What is a New Jersey FHA Loan?
A New Jersey FHA loan is a home loan for the state of New Jersey, featuring more flexible financing options than in the case of most other loans. This flexibility is on account of FHA loans being backed by the government: either the Federal Housing Administration (FHA) or the US Department of Housing and Urban Development (HUD). Because the government is there to help pay back the lender in case the borrower is unable, lenders are at less of a risk and hence require fewer precautions, i.e., more relaxed application requirements, lower interest rates, etc. In New Jersey, an applicant with a credit rating of 580 is required to make a down-payment of 3.5%, while applicants with lower scores than 580 will be required to pay 10% upfront. FHA loans are even open to individuals who in the past have filed for bankruptcy or foreclosure, so long as such events have been settled and followed by a period of stability. These conditions make FHA loans an excellent option for individuals purchasing a house for the first time. Below, we at Online Loans have broken down the assorted information available across the web into a convenient need-to-know to make getting you FHA loan as simple as possible. Feel free to use our mortgage calculator as well to help determine how much your loan will end up costing you.
In New Jersey, FHA loan applicants who intend to purchase a property will have certain requirements in regards to said property. For example, it will be required that the applicants intend to live in, as opposed to rent out, the units. Additionally, applicants will need to provide an appraisal for the property, ensuring that it meets health and safety standards (they will be responsible for paying the costs of any repairs/renovations needed to bring the property up to code). Other more general requirements for obtaining an FHA loan pertain to the applicant’s financial status. For example, in the case of FHA loans of $625,000 or more, for 15 years or less, a borrower with an LTV of 90% or higher will have an annual insurance premium of .45%. The latter will then determine what will be the total monthly premium. Other’s pertain to the applicant’s credit history. For instance, borrowers who in the past have filed for bankruptcy will have to have had a period of financial stability of at least two years, while in the case of borrowers who in the past have settled a foreclosure it is required that three years have passed since the foreclosure.
Although there is no standard rate for FHA loans, various criteria will help come into play to determine rates, such as the specifics of the loan itself, and the financial history of the applicant. In general, the better a borrower’s financial situation, the lower the rates will be (see our credit rebuilding guide). Similarly, longer loans tend to have lower rates.