USDA Single Family Housing Direct Home Loan (Section 502 Direct, New Mexico)

What is USDA Single Family Housing Direct Home Loan (Section 502 Direct, New Mexico)?

USDA Single Family Housing Direct Home Loan (Section 502 Direct, New Mexico) is a first mortgage for homebuyers in Albuquerque, New Mexico, administered by USDA Rural Development - New Mexico State Office.

• The USDA Section 502 Direct Loan Program helps low- and very-low-income New Mexicans buy, build, or repair homes in eligible rural areas with no down payment typically required. USDA provides a payment assistance subsidy that can reduce the effective interest rate to as low as 1% based on adjusted family income. Effective June 1, 2026, the base interest rate is 5.125%, with terms up to 33 years (38 years for very-low-income borrowers). The program is currently open and applications are accepted year-round through the NM State Office.
• No down payment typically required.
• Payment subsidy can reduce effective rate to as low as 1%.
• Up to 33-year (or 38-year) terms.
• Direct loan from USDA.
• Available year-round statewide in eligible rural areas.
• This is a federal program, so it is available beyond a single state or city.
• Funding comes from USDA Rural Development (Housing Act of 1949, 7 CFR Part 3550).

Do you have to pay it back?

USDA Single Family Housing Direct Home Loan (Section 502 Direct, New Mexico) is a first mortgage and is repaid under the terms set by USDA Rural Development - New Mexico State Office.

• Repayment is triggered by Payment subsidy (recapture) repaid in full or in part when title transfers or the borrower no longer occupies the home.
• The assistance is recorded in First position.
• Forgiveness and repayment terms are set by the program and can change — confirm them on the official program page before applying.

Who qualifies?

USDA Single Family Housing Direct Home Loan (Section 502 Direct, New Mexico) is open to buyers who will live in the home as their primary residence.

What are the income limits?

USDA Single Family Housing Direct Home Loan (Section 502 Direct, New Mexico) limits household income to 80% of the area median income, which varies by county and household size.

• Adjusted income at or below the applicable low-income (or very-low-income) limit for the area; limits vary by county and household size.
• Area median income figures are published by HUD and updated annually, so check the current table for the county before relying on a number.

What kind of home can it be used for?

USDA Single Family Housing Direct Home Loan (Section 502 Direct, New Mexico) caps the purchase price as follows: Property market value may not exceed the applicable RD area loan limit for the county.

• Eligible property types include Single Family.
• New construction is eligible.

Where does it apply?

USDA Single Family Housing Direct Home Loan (Section 502 Direct, New Mexico) is a federal program, so it is not limited to New Mexico.

• The program gives priority to designated target areas, so the address matters as well as the county.

How do you apply?

Applications for USDA Single Family Housing Direct Home Loan (Section 502 Direct, New Mexico) go through USDA Rural Development - New Mexico State Office, which publishes the current terms and the application steps on its own site.

1. 1

   Contact USDA Rural Development - New Mexico State Office to reserve funds

   Funds are reserved through Applications accepted year-round at the local RD office (program year Oct 1 - Sep 30); processed subject to funding availability, and are subject to availability.

2. 2

   Work with a lender who handles the program

   Hey Prescott is not a lender and does not accept applications; this page describes the program so a buyer can take it to a lender or housing counselor.