Preparing to buy a house? Call us for a complimentary mortgage consultation.
Compare mortgage rates in New Jersey.
Key Points
• Mortgage rates in New Jersey tend to be higher than the national average but are on par with 50-year historical rates.
• Mortgage interest rates are influenced by various factors, including the Federal Reserve’s federal funds rate, inflation, economic conditions, and supply and demand for mortgages.
• Higher mortgage rates make homes less affordable, increasing the monthly payments significantly.
• Consumer factors — like credit scores, down payments, and the type of mortgage — can also influence mortgage rates.
• New Jersey offers different types of mortgages suitable for a range of homebuyer profiles, including fixed-rate mortgages, adjustable-rate mortgages (ARMs), FHA loans, VA loans, USDA loans, and jumbo loans.
Introduction to Mortgage Interest Rates
In New Jersey, securing an affordable mortgage is a crucial step toward homeownership. This comprehensive guide provides an overview of mortgage rates in New Jersey, including historical trends, economic factors, consumer considerations, and popular mortgage types.
Mortgage interest rates are the fees charged by lenders for borrowing money to purchase a home. These rates are determined by a complex combination of factors, which can be broadly categorized into two buckets: the state of the economy and the borrower’s financial status.
Economic factors that impact mortgage rates include the federal funds rate set by the Federal Reserve, inflation, and the unemployment rate. Consumer factors that influence mortgage rates include credit score, down payment, income and assets, and the type of home loan.
Whether you’re buying your first home or your (hopefully) last, understanding these factors can help homebuyers make informed decisions about the best time to apply for a mortgage and the type of mortgage that best suits their financial situation.
Where Mortgage Rates Come From
The Federal Reserve (“the Fed”) plays a pivotal role in determining mortgage rates by setting short-term interest rates. Although home loan rates are not directly tied to Fed rates, they tend to follow the same economic trends. When the Fed’s interest rate is high, chances are mortgage rates will be too.
Therefore, homebuyers should pay attention to the Fed’s monetary policy decisions and economic forecasts to anticipate potential changes in mortgage rates.
How Interest Rates Affect Home Affordability
Mortgage rates have a significant impact on home affordability, often more than people realize. Even small interest rate changes can put homeownership out of reach for middle-income Americans. For instance, a one-percentage-point increase in the interest rate on a $300,000 mortgage can add almost $200 to the monthly mortgage payment, making it more challenging for many families to afford a home.
However, it’s over the long term that interest really has the opportunity to add up. In the same scenario, over the 30-year lifetime of the loan, you’d pay approximately the following amount in total interest:
• 6.50%: $382,636
• 6.00%: $347,515
• 5.50%: $313,210
Over 30 years, that $200 difference in monthly payment balloons to $69,426 in additional interest paid. Therefore, it is crucial for homebuyers to carefully consider mortgage rates when budgeting for homeownership and to explore options for obtaining the lowest possible rate.
Should Homebuyers Wait for Interest Rates to Drop?
Many first-time homebuyers face the dilemma of whether to buy a home now or wait for interest rates to drop further. It’s important to remember that homeowners can always refinance their mortgage after rates come down. Refinancing allows homeowners to obtain a lower interest rate on their existing mortgage, potentially saving thousands of dollars in interest over the remainder of the loan.
Conventional wisdom says that homebuyers should not delay their homeownership dreams solely based on the expectation of lower interest rates in the future. Instead, they should consider their financial situation, housing market conditions, and long-term goals — regardless of interest rates.
New Jersey Mortgage Rate Trends
Understanding historical mortgage rate trends can provide valuable insights into where rates are headed. In recent years, New Jersey rates ranged from a high of 7.84% in 2000 to a low of 3.61% in 2012, a bit below the national average.
Historical Interest Rates in New Jersey
| Year | New Jersey Rate | U.S. Rate |
|---|---|---|
| 2000 | 7.84 | 8.14 |
| 2001 | 6.95 | 7.03 |
| 2002 | 6.43 | 6.62 |
| 2003 | 5.67 | 5.83 |
| 2004 | 5.66 | 5.95 |
| 2005 | 5.88 | 6.00 |
| 2006 | 6.61 | 6.60 |
| 2007 | 6.38 | 6.44 |
| 2008 | 6.01 | 6.09 |
| 2009 | 5.01 | 5.06 |
| 2010 | 4.79 | 4.84 |
| 2011 | 4.52 | 4.66 |
| 2012 | 3.61 | 3.74 |
| 2013 | 3.75 | 3.92 |
| 2014 | 4.04 | 4.24 |
| 2015 | 3.80 | 3.91 |
| 2016 | 3.62 | 3.72 |
| 2017 | 3.94 | 4.03 |
| 2018 | 4.42 | 4.57 |
Historical U.S. Mortgage Rates
Mortgage rates in the United States have experienced significant fluctuations. In the early 1980s, mortgage rates reached double-digit levels, exceeding 15%. However, rates have generally trended downward since then, with periods of both increases and decreases. The current mortgage rate environment is characterized by relatively low rates compared to historical averages.
