First-Time Homebuyer Programs in New Jersey

The down payment on a new home is often the biggest hurdle for first-time homebuyers. In New Jersey, with an average home value of $535,982, a down payment of $107,196 is typically required to avoid buying private mortgage insurance.

First-time homebuyer programs in New Jersey help make homeownership more accessible. Some mortgages let you make a smaller down payment, but they often have income limits and require mortgage insurance. MoneyGeek explores several state-specific and government-backed first-time homebuyer programs for people from different financial backgrounds.

New Jersey offers grants and loans to assist first-time homebuyers with down payment and closing costs. We compiled first-time homebuyer programs provided by the New Jersey Housing and Mortgage Finance Agency (NJHMFA) to help you find the best option for your needs and situation.

The First-Time Homebuyer Mortgage program provides 30-year, fixed-rate loans to first-time homebuyers in New Jersey. These mortgages can be conventional or government-insured (FHA, VA or USDA) and originated through participating NJHMFA lenders. Borrowers can combine the loan with NJHMFA's down payment and closing assistance. This program applies to homes that will be used as the primary residence in any New Jersey county.

The NJHMFA Down Payment Assistance Program offers up to $15,000 in down payment and closing cost assistance for qualified first-time homebuyers. The assistance is provided as an interest-free, forgivable second loan with no monthly payments. It's forgiven after five years if the borrower continues to live in the home. This assistance must be used with an NJHMFA first mortgage loan.

The First Generation Down Payment Assistance Program provides an additional $7,000 on top of the Down Payment Assistance Program, offering up to $22,000 in total. It offers interest-free, forgivable loans and no monthly payments to eligible first-generation homebuyers. The funds can be used for down payments and closing costs. First-generation homebuyers are those whose parents or guardians don't own property or those who were placed in foster care.

The Police and Firemen’s Retirement System (PFRS) Mortgage program offers home loans to police officers and firefighters who are PFRS members in New Jersey. The program helps them purchase one-family or two-family residences or condominium units with loans from private lenders.

It allows for an 85% maximum loan-to-value ratio; second mortgages are permitted with certain limitations. The maximum loan amount is $766,550. Borrowers must pay a $1,500 fee to the lender, part of which may be paid upfront, and a $325 fee to NJHMFA, which administers the program.

The HFA Advantage Mortgage Program offers eligible New Jersey homebuyers a 30-year fixed-rate conventional loan. It can be combined with NJHMFA's Down Payment Assistance Program, which provides a forgivable loan with no interest or monthly payments. The loan is forgiven after five years if the borrower stays in the home as their primary residence and doesn't refinance or sell the property.

The program typically requires a 3% down payment, following Freddie Mac HFA Advantage guidelines. Borrowers can use the Down Payment Assistance funds for their down payment. Still, these funds can't cover closing costs typically paid by the seller, such as realtor commissions or transfer taxes, or address appraisal shortfalls.

In addition to New Jersey's statewide first-time homebuyer programs, city-specific programs help residents achieve homeownership in their chosen cities. The table below highlights some of the cities in New Jersey with a program for first-time homebuyers.

New Jersey offers zero-down-payment loan programs that allow you to buy a home without putting money down. USDA and VA loans are government-backed options that provide this benefit.

USDA loans help low to moderate-income households own a home in rural areas. The U.S. Department of Agriculture issues these loans through its Rural Development Guaranteed Housing Loan program. This initiative stimulates economic growth in rural communities by making homeownership more accessible.

USDA loans offer several benefits, including no down payment requirements, lower interest rates than conventional loans and reduced mortgage insurance costs. These loans make homeownership more accessible to low-to-moderate-income households in eligible rural areas.

To qualify for a USDA loan, the property must be 2,000 square feet or below and located in a USDA-eligible rural area with a population of less than 35,000. Income limits vary by location. For example, in Jersey City, New Jersey, the income limit for a four-person household is $107,050, while in Ocean City, New Jersey, it's $88,400.

VA loans from the U.S. Department of Veterans Affairs are for veterans, active-duty service members and eligible surviving spouses seeking home financing options.

VA loans come with several advantages, including a no-down payment option. They don't require private mortgage insurance (PMI), reducing monthly payments. VA loans also typically offer lower interest rates than private loans. As of December 2024, the APR for a 15-year fixed-rate VA loan in New Jersey is 6.08%, while the APR for a 30-year fixed-rate VA loan is 6.28%.

Eligibility for VA loans depends on several factors, including service length or commitment, duty status and character of service. Applicants must also meet location-based income limits and have a valid certificate of eligibility (COE).

First-time homebuyers in New Jersey can access low-down-payment loan programs that allow them to finance their homes with a down payment of 3.5% or less. These programs include conventional, FHA and FHA 203(k) loans.

FHA and conventional loans are often compared, as they're the most common types of mortgages. FHA loans require at least a 3.5% down payment, while conventional loans can require as low as 3% for first-time homebuyers. Conventional loans typically have stricter credit score and debt-to-income ratio requirements than FHA loans.

As of December 2024, the current APR for a 15-year fixed-rate conforming loan in New Jersey is 5.81%. The APR for a 15-year fixed-rate FHA loan is 8.01%. APRs on FHA loans can be higher due to additional fees and costs associated with government-backed loans.

Use our FHA vs. conventional loan calculator below to compare both mortgage programs and determine the best option.

We addressed frequently asked questions about first-time homebuyer programs in New Jersey to help you identify the best option and move closer to homeownership.

Explore additional MoneyGeek resources for first-time homebuyers in New Jersey to help you with the homebuying process.