How to Buy a House in New Jersey [8-Step Guide for 2023]

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By Lindsay Stefan Updated November 1, 2023


8 Steps to Buying a House in New Jersey

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Now that the housing market is finally calming down after the pandemic[1], buyers are facing a new challenge: Soaring mortgage rates.[2]

In New Jersey, the average 30-year fixed mortgage rate is 6.95% — up from 2021's historic lows. This raises the average monthly mortgage payment to $2,620 (assuming a 20% down payment at the median home value).

But buying a home in New Jersey is still possible, even for first-time home buyers. Many markets are seeing frequent price drops and fewer offers, giving motivated buyers the upper hand in negotiating for the best price.

In this guide, you’ll learn how to buy a house in New Jersey with confidence no matter what the market brings. Learn why you can trust our advice.

Whether you're actively house hunting or just starting to browse homes on Zillow, it's never too early to find a great local realtor to guide you on your search. An experienced agent can help you navigate a tricky housing market, explore your financial options, and negotiate the best deal possible.

Best of all, hiring a real estate agent comes at no extra cost to you — since the seller typically pays both their listing agent and your buyer's agent.

Ready to find a great local realtor, but not sure where to start? The best (and easiest!) option is to try a free agent matching service like Clever Real Estate. Answer a few simple questions about your home buying goals, and Clever will match you with hand-picked agents from Keller Williams, RE/MAX, and other top brokerages in your area. Find a top local agent and make your home buying dreams a reality today!

Step 1: Save for a down payment

🔑 Key takeaway:

Your down payment can be less than 20% of the purchase price — $98,958 for the typical home in New Jersey — but you'll have to purchase mortgage insurance and pay more interest over the life of your loan.

Your down payment is the first part of your home's purchase price that you pay at closing. Your mortgage lender will pay the remaining balance.

Typically, mortgage lenders in New Jersey want you to contribute 20% of the purchase price as a down payment. That would be $98,958 for a $494,792 home — the typical home value in New Jersey.

However, you have options to lower your down payment amount.

Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).

But making a down payment of less than 20% comes with some risks.

First, because you're borrowing more money, you'll have a higher monthly payment and pay more in interest over the life of your loan.

Second, you may have to purchase mortgage insurance.

Conventional loans require private mortgage insurance (PMI) until your loan balance reaches 80% of the purchase price. FHA loans, on the other hand, require a mortgage insurance premium (MIP) for the life of your loans.

Mortgage insurance costs around 1% of your mortgage balance annually. However, rates vary based on your down payment and credit score. Typically, your mortgage insurance payment is added to your mortgage payment each month.

VA loans don't charge mortgage insurance. Instead, you'll pay a VA loan funding fee at closing, which can range from 1.4% to 3.6% of the purchase price.

» READ MORE: Everything you need to know about low-income home loans

New Jersey down payment assistance programs

The state of New Jersey offers a number of down payment assistance (DPA) programs for first-time and low-income homebuyers. These programs can provide financial aid in the form of a grant or second mortgage to help you pay for closing costs or a down payment.

Here are some options in New Jersey that you may be eligible for:

NJHMFA Down Payment Assistance Program

The New Jersey Housing and Mortgage Finance Agency (NJHMFA) offers a DPA program for first-time homebuyers and those who haven't owned a home in the past three years. Eligible participants can receive an interest-free second mortgage for up to $10,000 for a down payment or closing costs.

This program is limited to those who have an NJHMFA first mortgage and meet maximum household income limits for their county.

U.S. Department of Housing and Urban Development

Additional DPA programs and resources in New Hampshire are available on the state's HUD page.

Step 2: Find a great real estate agent in New Jersey

🔑 Key takeaway:

Interview multiple agents to find one who knows your target neighborhoods, has experience in your price range, and communicates well.

Your real estate agent will be your main ally during the home buying process. Besides finding and showing you properties, your agent will help you make offers, negotiate contracts, and navigate the closing process. Plus, they can recommend other service providers like title companies and inspectors to help you buy your home in New Jersey.

Don't rush into choosing an agent. Instead, take the time to research and interview multiple real estate agents who have experience in the neighborhoods you're interested in. You should pay attention to a realtor's:

  • Years of experience
  • Number of transactions in the last year (the more the better!)
  • Experience in your price range
  • Overall review score
  • Individual reviews and complaints
👋 Find the best realtors near you!

Finding a great real estate agent shouldn't be complicated. Let Clever Real Estate do the hard part and match you with experienced local realtors who are experts in your market.

Enter your zip code below to compare top agents from trusted brands like Keller Williams, Berkshire Hathaway, and Coldwell Banker, then choose the best fit for you. It's 100% free, and there's no obligation.

Step 3: Get preapproved for a mortgage

🔑 Key takeaway:

Once you're preapproved for a mortgage, it's imperative that your financial situation doesn't change. If your credit drops, it can derail the process and keep you from closing on your house.

