For a lot of New Jersey home buyers, the down payment can be the biggest hurdle to buying a home. But it might only be a perceived hurdle. The truth is there are several mortgage programs available in New Jersey that offer low down-payment requirements.
Additionally, borrowers might be able to obtain gift money from a family member or borrower from a 401k. Those are just some of the ways you could buy a home in New Jersey with little to no money down.
Buying a Home With Little Money Down, Using FHA
House prices across New Jersey have risen steadily over the last few years. According to the real estate information service Zillow, the median home value for the state rose 5% over the last 12 months alone (ending in October 2017).
As a result, many home buyers in New Jersey are seeking ways to reduce their upfront, out-of-pocket expenses when buying a house. Some prefer to buy a house in New Jersey with little to no money down. Here’s how you might accomplish that goal.
Despite common misconceptions, you don’t necessarily need a down payment of 20% or more when buying a house in New Jersey. There are mortgage loans available that offer a much lower upfront investment.
The FHA loan program is one of those financing strategies that offers a low down payment. The Department of Housing and Urban Development (HUD), which manages this particular mortgage program, allows borrowers to make a down payment as low as 3.5% of the purchase price or appraised value.
Even better, HUD allows FHA home buyers to obtain gift money from a third-party donor, such as a family member, a close friend, or even an employer. These funds can be used to cover some, or all, of the minimum required investment.
This is one way you could buy a home in New Jersey with little to no money down. You could combine a mortgage program with a low upfront investment requirement with gift money from an approved third-party source.
Conventional Mortgage Loan Options in New Jersey
But you don’t necessarily have to limit yourself to the FHA loan program. These days, many conventional (non-government-backed) mortgage loans allow for gift money as well. 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%.
Here are the key points to remember from all of this:
- The down payment when buying a home might be less of an obstacle than you think.
- There’s a lot of flexibility within today’s mortgage industry.
- Different loan programs have different requirements, and some are more flexible than others.
- A lot of the mortgage loans available today allow for gift money to be provided by a third party.
- As a result, it’s possible to buy a home in New Jersey with little to no money down (out of your own pocket).
This underscores the importance of speaking with a knowledgeable loan officer about your financing options. And that’s where we come in!
Let’s explore your options. NJ Lenders Corp. offers a variety of financing options, some of which have relatively low down payment requirements. Please contact us if you would like to receive a cost estimate or a rate quote. We look forward to helping you.