Your Guide to Closing Costs in New Mexico

With plenty of sunshine and unparalleled landscapes, it is easy to see why homebuyers set their sights on New Mexico. From the unrivaled state parks to the welcoming people, New Mexico is a great place to call home. If you are planning on buying property in the Land of Enchantment, make sure you are saving up not just for a down payment, but for closing costs too.

Closing costs are an umbrella term, encompassing all the administrative and legal services you’ll need to pay before you receive the keys to your new home. Think of the fees you are billed throughout the homebuying journey, from applying for a mortgage to getting the property inspected and appraised. Various taxes and insurance premiums can be included in the closing costs tab. Typically, these fees are grouped together and paid in a single lump sum. All in, closing costs typically amount to two to five percent of the home’s purchase price, paid alongside your down payment. That is one expensive day for your bank account!

If you are buying property in New Mexico, NewHomeSource has put together the following guide to help you determine how much you should be saving for closing costs, state-specific rules, and how you can potentially lower these costs.

How Much are Closing Costs in New Mexico?

Closing costs in New Mexico run, on average, $3,513 for a home loan of $316,010, according to the National Association of Realtors. That price tag with taxes makes up 1.1 percent of the home’s price tag.

New Mexico is in the middle of the pack. Bordering states including Texas, Colorado, Utah, and Arizona all have higher closing costs with Oklahoma coming in a little lower.

But homebuyers in the southwest state should expect to spend far more than these estimates. This data excluded two major closing cost expenses – loan origination fees and private mortgage insurance – or PMI, which homebuyers must purchase if their down payment is less than 20 percent. Both expenses can add thousands to closing costs. Homebuyers in New Mexico may also need to pay for extra home insurance premiums, depending on where they live and the kinds of possessions they’re keeping in the home.

Home values also have risen, driving up closing costs. As of January 2025, the median price single-family homes sold for was $340,000, according to the New Mexico Association of Realtors.

Keep in mind, though, that closing costs will fluctuate greatly depending on a handful of factors, such as the price and location of the home, your down payment, credit score, and type of mortgage.

What Is Typically Included in New Mexico’s Closing Costs?

Homebuyers may be wondering how their closing costs tab can run high. You can categorize your expenses into three columns: Property-related fees, like a title search, property survey and home inspection; mortgage-related fees, such as setting up your loan and securing private mortgage insurance; and annual fees, including your home insurance premiums and property taxes.

Here’s a closer look at the breakdown for homebuyers in New Mexico, including the state-specific details:

Mortgage-Related Fees

The following are the closing cost fees you’ll incur for securing a mortgage, including the protocol for hiring an attorney:

Loan Origination Fees

Getting a mortgage doesn’t come free. Unless you have the cold hard cash to buy your home outright, the first expense rolled into your closing costs will be loan origination fees.

They are what your lender charges to open a mortgage account. It includes everything from setting up your home loan application, conducting an underwrite and pre-approval, and processing your funding at closing. These fees make up one of the largest portions of your closing costs at roughly 0.5 to 1 percent of your loan.

Credit Report Fees

Whenever you apply for credit – whether it is a credit card, personal loan, or mortgage – your lender will need to do a thorough credit check to make sure you are a responsible borrower. A key component of the credit check is pulling your credit score to have an in-depth look at how you are managing your existing debts.

Your lender will bill you for the full cost of requesting your credit report. If there is more than one name on the loan application, double this expense.

Private Mortgage Insurance

If you aren’t providing a 20 percent down payment, your lender will expect you to buy private mortgage insurance. This allows borrowers to qualify for a conventional loan even if they put down only five to 19.99 percent. While you are paying for the insurance, the coverage is for your lender in case of default.

PMI typically ranges from 0.25 percent to 2.25 percent of your loan. Once you hit the 20 percent mark in home equity, you do not have to pay PMI.

Attorney Fees

In some states it is mandatory to hire a real estate attorney when you buy a home, but New Mexico is not on that list.

