First-time home buyer assistance programs in New Jersey

Where do you begin when you want to own a home, but you’ve never been through the process of buying a property before? Whether you have great credit or a credit score that could use some improvement, there are programs set up for New Jersey first time home buyers that will benefit your financial situation in your real estate purchase. You may qualify to receive free money to put toward your down payment and closing costs. You might also be eligible to receive favorable fixed-interest-rate home loans.

The New Jersey Housing and Mortgage Finance Agency (HMFA)’s The Road Home New Jersey: A Guide for the First-Time Homebuyer is a roadmap to help you navigate your way to affordable homeownership.

First-time home buyers in the Garden State looking for help in getting their homeownership dreams fulfilled should review the following information about financial assistance programs.

National first-time home buyer programs

State assistance and loan programs aren’t the only resources you can tap into. Some municipalities offer housing assistance, especially for residents, and national funding sources should also be considered. Here are major programs that offer low- and no-down-payment programs.

Conventional mortgage – National program
BEST FOR – Low down payment, Limited mortgage insurance premiums

Description: If the mortgage meets requirements set by Fannie Mae and Freddie Mac, first-time home buyers can get a conventional home loan with as little as 3% down. You won’t have to pay mortgage insurance if you put at least 20% down. A credit score of around 740 will get you the best interest rates, but a minimum credit score of 620 to qualify for a conventional mortgage according to most lenders.

FHA loans – National program
BEST FOR – Low credit score, Low down payment

Description: Mortgages insured by the Federal Housing Administration, or FHA, offer relaxed qualification requirements, especially when it comes to down payment and credit score. You can qualify for an FHA home loan with a credit score as low as 500, but you’ll need a 10% down payment. If your score is 580 or higher, your down payment could be as low as 3.5%.

This is the go-to program for many Americans, especially first-time home buyers and those who have a marginal credit history. The Federal Housing Administration guarantees a portion of FHA home loans, which frees lenders to broaden their acceptance standards.

FHA loans do have an upfront and ongoing additional cost built in: mortgage insurance premiums. All FHA loans require mortgage insurance, which cannot be canceled. This protects the lender’s stake in the loan if you default.

VA loans – National program
BEST FOR – Military, Low down payment

Description: Guaranteed by the U.S. Department of Veterans Affairs, these mortgages are available to help military members, veterans and surviving spouses buy homes. If you qualify, you’ll see benefits such as no minimum credit score and no down payment or mortgage insurance, but you’ll likely have to pay a VA funding fee.

VA loans are especially generous, often requiring no down payment or mortgage insurance. But like a lot of military operations, the approval track is built for accuracy, not speed. While the VA has only a few requirements for things like debt and sufficient income, VA lenders may add their own additional requirements.

USDA loans – National program
BEST FOR – Low down payment, Rural

Description: The USDA home loan program encourages rural and suburban homeownership by offering zero-down-payment mortgages to lower-income buyers. Borrowers with nontraditional credit data, like rent or utility payments, can still apply, but those with a score of 640 or above will experience faster loan processing. These mortgages can be used only in certain areas, but you don’t have to be a farmer or rancher or live on a farm to qualify.

The U.S. Department of Agriculture home buyers assistance program targets rural areas and allows 100% financing by offering lenders mortgage guarantees. There are income limitations, which vary by region.

NJHMFA highlights and eligibility requirements

You’re considered a first-time home buyer in the Garden State if you haven’t owned a home in the previous three years. The New Jersey Housing and Mortgage Finance Agency offers programs to help you put down roots. These include 30-year fixed-interest-rate programs, government-insured loans and programs for buyers who are upgrading and downsizing, as well as first-timers.


  • Some programs have location, income and purchase price restrictions.
  • The home must be your primary residence.
  • If the house is a two- to four-unit home, one unit must be your primary residence.
  • You’ll need a credit score of 620 or higher.

NJHMFA first-time home buyer loan programs

Down Payment Assistance Program – State program
BEST FOR – Down payment assistance, Closing cost assistance

Description: This NJHMFA program offers $10,000 in closing cost and down payment assistance to first-time home buyers. These funds go toward home buyers down payment and closing costs. This may allow you to purchase your first home with no money out of pocket. That amount is offered as a 0% interest loan that is forgiven in five years. Specific county income and purchase price limits apply, and buyers must obtain financing through a NJHMFA loan program.

To qualify you have to have the following:

  • At least a 2 year work history with the same employer. The lender wants to see that you have some consistency in your employment.
  • Must have a minimum 620 credit score (*SEE COVID CHANGES BELOW). If needed, consider implementing a credit repair service.
  • This has to be your primary home.
  • You can not have any homeownership interest within the last 3 years.
  • The program will qualify for 1-4 units. In this case, you could potentially buy a duplex or multi-unit property so that you could rent out the units you aren’t living in.
  • Income requirements for 1-2 people, their combined income can not exceed $95,100. If 3+ people are getting the loan, combined income can not exceed $109,365.

A disadvantage of this program are that because you are getting the $10,000 up front, you are getting a slightly higher interest rate. This can lead to paying out more money for the home over time. If you can afford an out of pocket down payment, consider going a more conventional route to save money by getting a lower interest rate on your loan.

You are also required to stay at the home for a minimum of 5 years. If you sell the home before that time, you will be required to pay back a prorated portion of that $10,000 originally awarded to you.

Ever since the start of the pandemic, there have been a couple of tweaks to this program.

Interest Rates
Prior to the start of the pandemic, interest rates were around 3.25% for this program. When the pandemic started, the state raised their rate to 4.25% but as of May 2020, the state lowered the rates back down to around 3.25% to 3.5% – so you will still get the benefit of getting a lower interest rate through this program.

* Credit Scores
Before the pandemic began, the minimum credit score was a 620. Since the start of the pandemic, the state has risen their minimum standard to at least a 660. Some may see this as bad news as this may delay new home buyers plans to purchase their first house, but it never hurts to strive for a higher credit score.

Police and Firemen’s Retirement System Mortgage Program – State program
BEST FOR – First responders

Description: If you are an active member of the New Jersey Police and Firemen’s Retirement System and have at least one year of service, you’re eligible for this 30-year fixed-rate loan program. The home’s purchase price must meet local purchase price limits.

You’ll find lenders that participate in these programs. It’s always a good idea to shop around for a lender, as loan terms and interest rates will vary among lenders. For more information about these programs and more, visit

Buying a house is a big step that will result in having a home to call your own. Why continue to pay down your landlord’s mortgage? Decide to own a home which becomes your own financial asset. You will pay down your mortgage every month and build equity in the home. Over time, your home will be appreciating in value. Best of luck in achieving your dreams of becoming a first time home buyer in New Jersey.

Additional Resources


  • Michelle Garofalo

    Michelle Garofalo is the guiding force behind MSC Enterprises, LLC, a prominent custom home builder and real estate developer in Monmouth County and Ocean County, New Jersey. With over 25 years in real estate development, her expertise extends from a successful career in the solar industry, where she managed over 75MW of projects. Co-founding Infiniti Energy, Michelle now oversees day-to-day operations and leads business development, ensuring a seamless journey for clients. Her meticulous approach and commitment to excellence are reflected in MSC's residential and commercial properties, known for their quality, durability, and energy efficiency.