FHA Loan Requirements, Limits and Approval Tips
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2023 FHA Loan Limits in New Jersey

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In 2023, New Jersey homebuyers can purchase a single-family home backed by the Federal Housing Administration (FHA) for up to $1,089,300 in most of the state’s counties. More than half of the Garden State’s counties qualify for that maximum limit because they are high-cost areas, although in several counties the FHA loan limit is capped at $472,030 for a one-unit home.

New Jersey FHA loan limits by county

1County nameOne unitTwo unitsThree unitsFour unitsMedian sale price
2ATLANTIC$472,030$604,400$730,525$907,900$294,000
3BERGEN$1,089,300$1,394,775$1,685,850$2,095,200$1,010,000
4BURLINGTON$529,000$677,200$818,600$1,017,300$460,000
5CAMDEN$529,000$677,200$818,600$1,017,300$460,000
6CAPE MAY$548,550$702,250$848,850$1,054,900$477,000
7CUMBERLAND$472,030$604,400$730,525$907,900$182,000
8ESSEX$1,089,300$1,394,775$1,685,850$2,095,200$1,010,000
9GLOUCESTER$529,000$677,200$818,600$1,017,300$460,000
10HUDSON$1,089,300$1,394,775$1,685,850$2,095,200$1,010,000
11HUNTERDON$1,089,300$1,394,775$1,685,850$2,095,200$1,010,000
12MERCER$472,030$604,400$730,525$907,900$308,000
13MIDDLESEX$1,089,300$1,394,775$1,685,850$2,095,200$1,010,000
14MONMOUTH$1,089,300$1,394,775$1,685,850$2,095,200$1,010,000
15MORRIS$1,089,300$1,394,775$1,685,850$2,095,200$1,010,000
16OCEAN$1,089,300$1,394,775$1,685,850$2,095,200$1,010,000
17PASSAIC$1,089,300$1,394,775$1,685,850$2,095,200$1,010,000
18SALEM$529,000$677,200$818,600$1,017,300$460,000
19SOMERSET$1,089,300$1,394,775$1,685,850$2,095,200$1,010,000
20SUSSEX$1,089,300$1,394,775$1,685,850$2,095,200$1,010,000
21UNION$1,089,300$1,394,775$1,685,850$2,095,200$1,010,000
22WARREN$472,030$604,400$730,525$907,900$300,000

How are FHA loan limits determined?

Each year the FHA loan limits in New Jersey change based on the median house prices in each county and metropolitan statistical area (MSA). Individual loan limits are set for each county so that low- and high-cost areas will have rules appropriate to their housing prices. However, these individualized loan limits must fall between the FHA’s minimum loan amount (sometimes called the “floor”) of $472,030 and maximum loan amount (or “ceiling”) of $1,089,300.

In part because New Jersey metro areas saw an average increase in median sales price of 8.5% between the third quarters of 2021 and 2022, the FHA loan limit in many parts of New Jersey is the highest available: $1,089,300. This high-cost limit applies to the following New Jersey counties: Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex and Union.

Moderate-cost counties with an FHA loan limit between $529,000 and $548,550 include Burlington, Camden, Cape May, Gloucester and Salem.

In the four lowest-cost counties, the FHA loan limit is $472,030. Those New Jersey counties are Atlantic, Cumberland, Mercer and Warren.

How to qualify for an FHA loan in New Jersey

FHA loans come in handy if you need a home loan option that allows for 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 requirements you’ll need to meet in order to get 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 as long as they can put 10% down.

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 is paid as a part of your monthly bill.

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 property 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 and still put down only 3.5%. That’s a huge hurdle significantly lowered since conventional loan guidelines typically require 15%-25% down.

You’ll also be able to take advantage of another FHA loan perk: You can add any future rental income you expect to make from that multifamily property to your qualifying income. However, you’ll have to live in one of the units as your primary residence for at least a year.

Here are the high-cost FHA loan limits for two-to-four-unit homes in New Jersey:

  • $1,394,775 for two units
  • $1,685,850 for three units
  • $2,095,200 for four units

FHA lenders in New Jersey

Lender nameLT ratingMinimum FHA credit score
Churchill Mortgage3 stars620
Chase Bank5 starsNot disclosed
Rocket Mortgage5 stars580
AmeriSave3.5 stars600

 

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