A Guide to NJ Homebuyer Assistance Programs
By Lisa Fant
According to NJ Realtors® monthly housing data in August, there has been a season of change in the U.S. real estate market. Existing home sales have continued to soften, falling 5.9% month-to-month, and 20.9% year-over-year, according to the National Association of Realtors® (NAR). Many buyers tend to believe they need the standard 20% down payment to afford a home, which isn’t always the case; and according to Forbes, housing affordability is at a 33-year low.
But there is good news for aspiring homeowners. There are many homebuyer assistance programs to fit your needs and they could be a key piece to achieving homeownership.
While this guide serves as a comprehensive list of available programs in the state of New Jersey, it does not serve as specialized financial advice for individual circumstances.
According to the National Association of Realtors® 2022 Home Buyers and Sellers Report, 71% of first-time homebuyers put down less than 20% for their house purchase. The report also states many buyers express that saving for a down payment was the most grueling part of the homebuying process; however, financial assistance programs like down payment assistance, grants, and forgivable loans are available.
New Jersey Homeownership Programs
The New Jersey Housing and Mortgage Finance Agency (NJHMFA) offers several programs that may be a good fit for buyers.
The NJHMFA Down Payment Assistance (DPA) Program provides qualified homebuyers with $10,000 toward down payment or closing costs. If you are an eligible borrower who meets the maximum income limits according to your county, the DPA will offer a $10,000 forgivable loan with no payments and no interest rate if the loan is forgiven. The borrower must continuously reside in the premises as his/her principal residence for five years from the loan closing date.
The NJHMFA Homeward Bound Mortgage Program provides a 30-year, fixed-rate government insured loan for eligible homebuyers purchasing a home in New Jersey. Borrowers must purchase and occupy a residential home in New Jersey, be a first-time homebuyer, and must maintain occupancy for the life of the loan.
The Homeward Bound Mortgage Program can be coupled with the NJHMFA Down Payment Assistance (DPA).
Incentive Programs
You may be eligible for additional financial assistance if you or your spouse are a veteran or active military, educators, firefighters, healthcare workers, doctors, or teachers. The nationwide Homes for Heroes program saves qualifying homebuyers an average of $2,400 in reduced lending fees or title and inspection discounts.
Teacher Next Door offers grants, down payment assistance and more for teachers. They also provide resources specific to New Jersey residents.
Nationwide Programs
Freddie Mac’s Home Possible® Mortgage Program responsibly offers qualified very low- to low-income borrowers a low, 3% down payment financing option. Home Possible® allows flexible funding sources, eligibility to cancel mortgage insurance, and provides qualified, very low to low-income borrowers with the opportunity to own their home.
The USDA (U.S. Department of Agriculture) Rural Home Loan Program assists buyers who are looking for homes in rural locations. While there are maximum income limits and other possible qualifications, loans might be available with no money down for qualifying, single-family properties.
Many homebuyers leave money and resources on the table by not utilizing available financial assistance programs. With newfound knowledge of available homeownership programs, you will be ready to move forward from aspiring buyer to homeowner.