“What kinds of things do I need to buy a house in New Jersey?”

This is a common question among home buyers, and the answer can vary depending on whether or not you’re using a mortgage loan. Most home buyers in the state do use mortgage loans to help finance their purchases. So that’s the angle we will take when addressing this question.

Here are some of the things that might be needed when buying a house in New Jersey, using a mortgage loan.

1. You (might) need a down payment when buying a house in NJ.

Unless you use a mortgage program that offers 100% financing, such as the VA program for military personnel, you will probably need a down payment of some kind when buying a home in New Jersey.

Which leads to the next question: How much will you have to put down when purchasing a house?

The minimum required investment can vary from one mortgage loan program to the next. For example, conventional loans (that are not insured by the government) allow for down payments as low as 3% in some cases. The FHA program requires borrowers to put down 3.5% of the purchase price or appraised value. The VA loan program offers 100% financing, which eliminates the need for a down payment.

So that’s one of the first things you might need to buy a house in New Jersey — an upfront investment. Also keep in mind that your down payment funds could be provided by a third-party, such as a family member or relative. Many of the home loan programs available to New Jersey home buyers today allow for down payment gifts of some kind.

2. You’ll need a manageable level of debt to qualify for financing.

Debt, in and of itself, is usually not a problem when trying to buy a home in New Jersey with a mortgage loan. But having too much of it can be an issue.

Banks and mortgage companies use something known as the debt-to-income ratio when reviewing loan applicants. This is simply a comparison between the amount of money you earn, and the amount of recurring debts you have.

The rules and requirements can vary from one loan program for next. Generally speaking, however, most mortgage products set a limit somewhere between 43% and 50%, for the total debt-to-income ratio. This is to ensure that the borrower is not taking on too much debt with the addition of a mortgage loan.

So that’s another thing that is generally needed to buy a house in New Jersey – a manageable level of debt, in relation to your income.

3. Borrowers generally need good credit to get a mortgage loan in New Jersey.

Credit scores are three-digit numbers derived from the information found within your credit reports. The reports themselves are basically a record of your previous borrowing activity, including such things as credit cards, auto loans, and previous mortgage loans.

A good credit score is needed to buy a house with a mortgage loan in New Jersey. The good news is that you don’t necessarily need perfect credit to qualify for a mortgage loan in New Jersey. There is some flexibility here, with regard to borrower credit qualifications. And some loan programs are more flexible than others.

Generally speaking, a score of 600 or higher will put you in a good position to qualify for a home loan. That number is not set in stone, it just represents current industry trends. Please contact us if you have any questions about the subject.

Have questions? Those are some of the things that might be needed to buy a house in New Jersey, when using a home loan. You might encounter other requirements as well, depending on the specifics of your real estate transaction and the type of loan you use. Please contact us if you have any mortgage-related questions, or if you would like to get pre-approved for a loan.