How to Buy a Home in New Jersey

How to Buy a Home in New Jersey

Why Buy a Home in New Jersey?

Should you move to New Jersey? The taxes are so high! Why would anyone want to live there? Maybe you have heard a few of these things from fellow New Yorkers, or from others that are not from the area.

Why did I move to New Jersey? My personal answer is two-fold: competition and opportunity. I moved from Michigan (where I was born and raised) to New Jersey in 2012 for these two reasons.

What do I mean by competition? Competition in everything - schools/education, employment, housing, social stature, and financial wealth. When I moved to New Jersey, I believed that by surrounding myself with others that are better than me, I would become the best possible version of myself.

What do I mean by opportunity? Opportunity by my definition means ‘a chance’. New Jersey provides entrepreneurs a chance to start a small business and homebuyers a chance to double their net worth in less than five years. I personally did both. I started a mortgage company in 2013 and have doubled my life savings a few times since I moved to New Jersey.

I had 12 different addresses in my teens and twenties. If you’re reading this article and have some big dreams and goals for your life and your family, I would love to be the first to welcome you to the Garden State!

Is it hard to buy a house in New Jersey?

In a word - Yes.

Why is it hard to buy a house in New Jersey? The answer is that it is incredibly competitive and also very expensive. How competitive? According to the National Association of Realtors (NAR) economist Lawrence Yun, the average property in the US receives between 2 and 3 offers as of April 2026 (https://www.nar.realtor/magazine/real-estate-news/slow-sales-high-home-prices-whats-going-on). This stat is for the entire US. As a New Jersey Loan Officer working for an independent mortgage broker, I only see a small piece of the overall New Jersey market, but I can confidently estimate that the average number of offers for my clients is at least 8. This is approximately four times the national average.

How Expensive? According to the New Jersey Association of Realtors’ April 2026 report, Bergen County’s median sales price was $840,000, Hudson County’s median sales price was $652,500, Essex County’s median sales price was $799,999, Passaic County’s median sales price was $637,500, and Morris County’s median sales price was $775,000 (https://njar-public.stats.10kresearch.com/reports). 

One more interesting statistic related to the competitive nature of home buying and selling real estate in northern New Jersey is that the average number of ‘Days on Market’ (how long it takes the seller to accept a buyer’s offer) ranges from 28 - 46 days for single family homes and 24 - 43 days for condos and townhomes. This is much less than the national average of 57 days (https://www.realtor.com/research/april-2026-data/).

In summary, New Jersey real estate is more expensive and sells faster than real estate in other states.

What Makes New Jersey Real Estate an Excellent Investment?

Owning real estate in northern New Jersey has many benefits:

1. Close proximity to New York City. Being able to commute to employment with opportunities to make $100,000 or more as a recent college graduate is very attractive to many younger home buyers.

2. Excellent school ratings. New Jersey public schools are ranked 4th in the nation in 2026 and consistently rank in the top 5 states each year (https://worldpopulationreview.com/state-rankings/public-school-rankings-by-state)

3. Diverse Communities. New Jersey is the 7th most diverse state as of 2025. Between 2010 and 2024, New Jersey’s Hispanic population increased by 42%, and New Jersey’s Asian population increased by 40% (https://www.census.gov/quickfacts/fact/table/NJ/PST045225)

What Makes New Jersey Home Buying Unique?

New Jersey’s home inspection, attorney review process, purchase contract expiration, time of the essence and settlement procedure are different from other neighboring states.

In New Jersey, buyers perform a home inspection AFTER the purchase contract is fully negotiated and they have exclusive rights to purchase the property. Additionally, New Jersey customarily affords buyers 10 - 14 days to complete the home inspection. In other states like New York, the home inspection may take place before or while the home offer is being negotiated. In Michigan, the typical home inspection negotiation is completed within 5 - 7 days maximum.

The attorney review step is another unique part of the home buying process in New Jersey (especially in Northern New Jersey). Attorney review is typically a 3 business day process in which the buyer’s and seller’s attorneys review and revise the purchase agreement that was signed by the buyers and sellers.

Another interesting fact about purchase contracts in New Jersey is that they don’t expire. In other states, the purchase contract can be considered void if the buyer or seller fails to close by the contractual date. In New Jersey, a new contract is not required and the buyer and seller are still obligated to perform under the original contract (even if the dates have been missed).

