Buying a house in New Jersey

In general, to understand the process of buying a house in New Jersey, you must consider three essential steps:

1. Save for the home’s down payment.
2. Obtain approval for a mortgage loan, such as a conventional, FHA, VA, or a state program.
3. Go through the mandatory review by a real estate attorney in New Jersey after signing the contract to confirm or cancel the purchase.

These are only the basic but essential steps. In this blog, we will explain in detail each stage of the process, the real costs to anticipate, and the practical tips that can make the difference when buying your home in the Garden State. 

Steps to know for Buying a house in New Jersey in 2025

The process to buy a house in New Jersey is similar to other states but adds certain particularities. Below, we show you the steps in detail to guide you in 2025:

Step 1: Save for the down payment

The first step to buying your home in NJ is to gather the down payment. Normally, lenders ask for 20% of the purchase price, but there are programs that allow you to put down less:

• Conventional loans: Allow down payments from 3% to 5%, although they require private mortgage insurance (PMI) until reaching 80% of the loan-to-value.
• FHA loans: Allow down payments of 3.5% but include their own insurance (MIP) which, in some cases, can remain for the entire life of the loan.
• VA loans (for veterans and service members): Do not require a down payment or mortgage insurance, although a funding fee between 1.25% and 3.6% is paid.
• State programs NJHMFA: New Jersey offers assistance for first-time homebuyers with grants of up to $15,000 to cover part of the down payment and closing costs.

Practical example of Buying a house in New Jersey: how to purchase a $350,000 home

Assuming you are going to buy a home at this price, the calculations would be:

• 20% down payment = $70,000.
• With FHA, the down payment is 3.5% = $12,250 but with MIP insurance.
• With state programs, the down payment can be reduced to almost $0 if grants and loans are combined.

Remember that the MIP (Mortgage Insurance Premium) is mandatory mortgage insurance on FHA loans and usually remains for the entire loan, which increases the total cost.

Step 2: Assess your financial situation

Before starting the home search, the buyer must be clear about their real budget. It’s not just the mortgage; there are also associated costs, such as:

• Property taxes: 2.2% average annually of the home’s value.
• Homeowner’s insurance: Ranges between $800 and $1,500 per year in NJ.
• Maintenance expenses: It is recommended to set aside at least 1% annually of the home’s value.
• HOA fees (Homeowners Associations): In NJ they are common in condos, co-ops, and townhouses. Fees can range from $150 to over $500 per month, and if not paid, the HOA can place a lien on the property.
• Home closing costs in NJ: Usually between 2% and 5% of the property price and include attorney’s fees, appraisal costs, and other charges.

Estimate of additional expenses

In addition to the down payment and the mortgage, in New Jersey there are fixed and one-time expenses that every buyer should anticipate. For a $400,000 home, the main expenses would be:

• Property taxes: $8,800 per year.
• Homeowner’s insurance: $1,200 per year.
• Closing costs: Between $8,000 and $20,000 (one time).

In total, that’s $10,000 to $12,000 additional per year, plus the mortgage.

Part of the closing costs includes obtaining a title insurance policy in New Jersey, essential to protect your investment against hidden claims or liens.

Step 3: Get a mortgage pre-approval

In NJ, most sellers require a mortgage pre-approval letter before accepting an offer. To obtain it, the lender evaluates:

• Credit score (ideally 670+).
• Debt-to-income ratio (DTI).
• Employment history (minimum 2 years).
• Funds available for the down payment and closing.

Some tips we offer after receiving pre-approval are:

• Do not open new lines of credit.
• Do not change jobs suddenly.
• Keep payments up to date to avoid affecting your score.

The pre-approval letter does not obligate you to take the loan with that lender.

Restrictions for immigrants

Under new immigration policies, some lenders reject certain types of mortgage loans in the United States for immigrants without a Green Card. In these cases, options are limited to:

• Conventional loans with a higher rate.
• NJHMFA state programs that still accept an ITIN.

Example: A buyer with $80,000 in annual income and minimal debts can be approved for a $350,000 mortgage in NJ. However, they must have at least $15,000 to $20,000 available to cover the down payment and closing costs.

Mortgages for self-employed individuals in New Jersey

If you are self-employed or have independent income, the lender will evaluate your tax returns from the last two years to determine your net income.

Some lenders offer self-employed mortgage programs that allow the use of bank statements or financial statements instead of relying exclusively on the tax return.

