FirstDown Plus FAQs

***Terms effective with locks confirmed on or after April 3, 2024***

Q:       What exactly is the FirstDown Plus program?

A:       FirstDown Plus is a third mortgage program designed to provide additional down payment for borrowers who qualify. Although the program name will not change, the structure and terms will change from time to time, depending on the requirements of the funding source we use.

Q:       Why doesn’t Housing New Mexico change the name of the program when new terms and guidelines are announced? Wouldn’t that make it less confusing?

A:        We understand there may be some confusion initially; however, lenders should think of FirstDown Plus simply as a third mortgage program which has terms and conditions that are subject to change.

With each new round of funding, Housing New Mexico will announce the applicable terms and publish a new Program Sheet. Not having to change the program name provides the ability to adapt our system programming more quickly by simply updating the terms. Our goal is to keep the program sustainable and available to borrowers on a more consistent basis, even though the terms will likely change with every rendition.

Q:       What are the terms for this latest version of FirstDown Plus?

A:        FirstDown Plus provides a fixed loan amount of $10,000 on a fully amortizing, non-forgivable, 15-year maturity third mortgage loan, with a zero-percent interest rate and estimated monthly principal payments of $55.56.

Q:        Why is FirstDown Plus designated as a third mortgage?

A:        This program is exclusively for borrowers who are using FirstHome (first mortgage) AND FirstDown (second mortgage).  FirstDown Plus is ALWAYS a third lien.

Q:        Can my borrower use FirstDown Plus as a second mortgage if they prefer not to use FirstDown?

A:        No. The Program Policy specifies that FirstDown Plus must always be a third lien behind FirstHome and FirstDown.

Q:        Is there a minimum loan amount for the FirstDown second mortgage?

A:       Yes, the minimum loan amount for FirstDown is $1,000.

Q:        If my borrower has a $1,000 FirstDown loan can they still opt for the 30- year repayment term?

A:        No, the 10-year amortization must be used if the loan amount is $1,000. Lenders are encouraged to educate borrowers about the benefits of a shorter term option. The shorter the term, the lower the interest rate and the faster the borrower will pay off their FirstDown loan. The difference in the monthly payment amount on a 10-year versus the   15 or 30-year term is only a few dollars.

Q:        If my borrower is using FirstDown Plus, are they still allowed to have a second loan amount of up to 4 percent of the sales price?

A:        Yes. The terms of the FirstDown second mortgage allow loan amounts from $1,000 up to the maximum of 4 percent of the sales price of the home.

Q:        Is there a pre-payment penalty on FirstDown Plus?

A:        No. There are no prepayment penalties on any current Housing New Mexico loan programs.

Q:        Is this program only for borrowers who are low or very-low income? A: No. The income and purchase price limits are the same for FirstHome, FirstDown and FirstDown Plus. The current limits for all programs may be viewed here: https://housingnm.org/lenders-realtors/income-and-purchase-price-limits

Q:        How does FirstDown Plus help homebuyers with affordability?

A:        FirstDown Plus allows borrowers to make a larger down payment, which means they don’t need to finance as much on their first and second mortgages. Even though FirstDown Plus is a loan rather than a grant, it offers more affordable terms than the first and second mortgages.

Q:        Will funding for FirstDown Plus become depleted at some point?

A:        Yes, every round of funding is limited and made available on a first-come, first-served basis. However, Housing New Mexico is continually sourcing additional funding opportunities which we hope will help us meet our long-term goal of making the program sustainable.

Q:        Is this new version of the three-mortgage structure compatible with loans other than FHA?

A:        Yes. Other government-insured loans, such as VA, USDA-RD and HUDSection 184 are compatible, as is Freddie Mac’s HFA Advantage® conventional loan. Fannie Mae’s HFA Preferred™ conventional loan is not currently compatible with FirstDown Plus, due to DU system limitations.

Q:        Do lenders have the option to run AUS using either DU or LPA?

A:        No. All transactions involving this version of FirstDown Plus MUST be run using only LPA. DU findings are not acceptable with this three-lien structure.

Q:        What is the maximum loan amount for this program? A: FirstDown Plus is a fixed loan amount of $10,000.

Q:        Can some of the $10,000 be used to cover closing costs? A: No. FirstDown Plus must only be used for down payment.