One legal term you might find in a New Jersey purchase contract is something called ‘Time of the Essence’. This phrase and mechanism for contract enforcement is part of case law and is not a legal statute (https://law.justia.com/cases/new-jersey/appellate-division-published/1956/42-n-j-super-514-0.html). The common practice in New Jersey is that when the original closing date is missed, a new closing date is set automatically for either 10 calendar days or 10 business days from the original date. If either party fails to appear (and close the contract) on that date, they are in breach of the contract, and the other party can use legal remedies specified in the contract. This topic is one of the many topics negotiated in attorney review.

One other difference in New Jersey is the settlement procedure. In New Jersey, the title company typically acts as the escrow agent. The title company collects all of the funds due from the buyer and lender and disburses the funds to all parties - sellers, realtors, attorneys, insurance agents, etc. In other states such as New York, the buyer may be required to bring multiple individual checks to the closing to pay each party individually.

The First Step to Purchasing a Home in New Jersey

For a more detailed guide to purchasing a home in New Jersey, please check out our Buying Guide Page.

For the purpose of this blog entry, we will take an in-depth look at the first step of the home buying process, which is to obtain a high-quality, accurate preapproval letter from a financial institution that you trust.

Step 1: Get PreApproved

The first step to buying a home in New Jersey is to obtain a PreApproval Letter. A PreApproval Letter confirms that a mortgage professional has reviewed your income, assets, credit report, and monthly debts and determined that you will be able to obtain a mortgage. Every mortgage company has a different process and the quality and accuracy of the preapproval letter itself vary widely. Below are the basic elements of the basic elements of a preapproval letter.

1. Calculate available assets. Assets are used for down payment, closing costs, prepaid taxes, prepaid home insurance, and prepaid interest. One interesting fact about many New Jersey home purchases is that the amount paid for taxes, insurance, and interest often EXCEEDS the amount paid for closing costs (fees paid to companies for services required to obtain a mortgage).

2. Calculate qualifying income. Income is used to determine the borrower’s ability to repay the mortgage loan. It is important that the Loan Officer understands all of the mortgage guidelines for each specific program and the nuances of each individual lender’s interpretation of those guidelines.

3. Calculate monthly debts. Once the credit report is pulled, many of the borrower’s monthly debts will be automatically imported into the loan origination software. This is NOT a complete list of monthly debts and does not include items such as judgments, child support, alimony, or income tax repayment plans.

4. Review the Credit Report. Perhaps the most important step of completing a preapproval review is a careful examination of the borrower’s credit report. This review extends beyond simply confirming the FICO credit score is above the minimum threshold. The requirements for number of tradelines, on-time payment history, treatment of derogatory items, and the amount of monthly debt obligation (vs the payment listed on the credit report) vary per loan program and per lender.

Once the preapproval review is completed, the borrower is typically given a maximum purchase price, minimum down payment, maximum loan amount, an estimated interest rate and perhaps a maximum monthly payment. These items usually appear on a very generic preapproval letter that the borrower is supposed to share with their realtor and the seller's realtor to let all parties know that the borrower is creditworthy.

The problem is that a single generic preapproval letter is not sufficient to accommodate every scenario that a borrower may encounter when shopping for their new home. For example, the amount of property taxes affects the maximum purchase price and the amount of cash due at closing. The property taxes may range from $8,000 to $16,000 for a client that is purchasing an $800,000 home in Northern New Jersey. For this reason, the borrower may qualify to purchase an $800,000 single family home with $8,000 in property taxes, but not one with $16,000 in property taxes.

Each lender or broker has their own solution to determine the borrower’s qualifications. At Brightwire Loans, our approach is highly customized, and each borrower can determine their monthly payment, minimum down payment, maximum price, maximum loan amount, maximum property taxes, maximum home insurance costs, and maximum homeowners association fee costs by using the Brightwire Loans App (available in the Apple App Store and Google Play Store). Here is a link to download the App (Apple, Google).

Brightwire Loans offers programs with a minimum down payment of either 0% down payment, 3% down payment, 5% down payment, 10% down payment, or 20% down payment.

Many buyers are tempted to use mortgage calculators they find on Zillow.com, Realtor.com, or other sites to calculate their estimated monthly payment. The problem with these calculators is that they typically do not accurately calculate Private Mortgage Insurance (PMI), the interest rate does not change based on down payment, and the property taxes / property insurance calculations are not customized for New Jersey. The Brightwire Loans App has a qualification calculator that is built in and includes all of the above listed features.

What are the different types of loan programs available in the United States?