Factors Affecting Mortgage Rates in New Jersey
Economic Factors
• The Feds: The federal funds rate, set by the Federal Reserve, serves as a benchmark for other interest rates, including mortgage rates. Changes in the federal funds rate can have a ripple effect on mortgage rates, influencing their rise or fall.
• Inflation: When inflation rises, the purchasing power of money decreases, making it more expensive for lenders to lend money. As a result, they may increase interest rates to compensate for the reduced value of their investments. The converse is also true.
• Unemployment rate: A lower unemployment rate can lead to higher mortgage rates. A low unemployment rate indicates a strong economy, which typically leads to increased demand for housing. This increased demand puts upward pressure on home prices and, consequently, mortgage interest rates.
Consumer Factors
This is where a homebuyer’s financial habits and credit history come in. Your record of paying bills on time has a big effect on the mortgage rate you’re offered.
• Credit score: A higher credit score generally indicates a lower risk of default, making borrowers more attractive to lenders. As a result, borrowers with higher credit scores typically receive lower mortgage interest rates.
• Down payment: Increasing the down payment can reduce the mortgage interest rate. A larger down payment reduces the amount of money that needs to be borrowed, which lowers the risk for the lender. As a result, lenders may offer lower interest rates to borrowers who make larger down payments.
• Income and assets: A steady income and substantial assets reassure lenders of a borrower’s ability to repay the mortgage. Lenders will consider employment history, salary, investments, and emergency savings when assessing a borrower’s financial stability and determining the appropriate interest rate.
• Type of mortgage: Different types of mortgage loans have varying interest rates. For instance, adjustable-rate mortgages (ARMs) typically offer lower initial rates compared to fixed-rate mortgages. Government-backed loans, such as VA mortgages, may also have lower rates. Additionally, shorter loan terms generally come with lower interest rates than longer terms.
Recommended: 8 Tips for Maintaining a Good Credit Score
Types of Mortgages Available in New Jersey
New Jersey offers a diverse range of mortgage types to cater to the needs of different homebuyers. These include fixed-rate mortgages, adjustable-rate mortgages (ARMs), Federal Housing Administration (FHA) loans, Veterans Affairs (VA) loans, and United States Department of Agriculture (USDA) loans.
Most mortgages are what’s known as conventional loans. These are not backed by the government and can be fixed-rate or adjustable-rate.
Fixed-Rate Mortgage
A fixed-rate mortgage offers a consistent interest rate throughout the entire loan term, ensuring that the monthly principal and interest payments remain the same. Fixed-rate mortgages are available in terms of 10, 15, 20, or 30 years.
The stability of fixed-rate mortgages makes them a popular choice for homebuyers who prefer predictable monthly payments and want to lock in a favorable interest rate for the long term.
Adjustable-Rate Mortgage (ARM)
Adjustable-rate mortgages (ARMs) offer a lower initial interest rate compared to fixed-rate loans. However, the interest rate can adjust periodically, typically after a fixed introductory period of three to seven years. ARMs can be a good option for homebuyers who plan to sell or refinance their home before the introductory period ends.
It is important for borrowers to carefully consider the potential risks and rewards of ARMs before choosing this type of mortgage.
FHA Loan
FHA loans are backed by the Federal Housing Administration and typically have more lenient eligibility requirements compared to conventional loans. They also require a smaller down payment and allow for higher debt-to-income ratios, making them a good option for borrowers with limited savings or lower credit scores.
VA Loans
VA loan: VA loans are available to veterans, active-duty military members, and some Reserve and National Guard members. These loans are backed by the Department of Veterans Affairs and offer several benefits, including no down payment requirement, competitive interest rates, and flexible credit guidelines.
VA loans are an excellent option for eligible borrowers who want to purchase a home with minimal upfront costs.
USDA Loan
USDA loan: USDA loans are designed for low-income borrowers looking to purchase a home in a rural area. These loans are backed by the U.S. Department of Agriculture and offer 100% financing, meaning no down payment is required.
USDA loans have income and property eligibility requirements, making them a good option for qualified borrowers in rural areas.
