Buying a home in New Jersey may mean paying a little more than in other states, as the median sale price of $427,500 is a bit higher than the national median of $403,800.
However, rising home prices shouldn’t deter you from becoming a homeowner, as there are many types of loan programs that can help cover expenses like closing costs and down payments.
If you’re looking to get a mortgage to buy a home in the Garden State, here are some tips and tricks on the types of loans and homeownership assistance programs you might qualify for.
What are today’s mortgage rates in New Jersey?
For Monday, September 12, 2022, here are the current New Jersey mortgage rates. The average 30-year fixed mortgage rate is 5.880%. The average 30-year fixed mortgage refinance rate is 5.910%. Today, the average 15-year fixed mortgage rate is 5.160%.
For variable rate loans, the average variable rate mortgage rate (ARM) of 5/1 is 3.900%.
This information comes from Bankrate’s latest survey of the nation’s largest mortgage lenders.
Current Mortgage Rates in New Jersey
|Type of loan||Assess|
|Fixed 30 years||5.880%|
|Fixed 15 years||5.160%|
|30 year refi||5.910%|
How much mortgage do you need to buy a house in New Jersey?
The minimum down payment required will depend on the type of loan you are applying for. Conventional loans only require 3%, while jumbo loans from some lenders may require 20% or more. Different loan programs also have unique eligibility criteria, so depending on your situation, you may need to choose a program with a higher down payment requirement.
VA loans are a great example. VA loans require no down payment. However, to be eligible for this type of loan, you will need to have completed some sort of qualifying military service.
Average home prices vary depending on the neighborhood where you are looking to buy. To give you an idea of how much down payment you might need, we’ve compiled a list of some areas in and around New Jersey, along with the corresponding median selling prices.
|Subway station||Median house price||3.5%||ten%||20%|
|New York–Jersey City–White Plains, NY||$553,400||$19,369||$55,340||$110,680|
Types of Home Loans Available in New Jersey
You will find many lenders who offer home loans in the Garden State. This will include online-only lenders as well as traditional banks and mortgage brokers for different types of loans, including conventional, FHA, and VA loans.
The best type of loan for you may depend on what you qualify for. Mai Huynh, most recently head of underwriting at Better Mortgage, said that “for someone who might not qualify for a conventional loan due to a less than perfect credit history, an FHA [loan] may be a viable option. Choosing the right type of loan can also depend on your personal goals, whether it’s paying off the loan as quickly as possible, minimizing cash outlay for a down payment, or locking in a low monthly payment, says- she.
If you qualify, a conventional loan may offer some of the most competitive rates. It is possible to qualify with a minimum down payment of 3%, a credit score of 620 and a debt ratio below 45%. However, these are not necessarily strict requirements, as many lenders use an automated system to assess your entire application. Depending on the overall characteristics of your loan, you may be limited to a lower debt ratio.
Although the minimum down payment is only 3%, you will have to pay monthly private mortgage insurance if you put less than 20% down. This PMI can be removed once you have 20% equity in the home.
If you don’t qualify for a conventional loan, you can still get into your dream home with an FHA mortgage. FHA loans are insured by the Federal Housing Administration, and although you must bring a slightly higher down payment of 3.5%, these loans offer more flexibility when it comes to your credit score. Borrowers can qualify with a credit score of up to 580, but with a 10% down payment, that minimum credit score drops to 500.
FHA loans can be a bit more expensive than conventional loans because you’ll have to pay upfront mortgage insurance in addition to the ongoing monthly mortgage insurance premiums.
One of the main advantages of a VA loan is the fact that no down payment is required. VA loans also do not charge for mortgage insurance. However, to qualify for this type of loan, you will usually need to perform some sort of qualifying military service.
VA loans are insured by the Department of Veterans Affairs, but mortgage lenders may each have their own requirements for minimum credit scores and debt-to-income ratios. If you don’t qualify for a VA loan with one lender, it may be worth applying with another lender.
New Jersey Homeownership Programs
The New Jersey Housing and Mortgage Finance Agency (NJHMFA) offers several homeownership programs that provide financial assistance in the form of reduced down payment requirements and assistance with closing costs. . You’ll need to find a participating lender and meet program-specific requirements, but if you’re strapped for cash, this could be just what you need to take the leap into homeownership:
- NJHMFA First-Time Home Buyer Mortgage: New homeowners looking to purchase a primary residence can qualify for a 30-year FHA, VA, or USDA loan through a participating lender.
- NJHMFA Down Payment Assistance: If you’re a first-time homeowner, you may be eligible for up to $10,000 to help cover your down payment or closing costs. The funds are issued as a five-year interest-free loan with no monthly payment requirement. Income and purchase price limits apply and must be combined with an NJHMFA first mortgage.
- NJHMFA Police and Fire Retirement System Mortgage: Available to active members of the New Jersey Police and Fire Retirement System, eligible borrowers wishing to purchase a home with a purchase price below 548 $250 can qualify for a 30-year fixed rate loan. Borrowers do not need to be first-time homeowners to be approved for this program.
Even if you currently own a home, you may still qualify for some of New Jersey’s first-time homebuyer assistance programs.