Federal Housing Administration (FHA) home loans are a popular financing path among New Jersey home buyers. In fact, data collected during 2017 revealed that FHA-insured mortgage loans accounted for nearly 30% of all home purchase loans in New Jersey.

That put the FHA program in second place behind conventional or “regular” loans, which were the most popular type of mortgage in New Jersey last year.

FHA and Conventional Loan Market Share in New Jersey

The Urban Institute, a housing and economic research group based in the nation’s capital, created an interactive map tool that shows the market share of different mortgage programs. It offers results for the nation as a whole, as well as the individual states.

We used this tool to figure out the percentage of New Jersey home buyers who use FHA versus conventional loans when purchasing a property. As it turns out, conventional mortgage loans still reign supreme.

Here are the market-share percentages for loan programs used last year:

• Conventional, 65.4% of home buyers
• FHA, 29.2%
• VA, 4.3%

That adds up to 98.9% by the way. Special mortgage financing programs, such as the USDA loan designed for rural borrowers, likely made up the remaining 1.1% of loan volume.

Note: These figures are for 2017. The finalized numbers for 2018 were not available at the time this article was published.

Difference Between the Mortgage Programs

As a home buyer, it’s important to understand the key differences between different loan program and products. And if you need mortgage financing in New Jersey, you could speak to one of our loan officers about your options.

The three programs listed above — conventional, FHA and VA — account for the vast majority of home purchases in New Jersey. But what’s the difference between them?

We’ve explained the different types of mortgage loans in previous blog posts. Here’s a quick recap:

• Conventional: These “regular” mortgage loans are not insured or guaranteed by the federal government. They are the most popular financing option among home buyers in New Jersey, and also nationwide.
• FHA: The Federal Housing Administration’s loan program is one example of a government-insured mortgage. The FHA (a government agency that’s part of HUD) insures lenders against losses related to borrower default. This program requires borrowers to make a down payment of at least 3.5%.
• VA: These loans are also backed by the government. In this case, it’s the U.S. Department of Veterans Affairs that guarantees a portion of the loan. The VA program is limited to military members and veterans, along with their spouses in select cases. As you can see from the numbers above, there are far fewer VA loans in New Jersey compared to the other two programs.

Which Financing Option Is Right for You?

In addition to the three main loan programs mentioned above, borrowers have other choices to make about their financing. For example, you can choose between a fixed or adjustable-rate home loan. You can also decide whether or not you want to pay “points” at closing in exchange for a lower rate. You have choices on top of choices.

This is why it’s so important to speak to a knowledgeable loan officer about your financing options. Online research is helpful (and highly recommended), but it doesn’t take the place of a one-on-one consultation with a mortgage professional.

Please contact us if you have questions about the different types of mortgage loans available in New Jersey, or any other financing-related topic.