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The cost of living in New Mexico is low compared to the rest of the country; therefore, it is a great state in which to buy a home. The median home price in the state stands at $161,800, according to It is an excellent time to buy a home in New Mexico, as the appreciation has increased within the last year. The structure of homes in the state range from modest adobe homes to exquisite brick homes. Whatever you are looking for, you can find a home in New Mexico that suits your needs. The state encompasses diverse terrain and includes impressive Spanish architecture structures. If you are looking for a home in The Land of Enchantment, you will probably need a mortgage loan. Before you start looking for a loan, you need to know how mortgages work in New Mexico.

New Mexico Mortgage Rates states that the average interest rate for a 30-year fixed mortgage in New Mexico is 3.89%, and for a 15-year fixed loan, the rate is 3.15%. If you would like a 20-year fixed loan, the rate stands at 3.90%. If an adjustable mortgage is better for you, you can get a 7/1 ARM for 3.31% and a 5/1 ARM for 3.09% A 3/1 ARM will be 3.29%. This rates are lower than the national average for interest rates.

Types of Mortgages in New Mexico

You have the option to choose a fixed rate mortgage or an adjustable rate mortgage. A fixed rate mortgage provides the same interest rate, so you will have the same monthly payment amount. If you get a low interest rate, this is probably the best option. If you are only planning to stay in your home temporarily, you might want an adjustable rate mortgage. With this, your rate will fluctuate. If your rate is not great to begin with, this could be a could option for you.

Some other options you need to consider include:

  • FHA Loan: This is a mortgage backed by the Federal Housing Administration. These are very popular loans because they tend to be more lenient. Many first-time home buyers choose an FHA loan. You can get a loan with a down-payment amount of only 3.5%, and the credit requirements are more flexible. Private mortgage insurance is required.
  • VA Loans: The Veteran’s Administration offers these loans to military service people or retired service people. You can receive a VA loan with no down payment and no closing costs.
  • USDA Loans: The US Department of Agriculture offers this loan to assist people who wish you own a home. You can put little or no money down. This loan has income limits in order to qualify.
  • Conventional Loans: This loan is not insured by the federal government, and you must have good credit in order to qualify. These loans might be easier to process, so they do not take as long.

New Mexico Mortgage Laws

For most people, the mortgage is the largest bill that they pay. Therefore, you want to make sure you are working with a reputable and honest lender. By law, lenders cannot discriminate against you because of things such as your race, religion, gender, or color. They are also required to give you documents that state the exact terms and conditions of the loans, including the rate. A Truth in Lending Disclosure will tell you the cost of the loan, total number of payments, annual percentage rate, and home price. A Good Faith Estimate will present you will any fees you will be charged and any fees that you will need at closing.

Applying for a Mortgage in New Mexico

Lenders can pre-approve you for a loan, so you will know precisely how much you can spend on the loan. They will ask you to submit documents, including W2 forms, bank statements, tax forms, and pay stubs. Your home will need to be appraised and inspected. You might need to check your credit score before you apply for a loan to see if you meet the qualifications. After everything is completed, your loan will be sent to underwriting for final approval. Once finalized, you can close on the loan.