New Jersey Downpayment Assistance and First-Time Home Buyers Programs — An Update

This article is an update of a previous article.
The State of New Jersey Housing and Mortgage Finance Agency (HMFA) has mortgage programs for home buyers who are looking to purchase a home in New Jersey. HMFA also has down payment and closing cost assistance programs to help those who want to buy a home, and who qualify, but need a little financial assistance to become a home owner.

Does New Jersey Have First Time Home Buyer Programs?

You can buy a home in New Jersey if you are a first time home buyer. A home buyer must be able to qualify for an FHA, VA, Rural Housing Service, and Fannie Mae or Freddie Mac Conventional Mortgage with a HMFA approved participating mortgage lender to use the HMFA First Time Home Buyer Program. Interest rates for this program are below market and are fixed for up to 40 years. The most common mortgage length is 30 years.

First Time Home Buyer And Urban Target Area Mortgage Program Highlights

A below-market, fixed interest rate of 5.75% with 0 points is offered to first-time homebuyers and urban area buyers. Down payments of as little as 3.5% are required and must come from the borrower’s own assets. Loans are 30-year fixed rate. Certain closing costs can be gifted by family members, non-profit organizations or government agencies.

Eligible properties include: single family units, new and existing condos, 2 to 4 unit residential buildings which are older than 5 years in all non targeted areas. In targeted areas, allow for new units build less than 5 years ago and any new or existing 2 unit dwelling.

Income and Purchase Price Limits do apply depending on the location of the property and whether the location is a Targeted Area or not.

Home buyers who qualify may use the Smart Start Program to get help with down payment assistance and closing costs.

Home buyers should check into their eligibility for a Federal Tax Credit under this program

Tax Credit Loan Program – The "Prefund" Program

The HMFA’s First-Time Homebuyers Tax Credit Loan Program (TCLP) or “Prefund” program provides a 0% loan to Agency First-Time and Urban Target Area Homebuyers to pay downpayment and/or closing costs. The homebuyer must be an approved Agency Homebuyer Program Applicant, meet income requirements, have a signed contract to purchase a home on or before April 30, 2010 and must close on or before June 30, 2010.

Smart Start Program – Get Money For Down Payment And Closing Costs In New Jersey

If you are looking for help with your down payment and closing costs and you are buying a home in New Jersey to live in as your primary residence you may want to check into the Smart Start Program by HMFA. To utilize the Smart Start Program you will need to use one of HMFA’s first mortgage home buyer programs and be purchasing a home in a Smart Growth area.
The Smart Start Program is a loan program from HMFA for the home buyer through a participating lender. A home buyer can get from 2%, 3%, or 4% of the first mortgage to be applied to their down payment and closing cost requirements. The Smart Start loan is at 0%, and if the home buyer remains in their home for at least 5 years the loan is satisfied. But if the home buyer transfers their ownership in their home to someone else, gets a cash-out refinance, or moves from their home the Smart Start loan will have to be repaid in some fashion.
Home buyers using this program for down payment and closing cost assistance will need to meet certain income guidelines and property purchase price restrictions depending on which Smart Growth area they decide to buy a home in.

Live Where You Work (LWYW) Mortgage Program

The LWYW program is a home mortgage incentive program that provides low-interest mortgage loans to homebuyers purchasing homes in towns where they are employed. The goal of LWYW is to build stronger communities by promoting homeownership and encouraging people to live closer to their jobs.
Properties must be located in a participating Live Where You Work municipality. Eligible properties include one-family units, including condominiums, (new and existing), and existing 2- to 4-family unit properties that are more than 5 years old. Some Live Where You Work municipalities include Urban Target Areas (UTA). In Urban Target Areas eligible properties can also include new two-unit residential dwellings. Properties must be located in State designated Smart Growth locations.

100% Financing

Provides no downpayment, no mortgage insurance, mortgage loans at pre-approved new or rehabilitated single-family housing developments and for certain newly constructed units. First-time and urban area buyers are eligible for 30-year fixed rate financing at the HMFA’s prevailing interest rate. Homes must be pre-approved by the Agency and projects are listed on the Agency’s website.

Purchase/Rehab and Refi/Rehab Mortgage Program

Qualified first-time homebuyers and urban target area buyers can receive below-market interest rate financing for the purchase and rehabilitation of a home, or the rehabilitation of a presently owned home. Home buyers must meet income and purchase price requirements.

Home Plus

A fixed interest rate home mortgage to qualified first-time and urban area homebuyers with immediate home improvement needs. Homeowners are allowed to finance up to $15,000 toward home repairs and improvements as part of the first mortgage. Home buyers must meet income and purchase price requirements.

At Home Downtown Mortgage Program

The At Home Downtown program aims to revive New Jersey’s downtowns and neighborhood commercial districts by taking advantage of reduced-rate loans. Business owners, non-profit organizations and investors can construct or acquire, refinance, and renovate buildings that offer ground floor storefront commercial opportunities with overhead rental housing. First mortgage loans are at fixed, below market interest rates. Second mortgages will also be provided, when necessary.

Home Ownership for Performing Employees (HOPE)

HOPE is an employer guaranteed loan program that offers no downpayment, below-market, fixed rate mortgages to eligible employees without private mortgage insurance. Employers must be approved by the HMFA. The program adheres to the same mortgage program requirements as the Home Buyer Program.

Police and Firemen’s Retirement System (PFRS) Mortgage Program

Active members of the New Jersey Police and Firemen’s Retirement System (PFRS) with one year of creditable service are eligible for this program. Members may buy a home (first-time or trade-up); maximum mortgage amount is $417,000. Interest rate is 30 year fixed. Program rates are set semi-annually in February and August.