Most borrowers purchasing a primary residence, 2nd home, or investment property will be pursuing a Conventional Loan, Federal Housing Administration (FHA) Loan, or Veterans Affairs (VA) Loan. These loan types are commonly called Agency Loans, as government agencies (Fannie Mae, Freddie, Mac, and Ginnie Mae) created the standardized loan guidelines. Some less common types of loans are Non Qualified Mortgage (Non-QM) Loans and Jumbo Loans. A Non-QM loan is an umbrella term that describes loans where traditional documentation is not used to demonstrate the ability to repay (https://www.fdic.gov/news/financial-institution-letters/2013/fil13059.html). A Jumbo Loan is a “larger loan” that exceeds the conforming loan limits - $1,249,125 - for Single Family Homes and Condos in most northern New Jersey Counties and $832,750 for most southern New Jersey Counties (https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026).

What documents are required for a preapproval?

The documents required for a preapproval are different for each type of loan program. In general, the agency loan programs will require tax returns (typically 2 years), W2’s (typically 2 years), paystubs, Bank Statements, and Government Issued ID.

What is a prequalification? How does it compare to a preapproval?

Although the definition of these two terms are interpreted differently by each mortgage company, the general consensus is that a prequalification is based on information that is STATED by the borrower (typically over the phone or through an online application).

A preapproval is instead based on information that has been VERIFIED by the mortgage company issuing the preapproval.

In New Jersey, prequalifications are not accepted by most real estate agents, sellers, and attorneys when a buyer is submitting an offer to purchase real estate. Instead, a preapproval will be required.

How do I know if my financial institution has provided me with a PreQualification or a PreApproval letter?

Preapprovals and Prequalifications are essentially “free consulting” from the mortgage company that issues them. The mortgage company is not being compensated (unless they are charging an application fee) to review documents, pull the credit report, and issue the preapproval letter. As a result, many mortgage providers do not put much effort into the preapproval process or ensuring that the preapproval itself is accurate or valid.

One way to tell if you have a prequalification is to confirm if the lender pulled your credit report. If your credit report was not pulled, then you have a prequalification.

Another way to tell if you have a prequalification (and not a preapproval) is if the letter states “…the information provided in this letter is estimated only and is subject to full underwriting review” or “…the information in this letter is based on income, asset, and debt information that you provided and has not been verified”.

Many larger retail lenders (meaning entities other than mortgage brokers and banks) are not permitted to issue preapproval letters by their company’s management.

What are the important elements of a PreApproval Letter?

The first and most important aspect of a preapproval letter is the credit report. At Brightwire Loans, we typically use a soft pull of credit for mortgage preapprovals to help ensure that the client’s credit score does not decrease (due to the credit inquiry) by getting PreApproved. Additionally, at Brightwire Loans, we pull ALL THREE CREDIT BUREAUS - Experian, Equifax, and TransUnion - when completing a preapproval.

Pulling all three credit bureaus at the time of preapproval is the only way to gain certainty that there will be no issues at the time of application. The reason is that if negative information is being reported to only one of the three credit bureaus (Experian for example), and that credit bureau is not pulled for the preapproval, then the client may discover they are not able to qualify to purchase a property.

Alternatively, the client may still qualify for the loan, but with substantially inferior terms (higher rate, higher fees). If this is the case, the client typically only finds out about this issue after they are in contract to purchase the property (and have spent money on an inspection, an attorney, an appraisal, etc).

So why don’t all mortgage brokers simply pull all three credit bureau reports for every preapproval? The answer is simple! It is expensive. As of May 2026, the typical three-bureau credit report (sometimes called a tri-merge credit report) costs about $100 - $150 per borrower (https://kutv.com/newsletter-daily/cost-of-credit-reports-keeps-rising-for-potential-homebuyers). This means that if there is a married couple seeking a mortgage preapproval, and a tri-merge credit report is being used, the mortgage broker will spend $200 - $300 in hard costs to complete the preapproval (plus the soft costs associated with the time spent reviewing the documents and confirming their qualification).

How long does the preapproval document and qualification review process take?

The answer to this question varies significantly between mortgage providers. Some lenders may use AI to make a decision, and the process takes them less than 1 second. Others may only confirm that they received all of the documents and not even open or review them before issuing a preapproval letter.

Brightwire Loans spends about 4 - 8 hours with a human reviewer for each preapproval. This includes reviewing documents, completing a draft loan application, pulling credit, and analyzing each file for eligibility across the hundreds of loan programs we offer.