Here are some easy ways to ensure your credit doesn't change after you receive your preapproval letter:

  • Avoid opening new credit accounts
  • Don't close any accounts that have been open for a long time
  • Make all of your credit card payments on time

» LEARN MORE: What factors do mortgage lenders consider?

A mortgage preapproval letter is an offer to lend you up to a certain amount of money to purchase a home. It shows sellers that you are a serious buyer who is financially qualified to make an offer on a home.

Most sellers in New Jersey will require preapproval before showing you their home.

You don't have to decide on one lender right now. In fact, you should compare interest rates and preapproval amounts from several lenders to make sure you're getting the absolute best terms when you buy your New Jersey home.

Step 4: Choose the right location

🔑 Key takeaway:

Search for neighborhoods where:

  • Home prices are within your price range
  • Home values are on the rise
  • The local amenities support your lifestyle

Currently, the typical home value in New Jersey is $494,792, but don't worry if that doesn't perfectly match your budget. Home prices vary dramatically from city to city and even from neighborhood to neighborhood!

Also, look at past home value trends. This will give you an idea of how much your home's value could go up over the next few years.

To give you an idea of how appreciation could impact what your house is worth in the future, consider these examples from three neighborhoods in Jersey City:

Home value appreciation in Jersey City

Neighborhood 2015 Current Appreciation
The Heights $354,342 $678,932 47.8%
Greenville $243,875 $499,338 51.2%
Journal Square $284,249 $493,309 42.4%
Show more

Step 5: Start house hunting in New Jersey

🔑 Key takeaway:

Listing prices have barely risen in the past year, so homes in New Jersey will probably be within your budget. However, inventory is dipping, so there may not be a lot to choose from. You may have to settle on a home that won’t check all your boxes. Be open to the listings your agent shows you, even if they’re not exactly what you initially wanted. You may just be surprised and find one that’s worth considering.

Searching for homes in New Jersey is the fun part of the home buying process! You'll get to look at a variety of homes and discover what you really want in a home.

Make a list of everything you want in a home and prioritize them. At the top of the list should be the items that are most important to you. This will help you separate your "must-haves" from your "nice-to-haves."

Your agent can help you understand if your wants are realistic for your budget and favorite neighborhoods or if you need to rethink what you're looking for.

Look at current housing inventory

The timing of your house hunt in New Jersey can have a big impact on your number of options. For example, in New Jersey, #VALUE! has historically seen the most homes for sale. Searching in this season could give you more options and a greater likelihood of finding your dream home.

On the other hand, #VALUE! gives you the fewest choices in New Jersey. Historically, there are #N/A fewer homes for sale than during New Jersey's peak season.

Housing inventory in New Jersey by season

Step 6: Make an offer

🔑 Key takeaway:

New Jersey’s market is very active — homes are selling fast and very few listings are left on the market at the end of each month. When you find a house you love, you will have to make an offer fast, possibly even on the same day as viewing. Besides that, given the fierce competition, you will also have to put in a very strong offer to get the seller’s interest. Get your agent’s help when you write your offer, as they can ensure that you give a figure that’s competitive but fair for you.

Once you find a New Jersey house you love, it's time to make an offer. Your real estate agent will help you write a compelling offer that gives you the best shot of convincing the homeowner to sell to you.

Currently, in New Jersey, homes stay on the market for 61 days before going under contract. However, every market goes through seasonal changes. During busier months, homes get snatched up more quickly than others.

Historically, New Jersey homes sell fastest in June, where the average property is only on the market for 50 days. If your home search falls around this time, you should be prepared to move quickly and potentially make offers on several homes before yours is accepted.

On the other hand, if you buy in December, you have a bit more time to search. Homes typically stay on the market 20 days longer than New Jersey's annual average.

Average time homes spend on market in New Jersey

» LEARN MORE: What should an offer include?

Step 7: Inspections and appraisals

Inspections and appraisals are an opportunity for you to better evaluate the home's condition and value before officially purchasing it. You may have an opportunity after this step to renegotiate the terms of your contract with the seller if something unexpected pops up.

🔑 Key takeaway:

  • Inspections: A licensed professional checks the house for any unseen, unexpected, or potential issues.
  • Appraisals: An appraiser hired by your lender examines the house to determine how much it's worth.

Home inspections in New Jersey

Having your New Jersey home inspected by a licensed inspector gives you peace of mind about the condition of the property before you commit thousands of dollars to purchase it.

Your inspector should check out the following parts of the property:

  • Roof
  • Foundation
  • Electrical system
  • HVAC system
  • Plumbing

If the home has a septic system, you should also pay for a septic inspection to make sure it doesn't have any problems that wouldn't be covered in a typical home inspection.

New Jersey-specific inspections

New Jersey’s disclosure laws require sellers to divulge any known issues to interested buyers before closing. However, buyers still need to take necessary precautions to ensure that there aren't any hidden problems with a property.

