FHA

Mortgages insured by the Federal Housing Administration

are classified as FHA loans.

FHA does not make loans. The lending is done by FHA approved lenders.

FHA insurance allows a lender to make loans to qualified borrowers with limited funds for down payment. If the loan follows the “rules” set forth by FHA, the lender is guaranteed against loss.

In essence, The Federal Housing Administration tells lenders “We will protect you if you make loans to individuals with less equity (lower down payment) as long as you follow our guidelines.”

The other types of loans guaranteed by government sponsored agencies are VA and USDA.


Why Use FHA Financing in New Jersey?

When you are approved on an FHA loan, your mortgage insurance is also automatically approved.

This is not the case on a conventional loan. Whenever your down payment or equity is less than 20%, the lender must obtain private mortgage insurance. This mortgage insurance, or PMI, is secured through a separate company. The PMI Company can deny the coverage even after a lender approves your loan. In this case, your approval will be withdrawn, and your loan will be declined.


What is Mortgage Insurance (MI)?

The mortgage insurance (MI) insures the lender against losses.

When a borrower invests a low down payment (FHA), or no down payment (VA & USDA), the risk of the lender taking a loss is much greater than for a borrower who puts down 20%.

FHA, VA, and USDA will use the mortgage insurance fund to guard against lender losses. The lender can make a claim against the MI fund for losses incurred in the unfortunate event of a foreclosure for non payment.

Mortgage insurance benefits the borrower by making it possible to buy a home with low or no down payment.

FHA has an up front mortgage insurance (UFMIP) that is financed within the loan plus a monthly mortgage insurance payment. VA and USDA only have an up front MI fee.


Does FHA Have Income Restrictions in New Jersey?

FHA does not have income restrictions in NJ (or anywhere else) although the original intent was to help moderate income borrowers. VA also does not have income limitations, but USDA (100% financing) does.


May I Purchase a “Fixer Upper” or “Handyman’s Special” with an FHA Loan In New Jersey?

Yes. FHA does have programs that will finance in repair costs. It is the best financing option for borrower’s to take advantage of “fixer upper’s” or “handyman specials.” Not only can you finance in rehabilitation work, but also cosmetic improvements, appliances, and energy efficiency related work.


Does FHA have Loan Size Limits in New Jersey?

There are FHA loan size limits in NJ. They change on a yearly basis. The NJ FHA county loan size limits for 2017 are published below.

NJ County Name One-Family Two-Family Three-Family Four-Family
ATLANTIC – NJ $424,100 $543,000 $656,350 $815,650
BERGEN – NJ $636,150 $814,500 $984,525 $1,223,475
BURLINGTON- NJ $424,100 $543,000 $656,350 $815,650
CAMDEN – NJ  $424,100  $543,000  $656,350  $815,650
CAPE MAY – NJ  $424,100  $543,000  $656,350  $815,650
CUMBERLAND – NJ  $424,100  $543,000  $656,350  $815,650
ESSEX – NJ  $636,150  $814,500  $984,525  $1,223,475
GLOUCESTER – NJ  $424,100  $543,000  $656,350  $815,650
HUDSON – NJ  $636,150  $814,500  $984,525  $1,223,475
HUNTERDON – NJ  $636,150  $814,500  $984,525  $1,223,475
MERCER – NJ  $424,100  $543,000  $656,350  $815,650
MIDDLESEX – NJ  $636,150  $814,500  $984,525  $1,223,475
MONMOUTH – NJ  $636,150  $814,500  $984,525  $1,223,475
MORRIS – NJ  $636,150  $814,500  $984,525  $1,223,475
OCEAN – NJ  $636,150  $814,500  $984,525  $1,223,475
PASSAIC – NJ  $636,150  $814,500  $984,525  $1,223,475
SALEM – NJ  $424,100  $543,000  $656,350  $815,650
SOMERSET – NJ  $636,150  $814,500  $984,525  $1,223,475
SUSSEX – NJ  $636,150  $814,500  $984,525  $1,223,475
UNION – NJ  $636,150  $814,500  $984,525  $1,223,475
WARREN – NJ  $424,100  $543,000  $656,350  $815,650

If you have any FHA, Conventional Mortgage, or Credit related questions that have not been answered, click on the About Me link at the top of the page. Feel free to call or email me directly.


Email: mark@njfhapro.com, or call 732-207-8434.


I will certainly give you prompt and honest answers to any questions you may have.


We Offer 100% Financing, Pre-Approvals, and Credit Assistance!

USDA and VA are 100% financing programs. USDA financing is available in NJ.

Our Credit Repair Assistance is without charge (free).