New Jersey (NJ) First-Time Home Buyer Guide

Are you a New Jersey first-time home buyer? Before buying a house, consider our guide to homeownership in the Garden State. We’ll go over qualifications, first-time home buyer programs in New Jersey, down payment assistance programs and more.

Overview Of New Jersey (NJ) Homeownership

The sought-after New Jersey market has experienced an 8.3% year-over-year increase in sales, labeling it a seller's market. This means that the market may lean more toward sellers than buyers. Cities and areas around Trenton, Atlantic City, Vineland and Ocean City will anticipate growth from 0.7% to 9.2% by the middle of 2024.

You may have noted New Jersey's high real estate costs, and costs can vary from city to city. However, as a first-time home buyer in New Jersey, you may consider many reasons for moving there, including its small-town feel, driving distance to New York, as well as the beach and mountains, forests, parks and arboretums. The state also boasts high-quality education and an excellent health care system.

Check out some specific statistics about New Jersey home buyers below.

Check out New Jersey homes for sale.

​

Who Qualifies As A First-Time New Jersey Home Buyer?

Who qualifies as a first-time home buyer? You may be surprised, because a first-time home buyer isn't necessarily someone who plans to purchase a home for the very first time. You can be considered a first-time home buyer if you haven't owned a principal residence within a specific timeframe.

Let's get more specific, looking at the five criteria to identify first-time home buyers:

1. You haven't owned a home or served as a mortgage co-signer within the last 3 years.
2. You are a single parent who owned a home prior to when you and your former spouse were married.
3. You are a displaced homemaker who previously owned a home with a spouse.
4. You owned a home not permanently fixed to a foundation, such as a mobile home.
5. You owned a home that didn't meet state or local building codes and fixing it would cost more than constructing a home that meets building codes.

Consider the following eligibility requirements as a New Jersey home buyer, including:

• Credit score: Depending on the type of home you plan to buy, you must meet specific credit score requirements. For example, if you want to qualify for a conventional loan (a home loan not backed or guaranteed by a government entity), lenders look for at least a 620 credit score.
• Income: Each first-time home buyer must meet certain income requirements. They vary by lender and by program, so learn the income requirements prior to hitching your wagon to a particular program.
• Primary residence: Most programs require home buyers to purchase a primary residence. For example, you may not be able to buy an apartment building with a New Jersey first-time home buyer program.

Learn more about the best places to buy a house in New Jersey.

First-Time Home Buyer Loan Programs In NJ

Now, let's look at the following home loan programs available to New Jersey home buyers.

New Jersey Housing And Mortgage Finance Agency

The New Jersey Housing and Mortgage Finance Agency (NJHMFA) is an organization that invests in, facilitates and finances access to affordable homes for low- and moderate-income families, older adults and those who have special housing needs. Loan programs available through NJHMFA include:

• First-Time Home Buyer Mortgage Program: The First-Time Home Buyer Mortgage Program, also referred to as the NJHMFA first mortgage loan, provides home buyers with a competitive 30-year, fixed-rate government-insured loan through a NJHMFA lender. You can get a conventional, FHA, VA or USDA loan. A government organization does not back a conventional loan, while the federal government guarantees FHA, VA and USDA loans.
• Homeward Bound Mortgage Program: The Homeward Bound Mortgage Program provides a 30-year fixed-rate government-insured loan for first-time home buyers in New Jersey. You must meet credit and debt-to-income requirements set by your lender. If you're a veteran, you do not have to be a first-time home buyer, but you cannot own another primary residence.
• HFA Advantage Mortgage Program: The HFA Advantage Mortgage Program allows you to borrow with a 30-year fixed-rate conventional mortgage. You can take advantage of low down payment requirements and affordable mortgage insurance. You must plan to purchase a single-family home, condominium, townhome, PUD, manufactured or mobile home in New Jersey and have a minimum FICO^® score of 620. Your income cannot go above the maximum allowable income.

NJHMFA Police And Firemen's Retirement System Mortgage

The NJHMFA Police and Firemen's Retirement System Mortgage Program (PFRS) is for police officers or firefighters who are also New Jersey residents – there is no first-time home buyer requirement but 25% of resources are reserved for first-time home buyers. Individuals can receive a 30-year fixed-rate loan, but you must occupy it as your primary residence within 120 days of closing with a maximum loan-to-value ratio of 85% (a percentage that measures the loan you need to borrow against its appraised value).

The program has a $1,500 lending fee, a $325 administration fee and closing costs.

New Jersey Down Payment Assistance

Down payment assistance (DPA) and closing cost assistance means. Down payment and closing cost assistance programs provide support for the down payment or closing costs when you purchase a home. NJHMFA down payment assistance programs require you to pair DPA with the NJHMFA first mortgage loan.

The DPA program gives you up to $15,000 for down payment or closing costs. It's a forgivable loan if you live in the property for at least 5 years, and you don't refinance. "Forgivable" means you can stop making payments on a loan.

More First-Time Home Buyer Resources To Know

Beyond first-time home buyer New Jersey programs, you can look into additional first-time home buyer programs, loans and grants for home buyers, such as the following:

• New Jersey State Division of Housing and Community Resources (DCHR)
• New Jersey Housing Resource Center (NJHRC)
• New Jersey Habitat For Humanity
• U.S. Department of Agriculture Rural Housing
• New Jersey homeownership education

You can also consider government loans such as Federal Housing Administration (FHA), Department of Veterans Affairs (VA) and U.S. Department of Agriculture (USDA) loans. You can also look for more location-specific programs through the Department of Housing and Urban Development (HUD).

• FHA loans: The Department of Housing and Urban Development backs FHA loans, which means the government insures the loan to protect your lender if you quit making payments on your mortgage. You can typically borrow an FHA loan with a credit score minimum of 500 and a lower credit score with a low down payment – as low as 3.5% of the home purchase price.
• VA loans: Another government-backed loan, VA loans are backed by the U.S. Department of Veterans Affairs. These no-down-payment loans require you to be a service member, veteran or qualifying surviving spouse with a Certificate of Eligibility (COE). Most lenders look for a score of 620 but note that they will consider scores as low as 580.
• USDA loans: The U.S. Department of Agriculture backs USDA loans. You typically need a credit score of at least 640 for this loan, but lenders consider other factors when deciding whether to lend to you. You must also meet certain income criteria and buy a home in a designated rural area.

The Bottom Line

New Jersey has some of the highest home prices in the country, but that doesn't have to throw a wrench in homeownership.

You may qualify for a first-time home buyer loan in New Jersey, so find a NJHMFA participating lender and ask questions. Research the various first-time home buyer programs before you land on one.

Ready to join the ranks of millions of homeowners across America? Start an application today and take one step closer to homeownership.