Step 4: Start the home search

Finding the right home requires some prior planning. For example, you will need to know the following:

• Priority list: Number of bedrooms, bathrooms, location, access to transportation, proximity to schools and services.
• Market timing: Generally, between May and June there are more options, but between December and January there is less competition, so prices can be better.
• Type of home in New Jersey: Here you can find:
  • Single-family: More privacy, more maintenance.
  • Multifamily: Generates rental income but with stricter rules.
  • With HOA: Monthly fees that cover services but with strict rules.
  • Fixer-uppers: Can be a profitable investment but require detailed inspections.

Practical example: A $380,000 home in Newark with a $200 per month HOA can cost the same as a $420,000 home in a suburb without an HOA.

Step 5: Attorney review period

In New Jersey, any real estate purchase that uses the NJ Realtors standard contract includes an attorney review clause of 3 business days. During this time:

• The attorney can review or modify the contract.
• The agreement can be canceled without penalty.
• Both parties can negotiate new terms.

This period may not automatically apply if the contract was drafted by an attorney from the outset or in private sales (For Sale by Owner) that do not use the standard contract. In those cases, an attorney should review the document before signing, because there might be no right to cancel.

For all these reasons, it is essential to have a real estate attorney in NJ, since they:

• Protect your interests in the negotiation.
• Review mortgage, inspection, and contingency clauses.
• Avoid legal problems later on.

Example: Thanks to a real estate attorney, a buyer discovered that the house had hidden tax liens. The review allowed the contract to be canceled without losing the deposit.

Step 6: Make an offer

When you find the ideal property, it’s time to submit an offer. To do this, it is essential to know the following aspects:

Basic elements of an offer in NJ

These elements give structure to the proposal and help the seller make an informed decision:

• Proposed purchase price.
• Financing terms.
• Contingencies. For example, inspection, mortgage approval, or appraisal.
• Estimated closing date.

Key clauses

Beyond the basic elements, clauses can protect your interests during the process. These usually cover risks and responsibilities between buyer and seller:

• Mortgage contingency: Protects you if the loan is not approved.
• Pest and radon inspection: Common in NJ due to environmental risks.
• Shared expenses: Negotiation over repairs or closing costs.

Due to high mortgage rates, many sellers are offering concessions. For example, paying part of the closing costs or lowering the price in exchange for a quick closing.

Example: In Bergen County, a buyer negotiated for the seller to cover $10,000 in closing costs in exchange for signing in less than 30 days.

Step 7: Get a mortgage in New Jersey

After the offer is accepted, the formal process of applying for the mortgage begins. 

After meeting the requirements to apply for a mortgage in New Jersey, you can choose from several types of lenders in the state:

• Traditional banks.
• Credit unions.
• Private mortgage companies.

Factors to compare

Before signing the mortgage, it’s wise to analyze and compare several aspects among lenders to ensure you get the best terms:

• Interest rates (in 2025 they are around 6.9% to 7.1% for 30-year fixed in NJ).
• Closing costs (Between 2% and 5% of the price).
• Additional charges (appraisal, credit reports, insurance).

Required documentation

For the lender to evaluate your mortgage application, you must gather certain documents that prove your ability to pay and the validity of the transaction.

• Tax returns for the last 2 years.
• W-2 forms and pay stubs.
• Bank statements and list of debts.
• Signed purchase agreement.

In 2025, the federal administration has tightened some requirements for immigrants without lawful permanent residence. Now, at many banks in NJ it is required to have:

• A valid Green Card or a current work visa, and
• An active Social Security Number.

Quick example: A couple with $90,000 in annual income obtained a $350,000 mortgage with a 10% down payment. Their monthly payment, including taxes and insurance, came to about $2,750.

Step 8: Inspection and appraisal

The home inspection in New Jersey is very important because it determines whether the home has hidden defects. These inspections include:

• The home’s structure, such as foundation, roof, electrical, etc.
• Radon test.
• Pest inspection (such as termites).

The average cost of these inspections usually ranges between $400 and $700 depending on the size of the property and its location.

Real estate appraisal

As with the inspection, the lender also requests a real estate appraisal in New Jersey to ensure that the property truly is worth the amount being financed. 

This process considers factors such as: 

• Location,
• Condition of the home, and 
• Recent comparable sales in the area.

If the appraisal comes in lower than the agreed price, the buyer can renegotiate or even cancel the contract. 

However, this is only possible if the contract includes an appraisal contingency. Always verify that your contract has it to avoid losing your deposit.

Example: In Hudson County, a house listed at $500,000 was appraised at $470,000. The buyer got the seller to reduce the price by $20,000 in order to close.