In addition to a general home inspection, buyers are recommended to complete more specialized tests, such as:

  • Radon testing: Radon is one of the leading causes of lung cancer, and it can enter a home without detection. If the seller hasn't performed a radon test in the past year, consider having a test done before closing. You can order a radon test kit by visiting New Jersey's Department of Environmental Protection page here.
  • Pest inspection: Some lenders require borrowers to have a termite and pest inspection completed, but buyers should consider getting one done regardless. Infestations can spread without warning and cause structural damage to a property, so early detection is vital.


Appraisals determine the value of the property. If you're using a mortgage to buy your new home, your lender will order an appraisal to make sure the home is worth the money that it's loaning you.

» LEARN: 3 options for buyers after a low appraisal

Step 8: Close on your new home!

🔑 Key takeaway:

Before you close on your new home, you and your agent will do a final walk-through of the property to ensure that it's still in the expected condition.

On closing day, you'll meet at the title company to complete the transfer of your New Jersey home. Plan to spend a few hours completing some legal paperwork and settling your closing costs.

It's recommended to carefully review your paperwork ahead of time, if possible. The documents need to be completed perfectly for a legal transfer, so it's important that you fully understand each page before signing.

Some important documents to keep an eye out for will include:

  • Your final loan application
  • The deed
  • The mortgage promissory note
  • The disclosure statements

Once the paperwork is finished, you’ll be asked to pay your closing costs. The title company will make this easy by collecting the total sum you owe and distributing the correct amounts to every recipient on your behalf.

As a buyer, you can think of your closing costs being separated into four categories:

  • Lender fees: Fees paid to your mortgage lender for originating and underwriting your loan. Sometimes, lender fees may cover additional costs associated with your loan, such as appraisal fees and survey fees.
  • Title and escrow charges: Fees that the title company charges for their services. These fees are for conducting the closing process, performing the title search, and providing title documentation.
  • Prepaid costs: Ongoing homeownership costs that are paid up front. Lenders sometimes require borrowers to pay certain expenses ahead of time, such as property taxes and homeowners insurance.
  • Other closing costs: Miscellaneous expenses that vary by homebuyer. Common expenses covered here can include natural disaster certification fees or real estate attorney fees.

Buyers in New Jersey typically pay 3–5% of the purchase price in closing costs. For a $494,800 home — the typical home value in New Jersey — that's between $14,844 and $24,740!

⚡Make your home-buying dreams a reality!

Ready to make your home-buying dreams a reality? The first step is to find a top local realtor who's an expert negotiator with proven experience in your market.

Enter your zip code below to compare the best agents from trusted brands like Keller Williams, Berkshire Hathaway, and Coldwell Banker, then choose the best fit for you. It's 100% free and there's no obligation.

Frequently asked questions

Do I need a real estate attorney in New Jersey?

In New Jersey it's required for a real estate attorney to be part of every home sale. While your agent can make recommendations, remember you get to make the final decision. Interview lawyers before hiring them to make sure they have the experience you need.

What are the steps to buy a house in New Jersey?

  1. Save for down payment
  2. Get pre-approved for a mortgage
  3. Choose your preferred New Jersey neighborhoods
  4. Partner with the right real estate agent in New Jersey
  5. Go house hunting
  6. Make a strong offer
  7. Inspections and appraisals
  8. Do a final walkthrough and close

Does New Jersey have a first time home buyer program?

Yes, the New Jersey Housing and Mortgage Finance Agency offers a First-Time Homebuyer Mortgage Program. Eligible buyers can receive a 30-year loan with a low fixed interest rate. Borrowers may also apply for the New Jersey down payment assistance program, which offers up to $10,000 as an interest-free, forgivable loan.

Purchase price limits and household income limits apply. The maximum amounts vary by county, but target areas tend to have higher limits.

» READ: What are the top first-time home buyer programs?

Why trust us?

Clever Real Estate is a free agent-matching service that has helped more than 82,000 people buy and sell homes. We partner with over 2,700 top-performing agents nationwide at national brokers including Keller Williams, RE/MAX, Century 21, and more. We also help buyers save money with cash back after closing — no strings attached.

We’ve earned buyers’ trust with a rating of 4.9 out of 5 stars on Trustpilot and over 1,800 customer reviews.

Our team of industry-leading researchers is committed to making homeownership more accessible by educating buyers through guides like this one. We've spent thousands of hours analyzing publicly available data, surveying consumers, and interviewing industry experts. Our research has been featured in The New York Times, Business Insider, Inman, Housing Wire, and many more.

Learn more about Clever.

Article Sources

[1] Federal Reserve – "Housing Market Tightness During COVID-19: Increased Demand or Reduced Supply?". Updated July 08, 2021. Accessed October 11, 2022.
[2] Consumer Protection Financial Bureau – "The Fed is raising interest rates. What does that mean for borrowers and savers?". Updated March 17, 2022. Accessed October 11, 2022.

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