Jumbo Loan
Conventional mortgage loans have a maximum loan limit set by the Federal Housing Finance Agency (FHFA). For 2024, the conforming loan limit for a single-family home in New Jersey is $766,550 in some areas, and $1,149,825 in higher priced locales. Jumbo loans are nonconforming loans that exceed this limit and are typically used to finance more expensive properties.
Popular Places to Get a Mortgage in New Jersey
When searching for a mortgage in New Jersey, it is important to consider the cost of living and housing prices in different areas. Some popular places to get a mortgage in New Jersey include:
North Jersey: North Jersey counties such as Bergen, Essex, Hudson, Morris, Passaic, Somerset, Sussex, Union, and Warren offer a mix of urban and suburban living. While housing prices tend to be higher in this region (partly due to its proximity to New York City), there are also opportunities for affordable housing.
Central Jersey: Central Jersey counties such as Hunterdon, Mercer, Middlesex, Monmouth, and Ocean offer a balance between affordability and proximity to major cities, including Philadelphia. These counties offer a variety of housing options, including single-family homes, townhouses, and condos.
South Jersey: South Jersey counties such as Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Ocean, and Salem offer a more relaxed lifestyle and lower housing prices compared to North and Central Jersey. These counties are popular for retirees and families looking for affordable homes near the coast.
Least Expensive Locations
The Cost of Living Index measures the relative affordability of cities and towns throughout the U.S. An index number under 100 typically indicates less expensive neighborhoods, but in the Garden State even the cheaper areas come in over the average cost of living in the U.S.
Some of the least expensive locations in New Jersey for purchasing a home include:
• Pennsauken Township: COLI 112
• Gloucester Township: COLI 114
• Winslow Township: COLI 110
• Trenton: COLI 111
• Toms River: COLI 115
Recommended: Best Affordable Places to Live in the U.S.
Most Expensive Locations
Below are the most expensive locations in New Jersey for purchasing a home, along with the average home value:
• Hoboken $853,190
• Jackson $600,754
• Jersey City: $620,628
• Lakewood: $632,322
• Brick: 481,907
Tips for Securing a Competitive Mortgage Rate in New Jersey
Securing a competitive mortgage rate can save you thousands of dollars over the life of your loan. Here are some tips to help you get the best possible rate, from getting preapproved to discount points:
Compare Interest Rates and Fees
Take the time to compare interest rates and fees from multiple lenders. Be sure to ask about any upfront costs or closing fees associated with the loan.
Get Preapproved
Getting preapproved for a mortgage strengthens your position as a buyer and allows you to move quickly when you find the right property. While prequalification usually can be done online in just minutes, the mortgage preapproval process can take up to 10 days.
>Build Your Credit Score
Conventional loans usually require a credit score of at least 620, but requirements vary by lender. You’ll need a credit score of 580 to qualify for a Federal Housing Administration (FHA) loan with a low down payment.
Consider a Bigger Down Payment
Some lenders recommend putting down 20% or more of the purchase price as a down payment. But even 10% or 15% can secure a better rate.
Purchase Discount Points
“Points” are fees paid to a lender or broker that buy you a slightly lower rate. If you plan to live in a house for the long term — say, 10 years or more — you may consider paying more points upfront to keep the cost of interest down over the life of the loan.
New Jersey Mortgage Resources
New Jersey offers a variety of resources and programs to assist homebuyers, particularly first-time buyers and those with limited financial resources. These resources include:
First-Time Homebuyer Programs
New Jersey offers several programs to help those who qualify as a first-time homebuyer to overcome the challenges of saving for a down payment and qualifying for a mortgage. These programs include:
• Police and Fireman’s Retirement System Mortgage: Police officers, firefighters, and members of the Police and Firemen’s Retirement System may be eligible for a 30-year, fixed-rate, conforming loan with competitive rates. View the Police and Firemen’s fact sheet here.
• Homeward Bound: This program offers a competitive 30-year, fixed-rate, government-insured loan. See the Homeward Bound fact sheet here.
• HFA Advantage Mortgage Program: The program provides a 30-year, fixed-rate conventional loan, affordable mortgage insurance, and low down payment requirements. See the HFA Advantage fact sheet
Down Payment Assistance
Down payment assistance is available for first-time homebuyers who have qualified for a New Jersey Housing and Mortgage Finance Agency loan. Residents may qualify for up to $10,000 to use toward a down payment or closing costs.
Tools & Calculators
There are many online tools and calculators available to help New Jersey homebuyers estimate their monthly mortgage payments, compare interest rates, and determine their eligibility for various assistance programs. Some useful tools include:
Run the numbers on your home loan.