Brightwire’s turnaround times for preapprovals vary as total loan application volume changes throughout the year, but our goal is to complete agency preapprovals (Conventional, FHA, and VA loans) within 2-3 business days and Non-QM preapprovals within 4-5 business days.

If you’re interested in working with Brightwire Loans to purchase or refinance your property in New Jersey, please click the call now or apply now link below:

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FAQs 

How much do I need for a down payment in New Jersey?

The short answer is that 0% down is the lowest down payment if you are purchasing a property for $832,750 or less.

If you can afford to make a down payment of 3%, your terms (total monthly payment, rate, and fees) will be much lower.

If you are purchasing a property in a high-cost New Jersey county for $1,388,000 or greater, you will need 10% down payment (https://singlefamily.fanniemae.com/media/6796/display)

If your county is not considered high cost, then you will need at least 10% down payment if your purchase price is $925,278 or greater.

One important advantage of working with Brightwire Loans is that we do not require you to be a first-time home buyer to purchase with either 0%, 3%, 5%, or 10% down payment. Even if you presently or formerly have owned property, you can still take advantage of these low down payment programs for primary residence purchases.

Do I need a real estate attorney in NJ?

A real estate attorney to represent you as a buyer is highly recommended if you are purchasing in the following counties of New Jersey - Bergen, Hudson, Passaic, Essex, Morris, Sussex, Union, Warren, Hunterdon, Somerset, Middlesex, Monmouth, or Ocean.

An attorney is generally not needed if you are purchasing in Mercer, Burlington, Camden, Gloucester, Salem, Atlantic, Cumberland, or Cape May counties.

If you are purchasing property from a family member or close friend, Brightwire can help you draft a purchase contract and avoid the need to hire a real estate attorney.

Please call or schedule a consultation if you need a referral for a real estate attorney.

How long does it take to buy a house in New Jersey?

The typical homebuying process with preapproved Brightwire Loans borrowers takes 20 days from application to closing day.

According to Freddie Mac, the national average for all lenders is 43 days from application to closing (https://myhome.freddiemac.com/buying/closing-your-loan-when-buying).

Most larger banks and credit unions process loans much slower than independent mortgage brokers like Brightwire Loans. One item to compare when shopping for your mortgage loan is how many days the interest rate is locked. If a lender tells you that your rate is locked for 60, 75 or 90 days, this usually means that they will move very slowly and that it will take 2 - 3 months to close if everything proceeds smoothly.

What are typical closing costs in NJ?

The typical closing costs in New Jersey will be between $6,000 and $11,000.

Below is a quick table that you can generally use to estimate your closing costs based on your purchase price:

Can I buy a house in NJ with bad credit?

Yes, you can purchase a home in New Jersey with bad credit. If your credit score is 680 or higher, you will likely want to pursue a conventional mortgage. If your credit score is 580 - 679, an FHA mortgage will likely be your best option. If your score is 579 or lower, then you will only likely qualify for an investment property purchase (to buy a home that you do not occupy and is held for rental income).

How competitive is the New Jersey housing market in 2026?

Below is a graphic of the months of supply of housing in New Jersey. The ‘months of housing supply’ are a measure of competition and indicates how long it would take all of the homes on the market at present to sell. The lower the number of months of housing supply, the more competitive the market.

The table and the graph clearly show that the number of months of inventory is decreasing month-over-month towards the end of 2025. The general downward direction of the line plots for Single-Family, Townhouse-Condo, and Adult Communities over the last 15 years demonstrates that 2026 will be equally or more competitive vs 2021, 2022, 2023, 2024, and 2025.

What is the attorney review period in NJ?

The attorney review period is typically a 3-business-day process in which the buyer’s and seller’s attorneys review and revise the purchase agreement that was signed by the buyers and sellers.

The attorney review process in New Jersey is typically applicable in Bergen, Hudson, Passaic, Essex, Morris, Sussex, Union, Warren, Hunterdon, Somerset, Middlesex, Monmouth, and Ocean Counties.

The attorney review period began in 1980 when the New Jersey State Bar Association sued the New Jersey Association of Realtor Boards, claiming that realtors entering data into standardized form contracts was an unauthorized practice of law (without a license). In 1983, the New Jersey Supreme Court ruled that each time a realtor prepared a contract, they must include a ‘Notice to Buyer and Seller’ that allows either or both parties to have an attorney review their contract before it be considered final and binding (https://law.justia.com/cases/new-jersey/supreme-court/1983/93-n-j-470-0.html).