Your real estate agent or title company may still insist that you enlist the wisdom of an attorney to help you with the legal aspects of your home purchase, though. An attorney can help draft your purchase agreement, certify deeds, and review your home insurance and title insurance policies. They’re especially valuable in complicated home sales, such as if the property you are buying is in foreclosure or out of state.

Real estate attorneys will also do the heavy lifting and review your title abstract and verify that you have a clear title. They will also point out any red flags that you need to discuss with your seller before proceeding.

Legal fees will vary, depending on the complexity of the sale. Some attorneys bill by the hour while others may charge a retainer fee.

Escrow Fees

In New Mexico, real estate closings are handled by title companies and escrow agents who will guide you through each step of the process.

One of the key things your title company will do is set up an escrow account, which is a neutral third-party account to hold onto your funds, such as your earnest money deposit. Basically, your seller (and the various vendors you’ve hired to help with your home purchase) won’t receive any funds until both parties have met all their conditions on the home sale, and the ink is dry on the property transfer. Instead, your title company will hold all cash in an escrow account.

On closing day, it is your title company that will meet with you and your seller to sign off on the final bits of paperwork and hand over the keys.

In New Mexico, this is typically an expense that is split down the middle between buyer and seller.

Property-Related Fees

Before your lender transfers the funds for your loan, your potential new home will need to clear a handful of pivotal checkpoints. Common property-related fees include:

Title Search and Title Insurance

During the closing process, your title company will order a title search. A title examination involves scanning historical records like deeds, court records, and property and name indexes to confirm the seller’s right to transfer ownership to you. The goal is to make sure there are no outstanding ownership disputes, unpaid taxes, judgments, or lawsuits in process, so you can own the land free and clear once it is transferred.

You will also need to cover your bases with title insurance policies for both you and your lender. Title insurance protects both parties in case something is overlooked during the title search and there are “title defects” or claims to your property.

In New Mexico, it is customary for the seller to pick up the tab for the title insurance. While most insurance policies are paid annually, title insurance is paid just once at closing, and it cannot be transferred over to the next buyer.

Property Appraisal and Home Inspection

There are two main checkpoints your lender will require your property to clear before they process your loan: the appraisal and the home inspection. In both instances, your lender needs to know that they’re lending you a large sum of cash for a solid, worthy investment.

To start, your lender will send a third-party appraiser to scope out your potential buy and make sure it is priced at the right value. If you default on your mortgage and your lender must foreclose on your home, they need to know they can sell the property and recoup their costs.

The appraiser will scan the home’s size, features, condition, and how it stacks up to homes priced similarly in the community, to determine its fair market value.

Because your lender gets to choose the appraiser, consult with them on price points.

Once you are in the clear with this step, you’ll need to recruit an inspector who will focus on the nuts and bolts of your home. They will scan everything from the foundation to the roof to the appliances, HVAC system and plumbing and share any concerns.

Pay close attention to what your inspector says. They could flag key issues that already exist or may surface in the coming years. With this intel, you could ask your seller to knock down the price point or make repairs before finalizing the deal.

Whether it is you, your lender, or your lawyer who insists on either of these steps, you are responsible for the bill.

Real Estate Transfer Tax

Here’s a silver lining for homebuyers in New Mexico: you are off the hook for real estate transfer taxes. That is one less closing cost expense for you to worry about!

New Mexico is one of about a dozen states that do not have real estate transfer taxes. They’re typically charged by local and state governments when the seller transfers the property to the buyer. However, you may still incur a small fee from your county for record-keeping and documenting the transfer of property.

Annual Fees

From managing your mortgage to staying on top of utility bills, homeownership includes recurring expenses you’ll need to consider. Your closing costs will incorporate a handful of fees that you’ll need to start paying annually:

Property Taxes

In New Mexico, homeowners pay about 0.67 percent of their home’s assessed market value in property taxes, according to the Tax Foundation. Because property taxes are collected on a county level, the precise percentage will vary. You can check on your county’s tax rate on the state’s Taxation and Revenue website.

