So you're ready to buy a home in New Jersey. Congratulations. Buying a house in the Garden State need not turn into a daunting task. There is help. In this guide, you'll find a rundown of the lending process, what you'll need to show the bank or mortgage company and what you can expect in terms of closing costs in New Jersey. You'll also find state resources on home lending and financial assistance for those who qualify, such as first-time homebuyers, and information on refinancing options to lower your payments and interest rate if you already have a mortgage. This step-by-step guide removes some of the hassle of mortgage shopping by giving you the tools you need to choose wisely.


Check Mortgage Rates in New Jersey

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Beyond the credit worthiness of the applicant, mortgage rates in New Jersey can vary on several factors, including housing demand and the strength of the state economy. A rate quote is free for the asking. Many lenders post their rates online, or you can call them directly. The actual rate you receive will depend on your credit history, net worth and ability to repay the loan.

Anyone can check their credit history once a year for free from any of the three major credit reporting companies: Experian, TransUnion and Equifax. It's best to get a handle on credit scores and clear up any errors before applying for a mortgage, since a good credit rating is key to getting the best possible interest rate.

Learn more about factors that drive mortgage rates.


First-Timer? Here's Homebuying Help for New Jersey Residents

The state-run New Jersey Housing and Mortgage Finance Agency offers several lending programs to help first-time homebuyers. Below-market fixed interest rates are available to qualified borrowers, with down payments as low as 3.5 percent of the property's appraised value.

Special financing programs are also available for buying a house in Urban Target Areas, where the state is trying to improve neighborhoods through home ownership. Only 30-year fixed mortgages are available through this state program.

A Smart Start loan from the agency offers buyers in Smart Growth Areas zero-interest down payment and/or closing cost assistance for up to 4 percent of the first mortgage amount, with loan forgiveness for buyers who remain in their home for five years. The agency's participating lender list with contact information is available here.

New Jersey offers this mortgage application checklist to review before shopping for a loan. Highlights include proof of income and savings, an accounting of all debts and recurring bills, as well as your credit and employment history.

The agency's fact sheet for first-time buyers, along with prevailing mortgage rates is available online.

First-time homebuyers will also find this guide helpful for an in-depth explanation of the mortgage lending process in New Jersey.

Financial Assistance in New Jersey for First-Time Buyers

The New Jersey Housing and Mortgage Finance Agency's core loan product is the Homeward Bound Homebuyer Mortgage Program, which is a government-insured 30-year mortgage at a fixed interest rate with no points. Search below for various programs offered to first-time buyers in the Garden State.

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Understanding Home Affordability in New Jersey

New Jersey's economy and employment conditions affect people's ability to buy housing in the state, which influences home prices and interest rates. The unemployment rate can affect mortgage financing statewide or at the local level. When the economy is weak, rates in New Jersey generally move lower, favoring homebuyers. However, buyers may be required to come up with a greater down payment so their equity stake in the property is higher. Financing companies do this to create a greater incentive for the buyer to maintain timely mortgage payments.

First-time buyers working with the state's Housing and Mortgage Finance Agency can typically buy a house with a debt-to-income ratio as high as 33 percent. This includes the mortgage, taxes and insurance, with a total monthly debt load of up to 38 percent of the buyer's income.

New Jersey also offers programs outlined in this guide to help first-timers come up with an adequate down payment, often the single greatest obstacle to qualifying for a mortgage.

How N.J. Mortgage Rates and Home Prices Affect Monthly Payments

Metro Area Estimated Monthly Mortgage Payment* Q3 2019 (Change from Previous Year) 2018 Median Home Price 2017 2016
Allentown-Bethlehem-Easton, PA-NJ $795 $216,700 (+3.9%) $199,300 $190,300 $186,800
Atlantic City-Hammonton $782 $212,900 (+9.2%) $206,000 $187,100 $187,500
New York-Newark-Jersey City, NY-NJ-PA $1,616 $440,200 (+2.8%) $410,000 $404,300 $388,500
Philadelphia-Camden-Wilmington, PA-NJ-DE $941 $256,200 (+6.5%) $229,000 $230,000 $225,400
Trenton-Ewing $1,055 $287,300 (+5.7%) $245,500 $251,800 $253,100

Source: National Association of Realtors Q3 2019 Metropolitan Median Area Prices and Affordability report.
*Estimated Monthly Mortgage Payment is based on median home prices for the metro area in Q3 2019, a 20 percent down payment and a 30-year fixed mortgage at 3.68 percent. Payment includes principal and interest but excludes insurance and property taxes.


Determine How Much You Can Borrow in New Jersey

First-time homebuyers in the Garden State who borrow from the Federal Housing Administration (FHA) can borrow up to specified limits, which vary by county and housing type. The current loan ceiling for every New Jersey county is available here. FHA loans are intended for low to moderate income borrowers who can't come up with a large down payment.

Individual banks and mortgage companies will often prequalify borrowers for a home loan on a case-by-case basis with a predetermined ceiling on the amount. Some house shoppers may prefer to prequalify for a mortgage in New Jersey before looking at homes or working with a realtor. Income and credit scores are key in determining how much house the buyer can afford. With some New Jersey lending programs, it may be possible to qualify for a mortgage equal to a third of gross monthly income, although 25 percent is the norm.

