MFA's Primero Loan Program is a flexible, low cost loan program created in 1993 to finance the development of affordable rental or special needs residential facilities that would be considered high risk by traditional lenders. The purpose of the program is to leverage other public and private funds and to expand the housing development capacity of New Mexico's nonprofit, tribal and public agency housing providers. Through a substantial expansion of the program in 2002, Primero was broadened to finance projects that cannot be accommodated by existing sources—particularly the secondary market—and to develop new delivery systems through nonprofit organizations and other institutions to increase affordable housing production.
Eligible Projects and Programs
Funding may be approved for specific housing developments or for programs to be operated by agencies to meet local housing needs. Rental, owner-occupied and special needs projects of any size maybe financed under this program, during any stage of the development process. New construction, conversion, and acquisition/rehabilitation projects may be financed. Public and tribal agencies, for-profit and nonprofit sponsors are all eligible. Applicants must provide evidence of businesslike organizational operations, as well as experience in housing development or partnership with an experienced development team.
All projects and programs must be responsive to clearly identified housing needs. Income and/or rent limits will apply to all projects and programs, but these will differ with the type of activity proposed. Applicants must deliver commitments from other sources of funds or evidence that such funding is unavailable.
There are four different application packages for Primero Loan Program financing. Applicants should select the application most appropriate for the activity they are proposing.
- Pre-development application - Primero Loan Program funding for pre-development expenses such as environmental assessments, appraisals, title searches/insurance, architectural and engineering fees, or market studies.
- Homeownership development application - Funding for the acquisition, construction, or rehabilitation of single-family homes to be owned by income qualified household.
- Land banking credit application - A line of credit for the acquisition of property for the development of affordable housing projects. This opportunity is only available to qualifying nonprofit, public, and tribal housing development entities. Applicants must demonstrate: a proven ability to process a piece of land through the development process; ability to move quickly on development; and a history of completed housing developments. They must also provide a business plan that supports housing development activities to be eligible for this opportunity.
Applicants should provide all items listed on the appropriate application checklist. If all items cannot be provided at the time of application, applicants must indicate why, and state when the requested information will be available.
Development loans will be underwritten and structured according to sound lending practices. Interest rates are typically below-market and are determined at MFA's discretion. Primero loans are repaid through subsequent financing sources or in some cases through cash flow. Terms cannot exceed five years, but loans do not have to be amortized during their term. Loans are secured whenever possible, but they may be subordinated to other debt. The maximum loan amount is $1 million, and availability of funds varies.
MFA has established four funding priority initiatives designed to increase affordable housing development in underserved markets. Priority initiatives include: tribal housing, colonias housing, rehabilitation of homes occupied or soon-to-be occupied by income-eligible homeowners and manufactured housing. Activities focused on these areas will receive funding priority. Applicants wishing to receive funding priority under one of these initiatives must complete the appropriate application as specified in the application process section above, and indicate on the application under which initiative they are seeking funding.
How To Apply
Application forms can be obtained from MFA and submitted at any time. Complete applications are usually processed and approved within 60 days. All loans are reviewed by staff and those loans above a prescribed amount will be approved by the MFA Board of Directors. Discussions with staff are recommended prior to preparation of applications in order to identify appropriate application materials and make initial eligibility determinations.