0%

  • Price of Home – Enter the price of the home you want to buy. If you do not have a home in mind yet, just add in a number in the range you expect to want to buy a home for.
  • Mortgage – The second field titled “mortgage”, is by default on a 30 year fixed loan schedule.  This is the most common loan repayment schedule selected for USDA loans.  You can also select a 15 year mortgage.
  • Interest Rate – The interest rate a borrower receives depends on their credit, income, and other qualifying factors.  To get an actual rate quote, you will need to speak with a licensed loan officer.  You can call 1-800-731-3560 to get pre-qualified and receive a rate quote.
  • Down Payment – USDA loans do not require a down payment. If you would like to put money down, reduce the amount you put into the Price of Home field to reflect how much you want to use as a down payment. So if you want to buy a $150,000 home, and plan to put $10,000 down, then add in $140,000 for the Price of Home, which will serve as your total loan amount for the purpose of calculating your expected payment.
  • Property Taxes – Add the annual taxes for the home you want to buy.  To find out how much the annual property taxes are, check with the county assessor.  You can also ask a real estate agent to help you find out what the exact annual property taxes are for a home you are interested in.
  • Annual Insurance – The amount that the annual homeowners insurance will cost depends on the property you intend to buy, your homeowners insurance claim history (if you have owned a home before, and had to make a claim), and the specific homeowners insurance company that you select to insure your home.
  • Down Payment – This is the percentage that is calculated based upon the home purchase price and the down payment amount.

After submitting information into these fields, it will calculate how much the USDA mortgage payment will be based upon what is entered.  The next set of data presented on the right side and shows under the total monthly payment is as follows:

  • USDA Base Loan Amount -This is the amount of your loan after subtracting your down payment from the total, but prior to adding in the USDA upfront mortgage insurance premium (UPMIP).
  • USDA Upfront Mortgage Insurance – All USDA loans require a 1.00% upfront mortgage insurance premium to be paid. This is calculated from the base loan amount. This 1.00% is the same for any borrower and on any type of USDA loan. It does not vary from one lender to another.
  • USDA Total Loan Amount – This is the combined total of your USDA base loan amount (after subtracting the down payment), along with the upfront mortgage insurance fee. You have the option to pay the mortgage insurance amount out of pocket, or you can wrap it into the loan amount.  Most decide to include it in the loan amount, so we have it automatically added on the calculator.
  • Principle and Interest – This is the amount of your mortgage payment before adding mortgage insurance, and property taxes, and property insurance.
  • USDA Monthly Mortgage Insurance – This is the monthly mortgage insurance premiums required on all USDA loans.  This amount is 0.50% of the principle loan balance. It is recalculated each year and goes down as your loan balance does.
  • Monthly Escrow – This is how much your property taxes and property insurance is after taking the annual amounts and dividing them by 12 monthly payments.

Would you like to find out if you qualify or a USDA mortgage loan? We can help you get pre-approved over the phone or you can learn more and apply for a USDA loan online.  Our consultation is free of charge, which will include finding out if you are eligible, how much you can borrow, and also connect you with a real estate agent familiar with these programs.

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Fill out the form below to receive more information or call 1-800-731-3560

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