-
Mortgage calculator
Punch in your home loan amount and a new interest rate, and we’ll estimate your payoff date.
-
Down payment calculator
Enter a few details about your home loan and we’ll provide your monthly mortgage payment.
-
Home affordability calculator
Provide us with a few details and see how much you can afford to spend on a home purchase.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Refinancing Options in New Jersey
New Jersey homeowners who already have a mortgage may benefit from refinancing their loan to obtain a lower interest rate. A mortgage refinance can help reduce monthly mortgage payments, shorten the loan term, or access cash for various purposes.
Some popular refinancing options in New Jersey include:
FHA Streamline Refinance
This program allows FHA-insured homeowners to refinance into current mortgage rates with minimal hassle and without the need for a new appraisal.
VA Interest Rate Reduction Refinance Loan (IRRRL)
Sometimes called a VA Streamline Refinance, this program allows VA loan borrowers to refinance their loans to obtain a lower interest rate, potentially reducing their monthly payments.
Conventional Refinance
Conventional refinance loans are available to homeowners who do not have FHA or VA loans. Conventional refinance loans can offer competitive interest rates and flexible terms.
Recommended: What Are the Average Monthly Expenses for One Person?
Closing Costs, Taxes, and Fees in New Jersey
When purchasing a home in New Jersey, buyers can expect to pay various closing costs, taxes, and fees. These costs can vary depending on the purchase price of the home, the type of loan, and the lender. Some common closing costs in New Jersey include:
• Transfer tax: The transfer tax in New Jersey is 1% of the purchase price of the home.
• Recording fee: The recording fee is a one-time fee paid to the county clerk’s office to record the deed of the home.
• Lender’s fee: Lender’s fees include the application fee, appraisal fee, credit report fee, and other administrative fees.
• Title insurance: Title insurance protects the lender against any defects in the title to the home.
• Home inspection: A home inspection is recommended to identify any major issues with the home before closing.
Buyers should factor these costs into their budget when purchasing a home in New Jersey to ensure they have sufficient funds to cover these expenses.
The Takeaway
New Jersey’s mortgage landscape offers a diverse range of options for homebuyers, catering to different financial situations and preferences. By staying informed about current mortgage rates, exploring assistance programs, and carefully considering refinancing options, individuals can make strategic decisions that align with their financial goals and achieve successful homeownership in the Garden State. Remember, buying a home is a significant financial decision, and it is always advisable to consult with a mortgage lender or financial advisor to obtain personalized advice based on your specific circumstances.’
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.FAQ
What is a mortgage rate?
A mortgage rate is the interest rate that you pay on your mortgage loan. It is expressed as a percentage and is fixed for the life of the loan or adjustable at certain intervals.
Will mortgage rates drop in New Jersey?
It is difficult to predict whether mortgage rates will drop in New Jersey. Mortgage rates are influenced by a number of factors, including the overall state of the economy, the Federal Reserve’s monetary policy, and the supply and demand for mortgages.
Will mortgage rates ever go back to normal?
“Normal” mortgage rates can be subjective and vary over time. The current rates may be considered normal relative to historical averages, but they can still fluctuate based on economic conditions.
Will New Jersey home prices ever drop?
It is difficult to predict whether New Jersey home prices will ever drop. Home prices are influenced by a number of factors, including the overall state of the economy, the supply and demand for housing, and the cost of construction. It is possible that New Jersey home prices will continue to rise in the future, but it is also possible that they will eventually stabilize or even decrease.
Is it a good time to buy a house in New Jersey?
Whether or not it is a good time to buy a house in New Jersey depends on your individual circumstances. If you are financially stable and you are able to afford the monthly mortgage payments, then it may be a good time to buy a house. However, if you are not sure whether you can afford a house, then it may be best to wait until you are in a better financial position.
How to lock in a mortgage rate?
You can lock in a mortgage rate by purchasing a mortgage rate lock from a lender. This guarantees that you will get a certain interest rate for a certain period of time. This can protect you from rising interest rates.
How do mortgage interest rates work?
Mortgage interest rates are determined by a number of factors, including the overall state of the economy, the Federal Reserve’s monetary policy, and the supply and demand for mortgages. When there is a high demand for mortgages and a limited supply of funds available for lending, mortgage rates tend to increase. Conversely, when there is a low demand for mortgages and a plentiful supply of funds available for lending, mortgage rates tend to decrease.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SOHL-Q324-085
More home loan resources.
-
First-Time Homebuyer Guide
-
First-Time Homebuyer Programs and Loans
-
Mortgage Preapproval Process