First-Time Homebuyer Information Session – Program Recap

New Jersey is committed to helping individuals purchase their first home and has a variety of financial programs to help!

Thank you to Emerlee Simons, Leading Marketing and Outreach Coordinator for the NJ Housing and Mortgage Finance Agency, for a look at the programs available through the agency to assist NJ residents in purchasing a home – First-Time Buyer Down Payment Assistance Program and First Generation Down Payment Assistance Program. Each program has its own requirements so let’s dive in.

First-Time Buyer Down Payment Assistance Program

The First-Time Buyer Down Payment Assistance Program provides approved purchasers with up to $15,000 toward the down payment or closing costs of a primary residence in New Jersey. The money is a forgivable loan that requires the purchaser to stay in the property for 5 consecutive years and the amount is dependent upon the county where the property is located:

• Bergen, Essex, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Union – $15,000
• Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Salem, Sussex, Warren – $10,000

Borrowers must be a first-time homebuyer who has not owned a primary residence in the last 3 years. This applies to all first-time homebuyers, except for when the borrower is a qualified veteran or purchasing a property in an Urban Target Area; for later, the borrower cannot have another place of primary residence. Additionally, the borrower(s) must have at least a 620 Credit Score and 2 open trade lines, such as student loans or car loans. There are also income limits and property value limits based on the county and size of the family household.

In order to qualify for the program, the property must be a single-family home, condominium, townhome, manufactured or mobile home (must be permanently affixed to land owned by the borrower), or a 2-4 family dwelling unit of which one unit is to be occupied by the borrower as their primary residence. Additionally, the borrower(s) must have secured a first mortgage for the property through one of the agency’s participating lenders; the DPA program is considered a second mortgage on the property.

If the borrower fails to stay in the property for 5 years or refinances or otherwise conveys the first mortgage, the loan becomes due and payable.

First-Generation Homebuyer Program

This is a supplemental program for first-generation borrowers who are already qualified with a first mortgage through an approved lender and who have been accepted into the First-Time Homebuyer Down Payment Assistance Program. This program provides an additional $7,000 toward the down payment or closing costs and has the same repayment penalties as the DPA program.

A first-generation homebuyer is defined as either:

• A person whose parents or legal guardians do not have any present ownership in any residential real property in any state or territory of the United States, or outside of the United States AND whose spouse, or domestic partner, and each member of whose household has not, during the 3-year period ending upon acquisition of the eligible home to be acquired using such assistance, had any present ownership in any residential real property used as their principal residence in any state or territory of the United States, or outside of the United States.
• An individual who has at any time been placed in foster care in the State of New Jersey.

Required Paperwork and Other Conditions

In order to participate in any of the above programs, or any NJHMFA sponsored mortgages, the borrower must work with an approved lender. The following documents are required buy approved lenders:

• 3 years of signed federal tax returns or 3 years transcripts, 30 days of paystubs and 2 years of W2s for each adult household member with the file submission
• 2 months of bank statements for all borrowers’ liquid assets

It is also required that borrowers have available 2 months reserves of monthly mortgage payments, which can be in personal accounts, gifts to qualify or provide statements for 401k or pensions (borrower doesn’t need to withdraw the money). In addition to qualify for the above programs, the borrower(s) are required to complete a HUD Approved Credit Counseling Course before the lender submits the paperwork to the NJHMFA.

Approval for one of the above programs takes around 5 business days so it is highly recommended that you apply for these programs at least 10 days before your closing date.

More Information

For more information on these programs as well as all of the available programs for homebuyers in New Jersey, please visit the NJ Housing and Mortgage Finance Agency’s website – https://www.nj.gov/dca/hmfa/. If you have any questions, please contact Emerlee Simons at esimons@njhmfa.gov. You can also view a recording of the program on our YouTube channel at https://youtu.be/kBKhAWF_5fY.