Little-Known First-Time Home Buyer Programs – Federal and States Levels (New Jersey/Pennsylvania)

If you are still wondering, or thinking, or contemplating about buying your first home and think you need a lot of money to buy, then you check out these little-known first-time home buying programs.

I put together this series, with information of some of these programs at a federal, state, county and individual financial institutions.    Working with so many first-time home buyers, I have seen them make the most of these programs, helping them get into their first home, without breaking their bank.  Sometimes, they even have enough money left over to make their house a home, putting their own personal touches. 

This week, we will be looking at the programs on the federal and states (New Jersey and Pennsylvania) levels. 

Federal Level

While there are a few programs that are making their way through the legislature and have not been finalized yet, I did come across one program that may be of interest to you. 

Good Neighbor Next Door Program

• This program is offered by HUD (Housing and Urban Development governmental agency). 
• To be eligible for this program you must be a law enforcement officer, teacher (K-12), firefighter or emergency medical technician.
• This program offers a 50% discount from the list price of the home
• Only single-family homes located in revitalization areas are eligible to be purchased through the program.  To see what homes are currently eligible, go to the website HUD homes for sale (Click here).   There may not be any homes available in your area but keep checking the site.
• Buyer will be required to sign a second mortgage and note for the discounted amount.  No interest or payments will be charged for this “silent second”.
• Eligible buyers will need to live at the property for at least 3 years.
• For more info about this federal program, go to the website:  Hud.gov/Good Neighbor Next Door (Click Here).

State Level

New Jersey

NJHMFA (New Jersey Housing and Mortgage Finance Agency) Down Payment Assistance Program For First-Time Homebuyers

• This is the most widely known program throughout the state especially by many lenders
• It provides up to $15,000 of down payment assistance (DPA) based upon the county of the property being purchased.  In the South Jersey counties, it is up to $10,000 except for Mercer County.
• The assistance is an interest-free, five year forgivable second loan with no monthly payment.
• This program is for first-time home buyers. 
• The state considers a first-time home buyer as someone that has not owned a home within the previous 3 years.
• The home purchased must be a primary residence (you must live in the property) in any New Jersey county.The mortgage for this program is a 30-year fixed rate insured by the government (FHA/VA/USDA loans). 
• The special mortgage for this program must only be obtained through NJHMFA participating lenders.Certain restrictions such as maximum household income and purchase price limits apply. 
• Buyers need to live in the home for 5 years and then the DPA will be forgiven.  If the buyer sells the house before the 5 years, then they will have to pay back the DPA.   

First Generation Down Payment Assistance Program

• This program is also under the NJHMFA umbrella
• This program provides up to $7,000 in down payment and closing cost assistance.
• This program can be used combined with the First Time Home Buyer program to have a total amount between $17,000 to $22,000 for total down payment and closing cost assistance.
• This program is for qualified first-time homebuyers who are also first-generation homebuyers.
•  The assistance is provided as an interest-free, five-year forgivable second loan with no monthly payment.
• First-generation homebuyer is someone whose parents or legal guardians do not have any ownership interest in any residential real property in any state or territory of the U.S or outside of the U.S. and whose spouse and each member of their household has not had any present ownership interest in any residential property used in any state or territory of the U.S. or outside of the U.S.  or
• First-generation buyer can be someone who has been placed in foster care in NJ.
• The mortgage for this program is a 30-year fixed rate insured by the government (FHA/VA/USDA loans). 
• The special mortgage for this program must only be obtained through NJHMFA participating lenders.
• Certain restrictions such as maximum household income and purchase price limits apply.
• For more info on the NJHMFA programs, go to the website:  NJHMFA down payment assistance programs (Click here).

Pennsylvania

Pennsylvania Housing Finance Agency (PHFA) Grant

• Available for first-time homebuyers, veterans and those purchasing in specific areas designated for revitalization
• Can be combined with other PHFA programs
• Does not require repayment but must be used towards the purchase of a home costs when using the approved loan program (see below)

Keystone Advantage Assistance Loan Program

• Provides a second mortgage loan to help with the costs of purchasing a home
• Qualified borrowers can receive up to 4% of the purchase price or market value or $6,000 (whichever is less)
• Loan to be repaid at 0% interest for 10 years
• Borrowers must have a minimum credit score of 660
• Assistance can only be used for minimum required downpayment and/or closing costs
• Buyer’s liquid assets may not be greater than $50,000
• May be used on Conventional, FHA, VA or USDA loans and subject to their underwriting requirements

Keep in mind, sometimes that with some of the programs, the funds allotted to them may run out before the end of the fiscal year.  When that happens, potential buyers will have to wait for the new fiscal year for the programs to receive new funding.  Not everyone qualifies for these programs, but it is worth your time to check them out to see if qualifying for any of them is a possibility. 

Stay tuned for next week’s series where I will write about the programs available in the counties in our area, both in NJ and PA.

If you are ready to get started on your home search and wanted to start the conversation, reach out me at ccr@ccrsellsrealestate.com to set up a time to chat, or click on the box below.