Step 9: Prepare for closing

Closing is the final step where documents are signed and the property is transferred.

Before closing:

In the days leading up to the purchase, it is important to verify that everything is in order and that the property meets the agreed terms.

• Do a final walk-through 24 hours before.
• Verify that the agreed repairs have been completed.
• Confirm that appliances and systems are functioning.

During closing:

This is the time to sign the legal documentation and make the necessary payments to complete the transaction. This includes:

• Signing the promissory note and the mortgage.
• Signing and recording the property deed in New Jersey in the buyer’s name.
• Transferring funds (down payment and closing costs).

After closing:

Once the process is completed, the buyer officially receives the property and the loan becomes active. Therefore:

• The recorded deed is received.
• The lender sends the mortgage payment schedule.
• In some cases, the loan is transferred to another entity for servicing.

Key tip in NJ: Closing costs are usually high (between 4% and 5% of the price). For a $400,000 home, this means paying between $16,000 and $20,000 extra.

What does buying a house in New Jersey involve?

Buying a house in New Jersey is not identical to doing so in other states. There are particularities that every buyer should know; these are:

• Mandatory attorney review clause: In NJ, after signing a standard purchase contract, the parties have 3 business days for an attorney to review or cancel the contract. This protects buyers from abusive clauses.
• Competitive market in 2025: 30-year mortgage rates hover around 6.9%, which has reduced buyers’ purchasing power.
• High property taxes: New Jersey has one of the highest property taxes in the country (annual average of 2.2% of the home’s value).
• Special requirements for immigrants: Although US citizenship is not required, certain loans (such as FHA or VA) have been restricted in 2025 for some immigrants without lawful permanent status.

Example: If you buy a $400,000 home in NJ, in addition to the down payment, you should plan for at least $8,800 annually in property taxes and 2% to 5% in closing costs.

If instead of buying you are thinking about selling a house in New Jersey, we also have a complete guide and legal services to accompany you throughout the entire sales process.

Frequently asked questions about Buying a house in New Jersey

Do I need to be a US citizen for Buying a house in New Jersey?

No. Anyone can buy property in New Jersey, regardless of citizenship. However:  

• If the purchase is financed with a mortgage, most banks require the buyer to have obtained a Green Card or an employment visa.
• If the purchase is in cash, financing requirements do not apply, although valid identification must be presented and the legal requirements of the transaction must be met.

For more information on how to buy a house in New Jersey based on your immigration status, read our blog: “Can an illegal immigrant buy a house in the United States?”.

What is the minimum down payment to buy a house in NJ?

The down payment amount varies according to the type of mortgage you choose and your financial situation. These are the most common requirements:

• FHA loans: Minimum 3.5% if your credit score is 580 or higher. If it is between 500–579, the down payment can rise to 10%.
• Conventional loans: Options from 3% to 5%, depending on the lender, your credit, and debt-to-income ratio.
• VA loans: 0% down payment for eligible veterans.
• USDA/Rural loans: Financing up to 100% if the property is in an eligible area and you meet the income requirements.

Can I buy a house in NJ with no credit?

Yes, it is possible, although the process is usually more complex. Some lenders accept an alternative credit history, such as proof of rent or utility payments, but interest rates are usually higher.

What programs exist for first-time buyers in NJ?

If you are looking for assistance as a first-time homebuyer in New Jersey, there are state and federal programs that can make the process easier:

• NJHMFA First-Time Homebuyer Program: Assistance for down payment and closing costs.
• First-Generation Down Payment Assistance Program: Provides an additional amount for those who are the first in their family to become homeowners.
• HFA Advantage Mortgage Program: 30-year fixed-rate conventional loan, lower down payments, and reduced mortgage insurance.
• First-Time Homebuyer Mortgage Program: Another base mortgage program for first-time buyers.

How our real estate attorneys help you with Buying a house in New Jersey

Knowing how to buy a house in New Jersey can be exciting, but it is also a process with legal and financial steps that must be handled carefully. 

Every decision, from mortgage pre-approval to closing, can impact your financial future. At Curbelo Law, our real estate professionals in Ridgewood, NJ, accompany you throughout the process, such as:

• Contract review and negotiation.
• Attorney review period.
• Resolution of issues that may arise in inspections or appraisals.
• Representation at closings and property recordings.
• Strategic advice for immigrant buyers.

Do not take this step alone. Contact us today for a private consultation and ensure that your investment is protected at every stage of the process.