CREATE ZERO INTEREST DOWN PAYMENT LOAN FUND

HB0176

HOUSE BILL 176

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Alan T. Martinez
and
Rebecca Dow
and
Jonathan A. Henry

AN ACT

RELATING TO HOUSING; CREATING THE ZERO INTEREST DOWN PAYMENT
LOAN FUND FOR FIRST-TIME HOME BUYERS; CHANGING CERTAIN
DISTRIBUTIONS MADE TO THE EARLY CHILDHOOD EDUCATION AND CARE
FUND, THE BEHAVIORAL HEALTH TRUST FUND AND THE MEDICAID TRUST
FUND TO BE MADE TO THE ZERO INTEREST DOWN PAYMENT LOAN FUND;
MAKING AN APPROPRIATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1.
Section 6-4-27 NMSA 1978 (being Laws 2020,
Chapter 3, Section 4, as amended) is amended to read:

"6-4-27. EXCESS EXTRACTION TAXES SUSPENSE FUND--TRANSFER
OF EXCESS OIL AND GAS EMERGENCY SCHOOL TAX REVENUE--TAX
STABILIZATION RESERVE--[
EARLY CHILDHOOD EDUCATION AND CARE
FUND--BEHAVIORAL HEALTH TRUST FUND
]
ZERO INTEREST DOWN PAYMENT
LOAN FUND
--SEVERANCE TAX PERMANENT FUND.--

A. The "excess extraction taxes suspense fund" is
created as a nonreverting fund in the state treasury. Money in
the fund shall only be used to make transfers by the department
of finance and administration as required by this section.

B. At the end of each fiscal year, the department
of finance and administration shall calculate and transfer the
balance of the fund attributable to that fiscal year as
follows:

(1) if in the current fiscal year the total
net receipts attributable to the tax imposed pursuant to
Section 7-31-4 NMSA 1978 and distributed pursuant to Section
7-1-6.20 NMSA 1978 exceed the annual average amount, the
department shall distribute the excess amount above the annual
average amount as follows:

(a) to the tax stabilization reserve,
the amount necessary to bring the balance of state reserves to
a level equal to twenty-five percent of the aggregate recurring
appropriations for that fiscal year from the general fund, as
determined by the department; provided that, if the balance in
the excess extraction taxes suspense fund is not sufficient to
meet that level, the entire balance shall be transferred to the
tax stabilization reserve; and

(b)
to the zero interest down payment
loan fund
, the balance of the excess amount above the annual
average amount, if any, after the transfer is made pursuant to
Subparagraph (a) of this paragraph [
shall be transferred as
follows: 1) for fiscal years 2026 through 2028, fifty percent
to the early childhood education and care fund and fifty
percent to the behavioral health trust fund; provided that if,
as of the end of one of those fiscal years, the balance of the
early childhood education and care fund is less than the
balance of that fund as of the end of fiscal year 2025, the
transfer to the behavioral health trust fund made pursuant to
this item shall be decreased by an amount equal to one-half of
the difference between the balance of the early childhood
education and care fund as of the end of fiscal year 2025 and
the balance of that fund as of the end of that fiscal year; and
2) for fiscal year 2029 and each fiscal year thereafter, one
hundred percent to the early childhood education and care
fund
]; and

(2) the remaining balance of the fund, if any,
shall be distributed to the severance tax permanent fund.

C. As used in this section:

(1) "annual average amount" means the total
net receipts attributable to the tax imposed pursuant to
Section 7-31-4 NMSA 1978 and distributed pursuant to Section
7-1-6.20 NMSA 1978 in the immediately preceding five fiscal
years, divided by five; and

(2) "state reserves" means the general fund
balances, as determined by the department of finance and
administration, including all authorized revenues and transfers
to the general fund and balances in the appropriation
contingency fund, the general fund operating reserve, the
state-support reserve fund and the tax stabilization reserve."