Property taxes are a prepaid expense, meaning they must be paid at closing and cannot be rolled into your home financing. As part of your closing costs, you’ll need to pay for the first six to 12 months.

Property taxes are paid for semi-annually, with billing cycles in November and April.

Homeowner’s Insurance

From clearing an appraisal, title examination and credit check, your lender has a lengthy list of requirements you’ll need to fulfill before they transfer funds. Another purchase you’ll need to make is for homeowner’s insurance – you must have your insurance policy in effect and paid for the upcoming year at closing.

It is an essential buy for your peace of mind, too. Homeowner’s insurance covers any physical damage to your home caused by fire, wind, vandalism, or theft.

Do your homework on extra insurance policies you’ll need to tack on, especially if you are in a county that is at risk of extreme weather events.

Homeowner’s Association

About 14 percent of homeowners in New Mexico are part of a homeowner’s association (HOA). Based on these stats, you might be on the hook for this expense.

HOA fees typically cover the cost of community amenities, such as fitness centers, pools, and community parks. They also may cover expenses to keep your neighborhood running, from trash removal to security.

The more elaborate your HOA is, the more you should expect to pay. Be sure to ask about HOA fees upfront.

How Can I Lower My Closing Costs in New Mexico?

If the sticker shock is setting in, do not panic. There are a handful of ways homebuyers can lower their overall closing costs. Here’s a look at key strategies that could save you thousands:

Closing Cost Assistance

Take advantage of New Mexico’s homeownership assistance programs as it could put a significant dent in your closing costs.

First, check if you qualify for programs organized by the statewide Mortgage Finance Authority (MFA). It provides various assistance opportunities based on eligibility.

From Gallup and Albuquerque to Santa Fe and Los Alamos County, there are regional programs with closing costs funding up for grabs, too.

Get Your Finances in Shape

Your mortgage is a debt you’ll be repaying for decades, so the interest rate you secure is pivotal. Improving your credit score so you can show lenders you are a responsible borrower could help you snag a lower interest rate, saving you thousands over the lifetime of your loan.

And the closer you get to the 20 percent down payment threshold, the less you’ll have to cough up in PMI.

Comparison Shop

Take your time to comparison shop and obtain quotes from different providers, whether you are shopping for the best interest rate or for a qualified title company or real estate attorney.

Check out referrals from your lender, real estate agent, or title company, too. They could have go-to professionals on hand that they’ve approved with discounts for referrals.

But do not let price drive your final decision-making. Ultimately, you need to choose service providers with glowing reviews and the right price point.

Negotiate Lender Fees

If you have a longstanding, established relationship with your lender, you may have some wiggle room with your loan setup fees.

You could ask your lender to omit certain expenses from your bill, such as rate lock fees, loan processing fees or broker rebates. If that doesn’t work, you could also ask to stagger these expenses, so they’re paid in stages instead of at closing.

Seller Concessions

There may be more room for negotiation on who pays for what when you are dealing with your seller, especially if they’re trying to close the deal and you are in a buyer’s market.

Buyers can ask sellers to pay for some – or all – of their closing costs. You may submit a full price offer with a caveat that your seller covers all your closing costs, for example. Or you could ask your builder to pay your closing costs so you can, in turn, buy upgrades on a brand-new model home.

Essentially, there are a handful of different scenarios that you could examine to reassign some of the closing costs to your seller.

No-Closing-Cost Mortgages

With a “no-closing-cost” mortgage, your lender agrees to pay for part or all closing costs, but you must pay a higher interest rate.

Be careful with this option: It could cost you more money overall because of the bump in your interest rate.

Add Closing Costs to Your Home Financing

Aside from the prepaid expenses that must be paid at closing, you could opt to roll your closing costs into your home loan. This could add thousands to your mortgage. You won’t have to pay for closing costs on closing day, but your monthly mortgage payments will be a bit higher.