Home Purchase Loans In New Mexico

Potential homebuyers in Florida have access to a variety of home loans. Depending on the individual’s circumstances, financial objectives, and preferences, each has a unique set of benefits and drawbacks. 

Home Loan Programs in New Mexico

In Florida, a few of the most typical kinds of mortgages are as follows:

• Conventional Loans

A conventional loan is a mortgage not insured or guaranteed by the federal government. Instead, it is backed by private lenders, such as banks, credit unions, or mortgage companies. Conventional loans are the most common type of mortgage used by homebuyers.

There are two main types of conventional loans: conforming and non-conforming. Conforming loans adhere to the guidelines set by Fannie Mae and Freddie Mac, two government-sponsored enterprises that buy mortgages from lenders, bundle them and sell them as mortgage-backed securities. These guidelines include loan limits, credit score requirements, and debt-to-income ratios. Non-conforming loans, on the other hand, do not follow these guidelines and are often called “jumbo loans” because they are used to finance more expensive properties that exceed the loan limits set by Fannie Mae and Freddie Mac.

• FHA Loans

An FHA home loan is a mortgage insured by the Federal Housing Administration (FHA), a government agency within the U.S. Department of Housing and Urban Development (HUD). FHA loans are designed to help low-to-moderate income borrowers, first-time homebuyers, and those with less-than-perfect credit qualify for a mortgage and purchase a home.

• VA Loans

VA home loans are mortgages guaranteed by the United States Department of Veterans Affairs (VA). These loans are intended to assist qualified veterans, active-duty military people, and surviving spouses in purchasing a home. VA loans provide various advantages to eligible borrowers, making homeownership more accessible to veterans.

To be eligible for a VA home loan, borrowers must meet specific service requirements based on their time in the military, National Guard, or Reserves. Additionally, borrowers must obtain a Certificate of Eligibility (COE) to verify their eligibility for a VA loan. Although VA loans offer numerous advantages, they are not available for investment properties or vacation homes; they are intended for primary residences only.

• USDA Loans

USDA home loans are mortgages guaranteed by the US Department of Agriculture (USDA). They are intended to assist low-to-moderate-income borrowers in rural and suburban areas with purchasing a home. USDA house loans are also referred to as USDA Rural Development Guaranteed Housing Loan Program or Section 502 loans.

USDA home loans can be an excellent option for eligible borrowers looking to purchase a home in a qualifying rural or suburban area, particularly those with limited funds for a down payment or a lower credit score. However, the geographic and income restrictions may limit the program’s availability for some borrowers.

• Adjustable-Rate Mortgages (ARMs)

ARMs are home loans whose interest rate fluctuates regularly based on a predetermined index and margin. An ARM’s starting interest rate is often lower than a fixed-rate mortgage. However, the rate adjusts regularly after a specific term, increasing or decreasing the monthly mortgage payment.

ARMs are often structured with a fixed-rate period in the beginning, followed by an adjustable-rate period. Common terms include 3/1, 5/1, 7/1, and 10/1 ARMs. The first number represents the number of years the initial fixed rate lasts, and the second number indicates how often the rate adjusts after that (usually annually). For example, a 5/1 ARM has a fixed interest rate for the first five years and then adjusts annually for the remainder of the loan term.

When considering an adjustable-rate mortgage, weighing the potential risks and rewards is crucial. Borrowers should assess their financial situation, risk tolerance, and future plans to determine if an ARM suits their unique circumstances.

• Jumbo Loans

A jumbo loan, also called a jumbo mortgage, is a form of financing that exceeds the Federal Housing Finance Agency’s (FHFA) lending limits. Non-conforming loans are loans that do not conform to the limits established by Fannie Mae and Freddie Mac, the government-sponsored agencies that purchase and package most U.S. home loans. 

Jumbo loans have a higher interest rate, stricter underwriting guidelines, and a more significant down payment requirement than conventional mortgages. Down payments on jumbo loans can be as low as 10 percent for loan quantities of $1 million or more, corresponding to a purchase price of $1.1 million or more. These loans are intended for debtors whose loan balance exceeds the conforming loan lending limits.

Each type of home loan has distinct benefits and drawbacks, so it is essential to evaluate your financial situation and long-term objectives before selecting the best loan for your requirements. It is always a good idea to consult with a mortgage professional for assistance in navigating the process and making the best decision for your specific circumstances.

Apply for a Home Purchase Loan in New Mexico

Allow us to assist you in achieving your dream of becoming a proud New Mexico homeowner today. To get started, contact (505) 448-8884. Our Professional Loan Officers would be delighted to walk you through our home loan requirements and answer any questions you may have about the application process.