NJ First-Time Home Buyers


Gloucester County, NJ First Time Home Buyer Series: Mortgage Programs

Gloucester County, NJ First Time Home Buyer Series: Mortgage Programs (Part 3)

So maybe you've taken the jump to get pre-approved and have done your homework to understand your credit score information. Now when it comes to financing your new home, which mortgage option is the best for you? Understanding mortgage programs can be both simple or complex, depending on your needs.

Conventional Mortgages, FHA MortgagesUSDA (100%) mortgages, and VA mortgages are all available for both first time buyers as well as homeowners relocating.  Below is a short comparison of these options. We will also discuss first time home buyer loans below.


   FHA  Conventional USDA
Minimum down payment required  3.5%  5%  0%
Typical Credit Requirements*  620+  620+  620+
Lower credit scores allowed  Yes  Yes  Yes
Monthly Mortgage Insurance Required  Yes  Yes  No
Income Limitations  No  No  Yes
 * Rate/Cost varies drastically depending on the type of mortgage.      

NJ First Time Home Buyer Options*

The scope of this article is to further discuss first time home buyer options. The loan options mentioned above are listed only to make reference to, as each of the options above is available within the options listed below. It may sound a bit confusing, but with the help of an experienced mortgage advisor it will all come together.


NJ First Time Home Buyer Options

As a first time home buyer in NJ, you have several options and angles to purchase a home. We will briefly review several of the current options available. (Aside - A first time home buyer is considered someone who hasn't owned a home in the last 3 years).


The New Jersey Housing and Mortgage Finance Agency has several options for first time home buyers. These options are obtained by working with an approved HMFA lender, such as Treasury Mortgage (A division of Aurora Financial Group). Some confusion exists because the majority of mortgage lenders in business DO NOT have access to these loans. "Big Name" national lenders and mortgage brokers do not have access to NJHMFA options. Even most direct lenders or "correspondent lenders" do not have access either. 

Smart Start Grant Program

This popular option is a mortgage program with a grant option. You may obtain a grant of up to 4% of the loan amount used to finance your new home. For example, if you are buying a home and financing $100,000, a grant of up to $4,000 can be utilized. The most common use of this grant is to satisfy the FHA requirements of a 3.5% down payment (see above chart). In this case, the grant covers the down payment requirement, as well as come of the closing costs. (To see other ways to use your first time buyer options to cover a down payment, closing costs, and more check out Understanding and Using All of Your First Time Home Buyer Options.

Prefund Mortgage Program

A more recent and great addition to the NJHMFA mortgage options list is the Tax Credit Prefund Mortgage Option. This program allows $5,000 of the current federal tax credit (up to $8,000) to be prefunded and used for a down payment and/or closing costs. The benefit of this program over the Smart Start Grant option mentioned above is that the interest rate is .75% lower. For a home purchase price of around $150,000 or less, or for a situation where a buyer doesn't need a full 4% and would only benefit from having a "little" help, this option works very well.

A little more info: These programs have income limitations, but are quite high for many counties. They require a bit more paperwork than other options, but certainly can be worth the extra homework.

County Grants 

Many New Jersey counties have their own grant options for first time home buyers. Grant options vary greatly from several $1,000 to $10,000 or more. These options also usually have income limits. For instance Gloucester County has an income limitation for single buyers that is in the $40k's.

Some counties require no special education on the buyer's behalf, and some require several months of education along with a monetary investment. This article does not have the space to go into multiple county options, but here is something you want to keep in mind; Work with a lender that can help you understand how to incorporate several options together when you purchase your home. The link to the article above explains how a NJ first time home buyer can utilize a grant program, seller concessions, the tax credit and more, all at once!!

What to do now ...

There are MANY home buying and mortgage options out there. The most important thing to do is find a lender (mortgage advisor) to work with that understands ALL of these options. DO NOT settle for just anyone. Secondly, educate yourself as much as you can. Even the brightest and most experienced loan officers can benefit from an educated buyer bringing thoughts and options to the table that the buyer may have not brought up otherwise.

Look out for additional articles in this NJ First Time Home Buyer Series.

Leading You to Your First Home


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Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Comment balloon 2 commentsStephen Kappre • August 23 2009 11:20PM


Great series Steve.  I love the Mortgage Adviser title.  You truly do need someone who can look at your whole financial picture and advise you on options.  Have a great week.

Posted by Paddy (Patricia) Pizappi, Real Estate Associate Broker Hudson Valley NY (Better Homes and Gardens Rand Realty) over 10 years ago

You're a good resource Steve....first time homebuyers would do well to start with you.

Posted by Larry Bettag, Vice-President of National Production (Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001) over 10 years ago

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