BUYING A HOME

Your guide to buying a home, 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 a new area, we walk you through the loan options, down payment strategies, and real numbers so you can move forward with confidence.

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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.

MINIMUM DOWN PAYMENT

3% (first-time buyers) or 5%

MORTGAGE INSURANCE

PMI until 20% equity, then removable

CREDIT SCORE

620 minimum, best pricing at 740+

LOAN LIMITS (2026)

$806,500 in most counties

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.

MINIMUM DOWN PAYMENT

3.5% (580+ credit) or 10%

(500-579)

MORTGAGE INSURANCE

1.75% upfront + monthly MIP for life

CREDIT SCORE

580 minimum (500 with 10% down)

DTI LIMIT

Up to 56.99% with compensating factors

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.

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. FHA is one of the most popular choices for first-time buyers and pairs well with state and local down payment assistance programs.

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.

DOWN PAYMENT

0% — no down payment required

MORTGAGE INSURANCE

None — VA funding fee instead

CREDIT SCORE

620 minimum (lender overlay)

LOAN LIMITS

No limit with full entitlement

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

0% — no down payment required

INCOME LIMIT

115% of area median income

CREDIT SCORE

640 minimum for automated approval

PROPERTY

Must be in USDA-eligible area

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.

USDA loans

USDA loans offer zero down payment in designated rural and suburban areas. Despite the name, many suburban towns qualify that you would not expect. Income limits are higher than most people think at 115% of area median income. Check eligibility for your area before ruling this option out.

The home buying process, step by step.

Get pre-approved (not just pre-qualified)

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 markets, listing agents will not present offers without a real pre-approval letter. We turn these around in 24 to 48 hours.

Shop with your agent and make an offer

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. Your agent will guide you through the offer strategy, and we coordinate on the financing side to make sure your offer is as strong as possible.

Inspections and attorney review

Schedule a home inspection ($300 to $600), plus any additional inspections relevant to your area such as radon, termite, well, or septic testing. This is your opportunity to uncover potential issues before you are committed. Your agent or attorney can negotiate repairs or credits based on the findings.

Loan processing and underwriting

We order the appraisal and send your file to underwriting. The appraiser confirms the home's value supports the purchase price. Underwriting reviews your income, assets, credit, and the property details. Clean documentation upfront saves time and keeps closing on track.

Clear to close and closing day

Clear to close means underwriting has approved everything. You receive the Closing Disclosure with final numbers 3 business days before closing. At the table: sign documents, pay remaining costs, and get your keys.

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.

Common buyer situations we see every week

"I want to buy but I do not have much saved."

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 $350,000 home, 3% down is $10,500 and 20% is $70,000. The monthly payment difference including PMI is roughly $150 to $350 per month. Putting 20% down eliminates mortgage insurance but ties up a large amount of cash. 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 for the life of the loan. A 5/1 ARM gives a lower rate for 5 years, then adjusts annually. ARMs can make sense if you plan to sell or refinance within 5 to 7 years. We will show you the math on both so you can decide based on your timeline.

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 the 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 plan to refinance if rates drop.

"I want to buy but I do not have much saved."

Between state and local down payment assistance, FHA loans at 3.5% down, and seller credits, many buyers close with far less cash than they expected. We will research every program you qualify for and show you the real numbers.

"My credit is not great. Can I still buy?"

FHA accepts scores as low as 580 with 3.5% down. We also work on credit improvement strategies. Sometimes a few targeted moves can boost your score 40 to 60 points in 60 to 90 days, saving you thousands in interest over the life of your loan.

"I am self-employed. Will I get approved?"

Self-employed buyers qualify using 2 years of tax returns (net income on Schedule C, K-1, or 1120S). The challenge is that business write-offs lower your qualifying income. We can review your returns and help you understand the tradeoff between tax savings and mortgage qualification before you file.

"We need to sell our current home first."

Options include bridge loans, sale contingencies, or using a HELOC for the down payment on the new home. In competitive markets, sale contingencies can weaken your offer. We help you evaluate the right strategy for your timeline and financial situation.

"I am relocating from another state."

We work with remote buyers regularly. Pre-approval happens digitally, and we coordinate with your agent regardless of where you are moving from. We will walk you through any state-specific requirements so there are no surprises.

Frequently asked questions

How much do I need for a down payment?

As little as 0% with VA or USDA, 3% with conventional, or 3.5% with FHA. Many states also offer down payment assistance programs for first-time buyers that can reduce your out-of-pocket costs even further.

What credit score do I need to buy a home?

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.

How long does the home buying process take?

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.

What are closing costs?

Typically 2% to 5% of the loan amount. On a $350,000 purchase, expect $7,000 to $17,500 including lender fees, title insurance, appraisal, prepaid taxes, and insurance. Seller credits can offset some or all of these costs.

Can I get pre-approved before finding a house?

Yes, and you should. Pre-approval tells you what you can afford, your estimated monthly payment, and the cash you will need. It also strengthens your offer when you find the right home. Pre-approval letters are typically valid for 60 to 90 days.