Primero Loan Fund

Housing NM/MFA Primero Loan Program is a flexible, low cost loan program created in 1993 with the overall purpose to create a funding source that meets the financial needs of affordable housing initiatives that cannot be accommodated by existing sources of financing. It will develop sources and mechanisms that address multiple barriers to the creation and financing of affordable housing, including but not limited to secondary market limitations with respect to credit and collateral, high subsidy needs associated with housing for very low, low, and moderate income, workforce housing, and special needs tenants, inability to fund infrastructure and other development related prerequisites through conventional housing programs, and inefficient or otherwise inadequate delivery systems for underserved markets.

Eligible Borrowers

Public and tribal agencies, for-profit and nonprofit sponsors are all eligible to apply for a Primero loan. Applicants must provide evidence of businesslike organizational operations, as well as experience in housing development or partnership with an experienced development team.

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.

The financing mechanisms to be employed may include loans at or below the market rate, loan guaranties, mortgage insurance, and other financing mechanisms at the discretion of Housing NM/MFA.

Other Requirements

All projects and programs must be designed in a way that is 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.

Commitments of some other source(s) of financing or, at a minimum, clear evidence of efforts to obtain other sources for each project, to maximize leverage of funds.

For rental housing:

40% of the units must be set aside for households earning no more than 60% of area median income, or
20% must be set aside for households earning no more than 50% of median income.

Application Process

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 Loan: - Funding for pre-development expenses such as environmental assessments, appraisals, title searches/insurance, architectural and engineering fees, market studies, etc., for which third party reports are generated.
Development Loan: - Funding for the acquisition, construction, conversion or rehabilitation of multifamily rental projects.

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.

Loan Terms

Development loans will be underwritten and structured according to sound lending practices. However, interest rates, which are typically below market rates, are at MFA's discretion. Primero loans are repaid through subsequent financing source, 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 $3 million; availability of funds varies. Loan terms may not exceed 2 years for multifamily construction loans, 5 years for pre-development loans and single-family development loans, and 30 years for single-family homeownership or special purpose loans.

Priority Initiatives

MFA has established four funding priority initiatives designed to increase affordable housing development in underserved markets. Priority initiatives currently 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.

How To Apply

Application forms can be obtained from MFA and submitted at any time. Complete applications will normally be processed and decisioned within 60 days from receipt of a complete application package. All loans are reviewed by staff, and loans above a prescribed amount will be approved by MFA's Board of Directors. Discussions with staff are recommended prior to preparation of applications to identify appropriate application materials and make initial eligibility determinations.