Compare Current Mortgage Rates in New Mexico

Mortgage payments have two parts: the principal, which is the amount you borrow, and the interest you pay on the principal. Buyers often focus mainly on the principal even though for the first 19 or 20 years of a 30-year loan, most of the monthly payment goes toward interest. From Day 1, your interest rate has a tremendous impact on your payment.

While a lower payment is an excellent reason to find the best rate you can, the potential for long-term savings is an even better reason. With New Mexico buyers paying a median sale price of $351,900, according to Redfin, and assuming a 10% down payment, shaving just 0.25 percentage points off a 6.63% mortgage rate saves almost $18,800 over the life of your loan.

Each mortgage lender sets its own rates based on many factors, some of which you can control and some of which you can’t.

Factors you control

You control how you manage your finances and select a home to buy. Lenders take those factors into account when calculating your rate. 

Your rate might be different than the one you see posted on the lender’s website. The posted rate is based on assumptions that are usually explained in fine print at the bottom of the page.

Specific things the lender looks at include:

• Credit score
• Down payment amount
• Loan-to-value ratio
• Loan type
• How much you borrow
• Loan term
• Home type
• Home location

Factors you can’t control

Factors you can’t control include economic conditions and the lender’s business policies and choices.

The economy

The state of the economy influences federal interest rates. Lenders use those rates as a basis for the mortgage rates they offer consumers.

The Federal Reserve can move the federal funds rate up and down to control the money supply as needed to keep the economy healthy and productive. Higher rates ease inflation and lower ones ward off or reverse recession. When the federal funds rate changes, proportionate changes in consumer rates usually follow.

The other federal rate to watch is the prime rate. The prime rate is the average rate the country’s largest banks charge their prime borrowers. Lenders use the federal funds rate as a base for the prime and then add a margin of about 3%. Adjustable-rate mortgages are especially vulnerable to changes in the prime rate.

The economic conditions that prompt federal rate changes and the changes themselves have a strong influence on supply and demand in the housing market. Those forces have a major impact on mortgage rates. Lenders lower rates when demand is low. They raise rates when demand is high and people are willing to pay more for their loans.

Business decisions

Lenders use rates, both high and low, to influence your decision about which loan to apply for. It might lower rates on a particular loan it wants to promote, for example.

The New Mexico Mortgage Finance Authority has several programs to help first-time homebuyers. Whether you’re looking to purchase in a large city like Albuquerque or a rural area in Los Alamos County, you could be eligible for assistance if you haven’t owned a home in the past three years.

The following mortgage programs require a credit score of 620 or higher, and you must attend homebuyer counseling. Income limits might apply:

• FirstHome: A mortgage program for low- to moderate-income first-time homebuyers. You can use it for several loan types, including conventional, FHA, VA, and USDA.
• FirstDown: This is a second mortgage that provides money for your down payment and closing costs, up to 4% of the home’s value. You must use a FirstHome loan to be eligible.
• FirstDown Plus: FirstDown Plus provides additional down payment assistance in the form of a 10-year, $15,000 third mortgage with 0% interest. There are no monthly payments, and the loan is forgiven after you own and occupy the home for 10 years. You must use FirstDown Plus in conjunction with FirstHome and FirstDown.
• HomeNow: HomeNow helps with your down payment and closing costs. Like FirstDown Plus, it’s a forgivable 0% loan, but in this case, it’s a second mortgage. The assistance is available to first-time buyers whose income is no more than 80% of the area median income. 

To get the lowest New Mexico mortgage rate, you should select the most favorable type of loan you qualify for and then compare rates from several mortgage lenders.

Take the following steps to improve your chances of getting the best rate available:

• Compare lenders: Compare rates from different lenders. Be sure to also take points and fees into account for an accurate, apples-to-apples comparison. Lenders sometimes offer low promotional rates but make up for it elsewhere.
• Strengthen your credit: You can take out a conventional mortgage loan with a credit score as low as 620, but the rate could be high. Incrementally higher credit scores qualify you for better rates, and you can get the best score possible with a score of 760 or more. Paying bills on time, paying down credit card balances, and correcting credit report errors are some of the best ways to improve your credit. 
• Make a substantial down payment: Some loans allow you to purchase with little or no money down. However, you’ll get a better rate with a down payment of 20%.
• Get a 15- or 20-year loan: Lenders typically offer lower rates on shorter-term loans. 
• Pay discount points: A discount point is an advance interest payment that equals 1% of your loan amount. Your lender might allow you to pay points in exchange for a lower rate on your loan.
• Lock in your rate: If you’re confident that rates are on the rise, lock in your rate to avoid an increase before closing.

All types of mortgage loans are available in New Mexico. Your credit score, your down payment, and how much you need to borrow will help determine which one is right for you.  

Conventional

• Description: Most common loan type. Meets standards for purchase by Fannie Mae and Freddie Mac. Available with fixed or adjustable rate.
• Minimum credit score: 620
• Minimum down payment: 3%
• Terms available: 10 to 30 years.

FHA

• Description: Government-insured loans for credit-worthy borrowers who don’t qualify for a conventional loan. Available with fixed or adjustable rates.
• Minimum credit score: 500
• Minimum down payment: 3.5% for buyers with a credit score of 580 or higher and 10% for buyers with a credit score of 500 to 579.
• Terms available: 15 to 30 years.

VA

• Description: Veterans Affairs-guaranteed loan for veterans and active-duty military and their eligible family members. Available with fixed or adjustable rates.
• Minimum credit score: Varies by lender but typically 620.
• Minimum down payment: A down payment is not required.
• Terms available: 15 to 30 years.

USDA

• Description: U.S. Department of Agriculture-guaranteed loan for low-income borrowers purchasing in rural-designated areas. Fixed rates only.
• Minimum credit score: No USDA-mandated minimum, but lenders may set their own; it may be easier to qualify if your score is above 640.
• Minimum down payment: A down payment is not required.
• Terms available: 30 years.

Jumbo

• Description: Large loan that exceeds the conforming limit for conventional loans. Available with fixed or adjustable rates.
• Minimum credit score: Varies by lender, but typically at least 700.
• Minimum down payment: Varies by lender, but typically 20% or more.
• Terms available: Up to 30 years.