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Buying a Home in New Jersey: Hear from the Experts


Tg Glazer was president of the New Jersey Realtors in 2016.


Tammori Petty is director of communications for the New Jersey Housing and Mortgage Financing Agency.

What do first-time homebuyers often overlook or forget when they start the mortgage lending process?


Taking a good look at your finances is the first step to a successful home purchase. A good thing to remember for potential buyers is to not open any lines of credit or make any major purchases on credit cards once the mortgage process has begun, as it could affect obtaining the loan.

One huge obstacle for many potential first-time homebuyers is student loan debt. According to NAR, the most common student loan debt amount is $20,000 to $30,000, and 71 percent of those non-homeowners believed their student loan debt is slowing their ability to purchase a home.


Studies have shown that first-time homebuyers tend to under-budget when preparing to purchase their first home and do not fully understand the total cost of home ownership. First-time homebuyers should take note that there are monthly expenses beyond what the lender can see in a mortgage application, and they should account for every penny when creating a monthly budget. This includes current expenses and projected homeownership costs.

Another obstacle for first-time homebuyers is saving for a down payment and closing costs. Most mortgage programs require a minimum down payment to qualify. Through one of our approved lenders, our agency provides qualifying first-time homebuyers with a down payment and closing cost assistance program called Smart Start.

A prospective homebuyer should contact a HUD certified housing counselor and sign up for a homebuyer education class. The course is comprehensive and will guide those seeking to buy their first home through the purchase process, credit maintenance, inspection and budgeting. They can also seek one-on-one counseling for a more personal assessment and pre-qualification.

We also encourage people to take our Catch the Dream course in homebuyer education. You can enroll for a classroom or take it online. There's a private session with a homeownership counselor to outline your financial goals and go through your credit report line by line. We also do referrals to mortgage lenders, realtors, home inspectors and property insurers.

Any advice for people with credit scores on the fence, perhaps not quite good enough to secure a mortgage? What can they do to improve their credit-worthiness to qualify for financing?


If a buyer thinks their credit score isn't quite up to snuff when it comes to mortgages, a good first step would be to consult with a financial advisor or banking professional, who can give specific advice to every unique situation.


There are a few simple credit truths: pay on time, do not max out your credit cards, and do not open and close accounts frequently. First time homebuyers should remember that their credit report tells a story about them and provides the history of how debt is repaid. A mortgage will be one of their largest debts to repay in their lifetime, and a lender uses that credit report to determine if the mortgage debt will be repaid.

Is there adequate inventory in New Jersey right now for first-time homebuyers? Are there enough houses within their price range?


Throughout the state, we are seeing generally lower inventory than in previous years. We are seeing multiple strong offers on the same properties, pushing prices closer to pre-market collapse levels.


A first- time homebuyer's price range varies by salary, assets, and expenses. It also depends on where in New Jersey you want to live.


Don't Forget Those New Jersey Closing Costs

New Jersey is one of the three most expensive states in the country for closing costs, according to a 2015 survey. Be aware of these fees to avoid an unpleasant surprise that may cost several thousand dollars, depending on the financing package, the value of the property and individual lender's policies. Contributing factors to these higher costs compared to the rest of the country include the strength of the New Jersey economy, housing demand and the many bedroom communities for people commuting into New York City. An attorney is not required to close on a house in New Jersey, so this saves some money at closing.

More information on how lenders set closing costs and what you can expect on closing day can be found here.

Average Closing Costs in the Garden State

Average Origination
Average Third-Party
Average Total Closing

Source: Bankrate's 2015 survey of closing costs.

Refinancing a Mortgage in New Jersey

In the first quarter of 2016, New Jersey ranked in the Top 10 states for mortgages with refinance incentives eligible under the FHFA's Home Affordable Refinance Program. This means New Jersey is one of the best states for favorable refinancing opportunities. More than 1,600 mortgages were refinanced in the Garden State during the first three months of the year.

Some lenders in New Jersey offer fixed-price refinancing options - promotions designed to lure business. With a good repayment history, many New Jersey homeowners may be eligible for these special deals as well as a reduced interest rate and lower monthly payments.

More information on mortgage refinancing is available here.

Other New Jersey Mortgage Resources

The New Jersey Housing and Mortgage Finance Agency

provides a variety of programs to help homebuyers purchase a house.

First-Time Homebuyers

Financing options and assistance available through The New Jersey Housing and Mortgage Finance Agency.

Homebuyer FAQs

specific to New Jersey.

Mortgage Calculator

Enter financial information for an estimate of mortgage payments on a New Jersey house.

New Jersey Mortgage Rates

Prevailing interest rates available from lenders in the Garden State.

Searchable database of mortgage company reviews

Maintained by the New Jersey Better Business Bureau.

The New Jersey Judiciary Foreclosure Mediation Program

Provides homeowners with access to court-trained mediators to resolve foreclosure actions by negotiating payment arrangements between distressed borrowers and lenders.