FHA vs Conventional Loan in New Mexico

FHA loans require a minimum 3.5% down payment with a credit score of 580 or higher (10% with a score of 500-579). Conventional loans typically require 5% down for fixed-rate loans, though some programs allow 3% down. In New Mexico, these percentages apply to the purchase price of the home.

FHA loans require an upfront mortgage insurance premium (1.75% of the loan) plus annual premiums (0.55% for most borrowers) for the life of the loan. Conventional loans require PMI only if you put less than 20% down, and it can be canceled once you reach 20% equity.

For borrowers with credit scores above 720 and at least 10% down, conventional loans are usually cheaper due to lower or no mortgage insurance. For borrowers with lower credit scores or minimal down payments, FHA loans often offer better rates and total costs.

Yes. FHA loan limits vary by county and are updated annually. In most New Mexico counties the standard limit applies, but high-cost areas may have higher limits. Check the HUD website for current limits in your specific New Mexico county.