FHA Loans: What You Need to Know in 2022
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2022 FHA Loan Limits in New Jersey

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Qualified homebuyers in many New Jersey counties can get a loan backed by the Federal Housing Administration (FHA) for up to $970,800 in 2022 to buy a single-family home. More than half of the Garden State’s counties qualify for the maximum high-cost limit, although there are still three counties capped at the FHA low-cost limit of $420,680 for a one-unit home.

New Jersey FHA loan limits by county

County NameOne unitTwo unitThree unitFour unitMedian Sales Price
ATLANTIC$420,680$538,650$651,050$809,150$260,000
BERGEN$970,800$1,243,050$1,502,475$1,867,275$995,000
BURLINGTON$477,250$610,950$738,500$917,800$415,000
CAMDEN$477,250$610,950$738,500$917,800$415,000
CAPE MAY$489,900$627,150$758,100$942,100$426,000
CUMBERLAND$420,680$538,650$651,050$809,150$170,000
ESSEX$970,800$1,243,050$1,502,475$1,867,275$995,000
GLOUCESTER$477,250$610,950$738,500$917,800$415,000
HUDSON$970,800$1,243,050$1,502,475$1,867,275$995,000
HUNTERDON$970,800$1,243,050$1,502,475$1,867,275$995,000
MERCER$420,680$538,650$651,050$809,150$285,000
MIDDLESEX$970,800$1,243,050$1,502,475$1,867,275$995,000
MONMOUTH$970,800$1,243,050$1,502,475$1,867,275$995,000
MORRIS$970,800$1,243,050$1,502,475$1,867,275$995,000
OCEAN$970,800$1,243,050$1,502,475$1,867,275$995,000
PASSAIC$970,800$1,243,050$1,502,475$1,867,275$995,000
SALEM$477,250$610,950$738,500$917,800$415,000
SOMERSET$970,800$1,243,050$1,502,475$1,867,275$995,000
SUSSEX$970,800$1,243,050$1,502,475$1,867,275$995,000
UNION$970,800$1,243,050$1,502,475$1,867,275$995,000
WARREN$420,680$538,650$651,050$809,150$280,000

How are FHA loan limits determined?

Each year FHA loan limits change based on a percentage of the conforming loan limits published by the Federal Housing Finance Agency (FHFA) for conventional loans. Different limits are set for low- and high-cost areas of any given state.

Here’s how the FHA loan limits are calculated:

The low-cost limit, or “floor,” is $420,680 in 2022 for a single-family home. This limit is set at 65% of the 2022 national conforming loan limit of $647,200. There are only three low-cost counties in the state of New Jersey: Atlantic, Cumberland and Warren.

The high-cost limit is set at 150% of the conforming loan limit, which means you could borrow up to $970,800 for a single-family home. That’s good news for New Jersey homebuyers, where 12 counties saw median sales prices rise to $995,000 this past year. Here are the counties where the high-cost limits apply:

  • Bergen
  • Hudson
  • Hunterdon
  • Middlesex
  • Monmouth
  • Morris
  • Essex
  • Ocean
  • Passaic
  • Somerset
  • Sussex
  • Union

How to qualify for an FHA loan in New Jersey

FHA loans come in handy if you need to buy a home with a low down payment and low credit scores. Homebuyers often choose the program if they can’t qualify for a conventional loan.
Here are the minimum qualifying requirements for an FHA loan in New Jersey:

  • Down payment and credit score. You can make a 3.5% down payment as long as you have a minimum 580 credit score. Some lenders will approve borrowers with scores down to 500 and a 10% down payment.
  • Debt-to-income ratio. Lenders measure your debt-to-income (DTI) ratio to gauge how much total monthly debt you have compared to your before-tax income. Although they prefer a DTI ratio of 43% or lower, exceptions are possible for borrowers with high credit scores or extra savings.
  • Mortgage insurance. There are two types of FHA mortgage insurance required on FHA loans regardless of your down payment. The first is a lump-sum upfront mortgage insurance premium (UFMIP), worth 1.75% of your loan amount, which is usually added to your mortgage. The second is an annual mortgage insurance premium (MIP), which costs 0.45% to 1.05% of the loan amount. The MIP cost is divided by 12 and added to your monthly payment.
  • Occupancy. You must live in the home you buy with an FHA loan as your primary residence for at least a year.
  • FHA home appraisals. The FHA requires an appraisal for all purchase loans. FHA appraisal guidelines are stricter than conventional loan guidelines.

Buying a multifamily home with an FHA loan

In the high-cost areas of New Jersey, you may be able to borrow more than a million dollars to buy a multifamily home with a 3.5% down payment and add the rental income to your qualifying income. However, you’ll have to live in one of the units as your primary residence for at least a year. Conventional guidelines typically require a 15% down payment or more. Here are the high-cost FHA loan limits for two- to four-unit homes in New Jersey:

  • $1,243,050 for two units
  • $1,502,475 for three units
  • $1,867,275 for four units

FHA lenders in New Jersey

Lender nameLT ratingMinimum FHA credit score
Churchill Mortgage8/10620
Caliber Mortgage8/10620
Rocket Mortgage9.5/10580
AmeriSave Mortgage8/10600
PennyMac9/10620

 

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