Q:        Is there a limit to the combined down payment assistance provided by Housing New Mexico?

A:        Yes. The maximum combined Housing New Mexico DPA assistance is $35,000.

Q:        Is a borrower allowed to also use down payment assistance from a source other than Housing New Mexico?

A:        Yes, outside entities may provide additional down payment assistance; however, any resulting lien must always be subordinate to all three Housing New Mexico liens. Lenders are responsible for making sure that outside DPA sources meet agency guidelines.

Q:        Is this loan forgivable at any point?

A:        No. This loan is fully amortized over 15 years, meaning that monthly payments are required. However, because this loan has a zero-percent interest rate, the monthly payments consist of principal only.

Q:        Does FirstDown Plus close on an Housing New Mexico-specific note and mortgage?

A:        Yes. It will close on special note and mortgage forms which Freddie Mac developed specifically for third mortgage programs offered by state housing finance agencies (HFAs). When the loan receives Housing New Mexico compliance approval the note and mortgage for FirstDown Plus will become available to print from PowerLender, along with the other Housing New Mexico closing documents and approvals. Although some transaction-specific information will be populated on the forms, lenders will need to complete the remaining fields prior to closing.

Q:        Because the third mortgage closes on forms developed by Freddie Mac, does this mean the first mortgage loan can only be Freddie Mac’s HFA Advantage?

A:        No, not at all. Government-insured loans, such as FHA, VA, USDA-RD and HUD Section 184 are also compatible, as is Freddie Mac’s HFA Advantage® conventional loan. As mentioned previously, Fannie Mae’s HFA Preferred™ conventional loan is not currently compatible with FirstDown Plus.

Q:        Will Housing New Mexico make blank copies of this Freddie Mac note and mortgage available for lenders who want to program them into their own system?

A:        Yes we will; however, it’s not necessary for companies to invest time and money in programming these documents in their systems unless they prefer doing so. Lenders are responsible for ensuring that they’re using the most up-to-date version of the forms.

Q:        If my veteran borrower, who is a repeat homebuyer, qualifies to use FirstHome under the Veteran Waiver, can he/she also qualify for FirstDown Plus?

A:       Yes, anyone qualified to use FirstHome, even if under the Veteran Waiver, may also use FirstDown and the FirstDown Plus third mortgage.

Q:       Can this program be used to purchase a home in a targeted area?

A:       Yes. FirstHome, FirstDown and FirstDown Plus all have the same eligibility requirements and may be used to purchase most any single-family property in New Mexico, even those in a targeted census tract.

Q:       Are lenders allowed to charge an origination fee on FirstDown Plus?

A:       Yes. The allowable origination fees are as follows:

FirstHome (first mortgage):               Up to 0.5% (plus normal & customary lender fees)

FirstDown (second mortgage):           $100

FirstDown Plus (third mortgage):       $500

Q:        What if I lock my borrower on FirstDown Plus under these current terms but the next version of the program happens to be more favorable – can I switch to the newest version of FirstDown Plus?

A:        No. Lenders must structure the transaction according to what they reserved. You would be allowed to cancel the reservation; however, a 60- day waiting period is required before a new loan can be reserved for that borrower. Lenders are encouraged to carefully consider the transaction details and structure before submitting lock requests due to limited funds.

Q:        I had my borrower’s locks in place but when the appraisal report came back, it was noted that repairs are needed. Because of the seller’s unwillingness to make repairs, the agreement was terminated. Am I allowed to keep the same reservation and switch to the new property address?

A:        Yes, we understand that these things happen on occasion. You may email singlefamily@housingnm.org and request to have the address changed. If our investor approves the change, you will be given instructions to provide the termination agreement and new contract. This process can take one or two full business days, as we must wait to receive investor approval. Please note that you must still adhere to the same timeframe as the original lock.

Q:        Is it realistic to expect to be able to use FirstDown Plus in a transaction involving new construction, given the limited funding and an uncertain completion date by the builder?

A:        Yes. In transactions involving new construction, Housing New Mexico will allow a reservation-to-purchase lock window of 120 days. Housing New Mexico may waive the extension fees on a case-by-case basis, depending on the circumstances.

          Here is a recap of the required purchase timeframes: