Buying a Home
Your guide to buying a home in New Jersey or Pennsylvania — from first questions to closing day.
Whether you are a first-time buyer figuring out what you can afford, a move-up buyer navigating the sell-then-buy timing, or relocating to New Jersey or eastern Pennsylvania — we will walk you through the loan options, down payment strategies, and real numbers so you can move forward with confidence.
Mortgage programs for home buyers
There is no single best loan. The right program depends on your credit, savings, income, and military status. Here is how the main options compare.
Conventional loans
Conventional loans are the most common mortgage type for buyers with solid credit and some savings. They follow Fannie Mae and Freddie Mac guidelines. If your credit score is 700 or above, conventional is usually the most cost-effective option because mortgage insurance is cheaper than FHA and drops off once you reach 20% equity.
Good for: Buyers with credit above 700 who want the lowest total cost. HomeReady and Home Possible programs allow 3% down with income limits — ideal for first-time buyers earning below 80% of the area median income.
FHA loans
FHA loans are insured by the Federal Housing Administration and designed for buyers with lower credit scores or smaller down payments. The tradeoff is mortgage insurance that stays for the life of the loan unless you refinance later. In New Jersey, FHA loans are the most popular choice for first-time buyers and pair perfectly with NJHMFA down payment assistance.
Good for: Buyers with credit between 580 and 700, limited savings, or higher debt ratios. Many buyers start with FHA and refinance into conventional once credit improves and equity builds.
VA loans
If you are a veteran, active-duty service member, or eligible surviving spouse, VA loans are almost always the best option. Zero down payment, no monthly mortgage insurance, and competitive rates. The VA funding fee (1.25% to 3.3%) can be rolled into the loan and is waived for veterans with service-connected disabilities. South Jersey has a large military-connected population near Joint Base McGuire-Dix-Lakehurst.
USDA loans
USDA loans offer zero down payment in designated rural and suburban areas. Despite the name, many suburban NJ towns qualify — parts of Burlington, Gloucester, Salem, and Cumberland counties, plus large portions of Pennsylvania. Income limits are higher than most expect at 115% of area median income.
Down payment assistance in New Jersey
New Jersey offers some of the strongest down payment assistance programs in the country — forgivable second mortgages with no monthly payment that disappear after five years.
NJHMFA Down Payment Assistance — up to $15,000
The New Jersey Housing and Mortgage Finance Agency provides up to $15,000 for down payment and closing costs. Zero-interest, five-year forgivable second mortgage with no monthly payment. Available in every NJ county and pairs with an NJHMFA first mortgage through a participating lender.
Eligibility: First-time homebuyer (no ownership in 3 years), FICO 620+, income below 140% of area median, primary residence in NJ.
First Generation Homebuyer Program — additional $7,000
First-time AND first-generation buyer (parents do not own residential property)? Stack an additional $7,000 for up to $22,000 total. Same terms: zero interest, forgivable after five years, no monthly payment.
What $22,000 in assistance means in real numbers
On a $400,000 home with FHA: 3.5% down is $14,000 and closing costs run $10,000 to $16,000. With $22,000 in DPA, your cash out of pocket could be as low as $2,000 to $8,000. That changes the conversation from "can I afford this?" to "which home fits my budget?"
Down payment assistance in Pennsylvania
Pennsylvania buyers have access to multiple assistance programs through the Pennsylvania Housing Finance Agency (PHFA). These can be stacked with PHFA first mortgage programs for significant savings.
K-FIT (Keystone Forgivable in Ten Years) — up to 5% of purchase price
The K-FIT program provides up to 5% of the purchase price or appraised value (whichever is lower) with no maximum dollar limit. The second mortgage is forgiven at 10% per year over ten years — stay in the home for ten years and the entire amount disappears. No monthly payment on the assistance loan.
Eligibility: FICO 660+, liquid assets under $50,000 after closing, must qualify for a PHFA first mortgage, primary residence in PA.
HOMEstead Program — up to $10,000
Provides up to $10,000 in down payment and closing cost assistance as a no-interest second mortgage, forgiven at 20% per year over five years. Available in select counties through local agencies. Income must be at or below 80% of area median income.
