First time buyers (2024)

FAQs

What is the best option for first time buyers? ›

FHA Mortgage

FHA mortgages are low-down payment mortgages insured by the Federal Housing Administration (FHA). They're a catch-all program for first-time buyers ineligible for other low- and no-down payment options. FHA mortgages allow: Minimum down payment of 3.5%

You're considered a first-time homebuyer if you have not owned a home within the previous three years. Are you planning to purchase a home in New Jersey?

New Jersey home buyer stats

Down payment amounts are based on the state's most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.

The Homeward Bound Mortgage Program can be coupled with the NJHMFA Down Payment Assistance (DPA). NJHMFA (DPA) Program provides qualified homebuyers with $10,000 toward down payment and/or closing costs. The DPA it is a $10,000 forgivable loan with no payments and no interest rate the loan is forgiven.

Conforming Loan Down Payment – $500k House

Conforming loan down payments can vary from 3% to 20% or more, so for a $500,000 home, you'd need between $15,000 and $100,000. Conforming loans, once again, follow Fannie Mae and Freddie Mac guidelines and usually offer competitive terms.

The minimum credit score needed for most mortgages is typically around 620. However, government-backed mortgages like Federal Housing Administration (FHA) loans typically have lower credit requirements than conventional fixed-rate loans and adjustable-rate mortgages (ARMs).

In New Jersey, closing costs for buyers usually range between 2% and 5% of the home's purchase price. For sellers, the closing costs can range from 5% to 8% of the sale price, with the real estate agent's commission forming the bulk of this amount.

FHA loan: 3.5 percent down payment

For a Federal Housing Administration (FHA) loan, the minimum down payment is 3.5 percent with a credit score of at least 580. If you have a credit score between 500 and 579, you can still get approved, but you'll need a 10 percent down payment.

Conventional Mortgage Loan Options in New Jersey

And many have down payment requirements as low as 3%. That's because Fannie Mae and Freddie Mac, the government-sponsored enterprises that purchase loans from lenders via the secondary market, both support mortgage programs with loan-to-value ratios up to 97%.

Your credit score typically won't affect the home loan amount you're able to receive. Instead, it will affect the interest rate of the loan. The lender will determine how much you can borrow based on a number of factors like your income, debt-to-income ratio, and more.

Can I buy a house with a 580 credit score? ›

You can get a mortgage with a credit score as low as 620, 580 or even 500, depending on the type of loan. Some mortgage lenders offer bad credit loans with more flexible qualifying requirements but higher costs. Others offer free credit counseling to help you improve your score before applying for a loan.

NJ Special Loan Programs and Their Requirements

The Federal Housing Administration (FHA) offers loans requiring a down payment of 3.5% to borrowers with a minimum credit score of 620.

The New Jersey Housing and Mortgage Finance Agency's (NJHMFA) First-Time Homebuyer Mortgage Program provides qualified New Jersey first-time homebuyers with a competitive 30-year, fixed-rate government-insured loan (FHA/VA/USDA) originated through an NJHMFA participating lender.

Undergraduate grants range from $1,300 to $1,550 per year and graduate grants up to $2,300 per year depending on college costs and financial need. Eligibility Requirements: Students who have been New Jersey residents for 12 consecutive months prior to the award period.

An FHA loan may be a better option if you have a lower credit score, a higher DTI ratio, or less money saved for a down payment. On the other hand, a conventional loan may work better if your finances are sound and you can qualify for favorable loan terms.

How Much Is The Average Down Payment On A House? The average first-time buyer pays about 6% of the home price for their down payment, while repeat buyers put down 17%, according to data from the National Association of REALTORS^® in late 2022. The median home sale price in the U.S. was $416,100 as of Q2 in 2023.

California first-time home buyer loans

If you're a California first-time home buyer with a 20% down payment, you can get a conventional loan with a low interest rate.