Zero Interest Homebuilder Program

The Program

The Zero Interest Homebuilder Program (ZIHP) is a loan product designed to address the current shortage of affordable and practical housing accessible to low- and moderate-income homebuyers within the State of New Mexico. By offering interest-free construction financing via the New Mexico Housing Trust Fund, the program is intended to promote the development and sale of entry-level and economical homes priced as such for their respective market.

Eligible Applicants

Eligible applicants include nonprofit organizations, for-profit organizations, governmental housing agencies, regional housing authorities, governmental entities, governmental instrumentalities, tribal governments, tribal housing agencies, builders, single-family developers, corporations, limited liability companies, partnerships, joint ventures, syndicates, associations or other entities that can assume contractual liability and legal responsibility by executing one or more written agreements entered into with Housing New Mexico.

Eligible Projects

ZIHP is designed to encourage the construction of homes featuring cost-effective floor plans and amenities that balance affordability with functionality. Homes financed by ZIHP will require the following:
• Floor plans ranging between 950-1,500 square feet
• No more and no less than 2-3 bedrooms and 1-2 bathrooms
• Amenities and materials must be appropriate for cost-effective construction
• Project plans must meet Housing NM’s Universal Single-Family Design Standards

ZIHP development and construction loans may be used to assist in financing a wide range of activities to increase affordable homeownership opportunities, including costs of on-site infrastructure necessary to support the development of affordable single-family lots and/or the construction of affordable homes. Housing New Mexico encourages inquiries from potential applicants prior to and during the application process to help assure that proposed activities are eligible subject to applicable law.

Eligible Homebuyers

Currently, program beneficiaries may earn up to 150% of the Area Median Income (AMI), as published annually by the federal Department of Housing Urban Development (HUD), for the subject county, adjusted for household size. Exceptions exceeding 150% of AMI may be considered for households purchasing homes constructed in high-cost counties (Lincoln, Los Alamos, Santa Fe, and Taos).

Sales Price Limitations

Homes financed by ZIHP will have a maximum sales price of 240% of the HUD 234 Elevator Limits: https://www.federalregister.gov/documents/2024/02/13/2024-02870/annual-indexing-of-basic-statutory-mortgage-limits-for-multifamily-housing-programs. Exceptions exceeding the maximum sales price may be considered for homes constructed in high-cost counties (Lincoln, Los Alamos, Santa Fe, and Taos).

Affordability Period

Housing New Mexico shall establish a required affordability period with each successful applicant based on the housing activity, amount of financing provided to the project, enforceability, and other considerations that are in compliance with the Affordable Housing Act. Generally, an approved single-family project will enter into a master Land Use Restriction Agreement (LURA) to ensure each financed lot is sold to an income-eligible buyer. Upon the purchase of a completed home, the homebuyer will also enter into a LURA, which begins a homeowner compliance period. A compliance period is an agreed-upon period where if the home is re-sold, the new buyer will meet the required income qualifications. If the new buyer does not meet the income requirements, a compliance fee will be imposed as a percentage of net sales proceeds beginning at 50% in the first year and decreasing annually over the term of the LURA. In no event shall the compliance period be less than five years.

Application Procedures

Complete applications must be received no later than 60 days prior to a regularly scheduled meeting of the Housing New Mexico Board of Directors in order to be considered at that meeting. Meetings of the Housing New Mexico Board of Directors are generally held every third Wednesday of the month. All applications submitted by the deadline for a particular meeting of the Housing New Mexico Board of Directors will be treated as one funding round and evaluated concurrently. All application materials and Notice of Funding Availability (NOFA) are available on Housing New Mexico’s website. The NOFA provides guidance on funding requirements, priorities, and processes.

New Mexico Housing Trust Fund (NMHTF) details
New Mexico Housing Trust Fund (NMHTF) Notice of Funding Availability (NOFA)

Loan Terms

• Infrastructure Development Loans: up to five years (current maximum $3,000,000)
• Construction Revolving Line of Credit: up to three years (current maximum $3,000,000)