Buying a home in New Jersey is very much like buying a home in any other state. You’ve still got to go about the process in basically the same way—finding a lender, looking for a home, getting an inspection, and closing on the sale.

What’s the biggest difference as a first time homebuyer in New Jersey vs. any other state? Definitely the state lending options.

First-Time Homebuyer in New Jersey

Welcome, first-time homebuyer! Here are a few things you’ll want look into before you go out and buy a home.

Can I afford a home in New Jersey?

There are likely to be many different reasons why you are choosing to buy a house. Before you dive in and look at potential houses (the fun part), make sure you can afford a house payment. There are several mortgage calculators out there that will help you determine if buying a home is the right thing for your monthly budget.

The median home sale price in New Jersey is $286,500, according to Zillow. That means that you can expect most homes to be in that ballpark range. If you can’t afford that much, know that your house search might be limited to smaller properties or homes that need more work.

Mortgage Options in New Jersey

Once you’ve decided that your budget allows for a house payment, you’ll need a plan for lending. Shop around for the right lender and mortgage rates. Remember, mortgage rates vary from lender to lender, so get several options before you stick with one lender.

If you’re a bit lost on your mortgage options, we’ve organized a list of some of the lending options available to first-time homebuyers.

National Mortgage Options

There are a few mortgage options that are available to you on a national level.

Conventional Loans

Conventional loans are best for people who don’t have a lot of money to put down on a piece of property, but don’t want to pay a lot in Private Mortgage Insurance (PMI). The lowest down payment you can put down on a conventional loan is 3% if the property meets the standards set forth by Fannie Mae and Freddie Mac.

Conventional loans typically have a minimum allowable credit score of 620, but it often varies from lender to lender.

FHA Loans

FHA (Federal Housing Administration) loans offer relaxed qualification requirements, particularly when it comes to down payment and credit score. You can qualify for an FHA home loan with a credit score as low as 500, although you’ll have to put 10% down with that score. If your credit score is 580 or higher, however, you can get away with a down payment as low as 3.5%.

USDA Loans

USDA home loans motivate rural and suburban homeownership by offering zero-down-payment home loans to lower-income buyers. For a faster qualification period, however, it’s recommended that you have a credit score of 640 or higher. These mortgages are only valid in certain areas, but you don’t have to be a farmer to qualify.

VA Loans

VA loans come through the Department of Veterans Affairs and offer benefits such as no down payment and low credit score options for active and retired military members and their spouses. While there is a funding fee, there is no mortgage insurance which is a major benefit for homebuyers.

New Jersey Housing and Mortgage Finance Agency (NJHMFA)

The NJHMFA offers lending options only to New Jersey first time homebuyers. While some of the programs have greater benefits than the national mortgage options, others are not as great. Talk with your lender about which program is right for you.

NJHMFA Details:

  • Must have a credit score of 620 or higher
  • Lending options for first-time homebuyers, as well as options for those looking to downsize or upsize
  • Restrictions on location, income, and credit scores may apply—check your program for more info
  • Home must be your primary residence (may be 2-to-4-units as long as it is your primary residence)
  • Loans are government insured

NJHMFA Downpayment Assistance Program

Those using an NJHMFA loan who may need a bit of help with their down payment can receive a no-interest loan of up to $10,000 to use toward closing on your first home. This loan is forgivable after 5 years, although purchase and income limits do apply. You must have a credit score of 620 or higher for this loan.

Police and Firemen’s Retirement System Mortgage Program

For loans with 30-year terms, this loan option is for active members of the New Jersey Police and Firemen’s Retirement System with at least one year of service under their belt. There are purchase price limits for this mortgage program, however.

How do New Jersey loan programs work?

All the loan programs are unique in their own way. However applying for a mortgage through one of these programs remains the same, for help applying for a mortgage, click here.

You need to make sure you understand the requirements for each program clearly before you decide to apply for a loan. Use your credit score as a basis for choosing a home loan program.

If your credit score is 620 or above, many of these New Jersey loan options are available to you. Or you could investigate one of the other options such as the FHA, Section 502 or USDA loans as alternatives.

Participating in guided loan programs gives you complete security and support. There are so many resources for you to turn to for advice or reassurance during your journey. NJHMFA also supplies you with lists of accredited lenders who operate with their schemes. So, you never find yourself lost or confused with a lender who doesn’t support these statewide or regional loans.

Can I save money while buying my first home?

Yes, with a mortgage credit certificate. Those eligible for the mortgage credit certificate program receive a tax credit. This program is available to first-time home buyers who fall within a certain income bracket and have their home listed as a principal address.

The MCC program works with FHA loans: request your loan officer to screen your eligibility and assist you in filling out the application. If you’re approved, your MCC claim would go through with your federal tax claim.

Living in New Jersey

Now you’re equipped with information to start your home-buying journey in the Garden State. Be prepared, as they say buying a home can be one of the most stressful life events for any person. Your best bet to get the loans available is to shop in suburbs that are well-suited to you, your family and your requirements.

Check out schools in the area. Test your commute to and from work. Whether it is Beckett or Springdale, take time to fall in love with the community. Don’t let price rule when it comes to choosing your first home.

A great resource for getting to know the neighborhood is getting a local real estate agent. It’s their job to know the area inside out, meaning they’ll give you a guided tour of the area and will be able to tell you which areas are best suited for you and your family.