Keystone Advantage — up to $6,000
Up to 4% of purchase price or $6,000, whichever is lower, as a zero-interest second mortgage repaid over 10 years. Can be combined with the $500 PHFA Grant for HFA Preferred loan borrowers.
County-level programs in eastern PA
Bucks, Chester, Delaware, and Montgomery counties each offer additional local first-time buyer programs with $5,000 to $10,000 in assistance. Philadelphia offers up to $10,000 through its First-Time Homebuyers Program. These can sometimes be layered with PHFA state programs for maximum benefit.
The home buying process, step by step
Buying a home involves about a dozen moving pieces over 30 to 60 days. Here is the actual sequence.
A pre-approval means a lender has verified your income, pulled credit, and confirmed what you qualify for. A pre-qualification is just an estimate. In competitive NJ and PA markets, listing agents will not present offers without a real pre-approval letter. We turn these around in 24 to 48 hours.
With pre-approval in hand, you know your price range and monthly payment. When you find the right home, submit an offer with your pre-approval letter. In NJ, you will also hire an attorney (required by state law) and schedule inspections during attorney review. In Pennsylvania, attorneys are not required but recommended — closings happen at the title company.
NJ has a 3-day attorney review period after contract signing where either party can cancel or request modifications. Schedule a home inspection ($300 to $550), plus radon, termite, or oil tank sweeps as needed. South Jersey properties often need oil tank scans while North Jersey homes should check for lead and asbestos.
We order the appraisal and send your file to underwriting. The appraiser confirms value supports the price. Underwriting reviews income, assets, credit, and the property. Clean documentation upfront saves time and keeps closing on track.
Clear to close means underwriting approved everything. You get the Closing Disclosure with final numbers 3 business days before closing. At the table: sign documents, pay remaining costs, get keys. NJ closings happen at the title company or attorney office.
What does it actually cost to buy a home in New Jersey?
On a $450,000 home in New Jersey
With $22,000 in NJHMFA assistance, actual cash needed could drop to $3,000 to $13,000 depending on loan type and seller credits.
Buying in New Jersey — what is different here
Property taxes are the highest in the country
NJ averages roughly 2.2% effective tax rate versus 1% nationally. On a $450,000 home, that is about $9,900 per year or $825 per month added to your payment. Camden County averages about 3.3% while Morris County is around 2.1%. The municipality you choose makes a meaningful difference in your monthly payment.
Attorney review is required
Unlike most states, NJ requires an attorney for closing. The 3-day attorney review period after contract signing is when most negotiations happen. Your attorney can request repairs, price reductions, or contract modifications. Budget $1,000 to $2,000.
Flood zones, oil tanks, and radon
Parts of South Jersey sit in FEMA flood zones requiring flood insurance at $1,000 to $3,000 or more per year. Underground oil tanks are common in older homes and can cost $2,000 to $15,000 or more to remove if leaking. Radon runs high in northern and central counties. These inspections cost $100 to $200 each and can save you from major problems.
Competitive markets move fast
In desirable areas like Cherry Hill, Haddonfield, Moorestown, Princeton, and Shore communities, homes get multiple offers within days. A strong pre-approval letter and clean financing make your offer competitive. We issue pre-approval letters that agents trust because our files are fully reviewed.
Buying in Pennsylvania — key differences from NJ
No attorney requirement
Unlike New Jersey, Pennsylvania does not require an attorney for real estate closings. Closings are handled by the title company. Many buyers still hire an attorney for complex deals, but it is not mandatory — which saves $1,000 to $2,000 in closing costs.
Transfer tax instead of NJ realty fee
Pennsylvania charges a 2% transfer tax on real estate sales (1% state plus 1% local), typically split between buyer and seller. In Philadelphia, the combined rate is 4.278%. In Bucks and Montgomery counties, it is 2% total. This is a meaningful closing cost — on a $350,000 home, your half of the transfer tax is $3,500 (or $7,487 in Philadelphia).