SECTION 2.
Section 9-29A-3 NMSA 1978 (being Laws 2020,
Chapter 3, Section 3, as amended) is amended to read:

"9-29A-3. DISTRIBUTION--[
EARLY CHILDHOOD EDUCATION AND
CARE FUND--MEDICAID TRUST FUND
]
ZERO INTEREST DOWN PAYMENT LOAN
FUND
--SEVERANCE TAX PERMANENT FUND--PAYMENTS PURSUANT TO
FEDERAL MINERAL LEASING ACT.--

A. If, by June 30 of each fiscal year, the net
receipts for that fiscal year of the money received by the
state pursuant to the federal Mineral Leasing Act exceed the
annual average amount, the excess amount above the annual
average amount shall be distributed [
as follows and attributed
to that fiscal year:

(1) for fiscal years 2026 through 2028:

(a) fifty percent to the early childhood
education and care fund and fifty percent to the medicaid trust
fund; provided that

(b) if, as of the end of one of those
fiscal years, the balance of the early childhood education and
care fund is less than the balance of that fund as of the end
of fiscal year 2025, the distribution to the medicaid trust
fund made pursuant to Subparagraph (a) of this paragraph shall
be decreased by an amount equal to one-half of the difference
between the balance of the early childhood education and care
fund as of the end of fiscal year 2025 and the balance of that
fund as of the end of that fiscal year; and

(2) for fiscal year 2029 and each fiscal year
thereafter, one hundred percent to the early childhood
education and care fund
]
to the zero interest down payment loan
fund
and attributed to that fiscal year
.

B. If, [
by June 30, 2025, and
] by June 30 of each
fiscal year, [
thereafter
] the remaining amount of the net
receipts for that fiscal year of the money received by the
state pursuant to the federal Mineral Leasing Act after the
distribution pursuant to Subsection A of this section exceeds
the threshold amount, the excess shall be distributed to the
severance tax permanent fund.

C. The department of finance and administration
shall make the calculations to determine if excess amounts
shall be distributed pursuant to this section. If there is an
excess amount, the distribution shall be made as soon as
practicable. If there is not an excess amount, no distribution
shall be made.

D. As used in this section:

(1) "annual average amount" means the total
net receipts attributable to money received by the state
pursuant to the federal Mineral Leasing Act in the immediately
preceding five fiscal years, divided by five; and

(2) "threshold amount" means the net receipts
of the money received by the state pursuant to the federal
Mineral Leasing Act distributed in fiscal year 2024 pursuant to
Subsection B of Section 22-8-34 NMSA 1978."

SECTION 3.
A new section of the Mortgage Finance
Authority Act is enacted to read:

"[
NEW MATERIAL
]
ZERO INTEREST DOWN PAYMENT LOAN FUND FOR
FIRST-TIME HOME BUYERS
--REQUIREMENTS.--

A. The "zero interest down payment loan fund" is
created as a nonreverting fund in the state treasury. The fund
consists of distributions, appropriations, gifts, grants,
donations and income from investment of the fund. The
authority shall administer the fund, and money in the fund is
appropriated to the department of finance and administration to
contract with the authority to provide loans as provided in
this section. Expenditures from the fund shall be by warrant
of the secretary of finance and administration pursuant to
vouchers signed by the secretary of finance and administration
or the secretary's authorized representative.

B. Subject to availability of money in the fund,
money in the fund shall be used to provide zero interest loans
to eligible home buyers for up to twenty percent of the
purchase price of residential housing in New Mexico that is the
first home of the eligible home buyer; provided that the loan
provided by the authority shall be a lien on the property
secured by a thirty-year mortgage. If the property is sold in
less than thirty years, the balance of the loan shall be
immediately repaid. The authority may foreclose on the loan if
the home buyer defaults on the loan.

C. Applications for a zero interest loan shall be
submitted to the authority on forms and in a manner prescribed
by the authority.

D. The authority may promulgate rules to carry out
the provisions of this section.

E. As used in this section, "eligible home buyer"
means a person whose household income is less than four hundred
percent of the federal poverty level.
"

SECTION 4.
EFFECTIVE DATE.--The effective date of the
provisions of this act is July 1, 2026.

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