Lower property taxes than NJ
Pennsylvania property taxes average about 1.5% statewide versus NJ at 2.2%. On a $400,000 home, that difference saves roughly $2,800 per year or $233 per month. Bucks County averages about 1.3%, Chester County 1.5%, and Montgomery County about 1.7%. Philadelphia is higher at around 1.4% but with the added wage tax.
More USDA-eligible areas
Large portions of Pennsylvania qualify for USDA zero-down-payment loans, including many suburban areas in Bucks, Chester, and Lancaster counties. If you are open to slightly more rural communities, USDA can save you tens of thousands in down payment costs.
Understanding your mortgage
Most lender websites skip the why and jump straight to apply now. Here is the education that helps you make a better decision.
How much house can you really afford?
Lenders look at your debt-to-income ratio (DTI) — the percentage of gross monthly income going to debt. Most programs cap at 43% to 50%. But what a lender approves you for and what you are comfortable paying are different numbers. A lender does not account for daycare, groceries, retirement savings, or your emergency fund. We recommend keeping total housing payment below 28% to 30% of gross income. Use our affordability calculator to see where you land.
Down payment: 3% vs. 10% vs. 20%
On a $400,000 home: 3% down is $12,000 and 20% is $80,000. The monthly payment difference including PMI is roughly $200 to $400 per month. Putting 20% down eliminates mortgage insurance but ties up $80,000. There is no universally right answer — we model multiple scenarios so you can see the tradeoffs in actual dollars.
Fixed rate vs. adjustable rate (ARM)
A 30-year fixed locks your payment forever. A 5/1 ARM gives a lower rate for 5 years then adjusts annually. ARMs make sense if you will sell or refinance within 5 to 7 years. With rates in the low-to-mid 6% range, some buyers choose ARMs with plans to refinance if rates drop.
The 2-1 buydown strategy
A 2-1 buydown reduces your rate by 2% in year one and 1% in year two, then reverts to full rate in year three. On a 6.5% rate you would pay 4.5% the first year and 5.5% the second. Usually funded by the seller through a closing credit. Works well when you expect income growth or rate drops.
Common buyer situations we see every week
Between NJHMFA assistance ($15,000 to $22,000), FHA loans at 3.5% down, and seller credits, many buyers close with $5,000 to $10,000 total out of pocket.
FHA accepts scores as low as 580 with 3.5% down. We also work on credit improvement plans — sometimes a few strategic moves boost your score 40 to 60 points in 60 to 90 days, saving thousands in interest.
Self-employed buyers qualify on 2 years of tax returns (net income on Schedule C, K-1, or 1120S). The challenge is that write-offs lower qualifying income. We review returns before you file so you understand the tradeoff between tax savings and mortgage qualification.
Options include bridge loans, sale contingencies, or a HELOC for the down payment. In fast markets, sale contingencies make your offer less competitive. We help you pick the right strategy.
We work with remote buyers regularly. Pre-approval happens digitally. The biggest adjustments for out-of-state buyers are NJ property taxes and the attorney requirement (not needed in PA). We walk you through both states so you can compare.
Frequently asked questions
As little as 0% with VA or USDA, 3% conventional, or 3.5% FHA. NJHMFA provides up to $22,000 in forgivable assistance for first-time buyers.
FHA: 580+ (500 with 10% down). Conventional: 620+. VA: 620+. Better scores mean lower rates — a 50-point improvement can save thousands over the life of the loan.
From accepted offer to closing: 30 to 45 days. Pre-approval: 24 to 48 hours. Having pre-approval before you start shopping puts you in the strongest position.
Typically 2% to 5% of loan amount. On a $400,000 purchase, expect $10,000 to $20,000 including lender fees, title insurance, appraisal, attorney, prepaid taxes and insurance. Seller credits can offset some or all.
Yes. NJ requires attorney involvement — contract review, negotiations, title search, and closing. Every buyer and seller has one. Budget $1,000 to $2,000.
Yes and you should. Pre-approval tells you what you can afford, your monthly payment, and cash needed. It also strengthens your offer. Letters are valid 60 to 90 days.
Ready to see what you qualify for?
Start with the quiz for guidance, book a call with Brad or Craig, or jump straight to an application.