Home to some of the country's highest-rated educational systems and a fun place to call home due to its active nightlife and proximity to Philadelphia, Camden County, New Jersey, has become an increasingly popular place for people to call home. This place's increasing desirability has raised the median home price about 14% from last year to $211,664.
The median home price increase has raised hesitancy among potential homeowners. Most conventional loans require a down payment of 20%, which would be about $42,332 for Camden County based on the median home price. The increased down payment amount is a shockingly high down payment to make, with most Americans having an average of $1,000 to $5,000 on their savings.
Government home loans can significantly reduce and even remove the down payment usually required for homeownership. Also, these loans offer several other benefits, which vary depending on the specific loan amount borrowed. The Federal Housing Administration (FHA), Department of Veteran Affairs (VA), and the U.S. Department of Agriculture (USDA) guarantee these government loans but do not administer them. That task is up to the lenders themselves; whose credit score requirements might vary depending on the loan.
FHA Home Loans
The most widely used government loans available, FHA loans offer some of the best benefits out of any other loan. The program's low eligibility requirements also make them the most widely used since it makes these loans perfect for first-time borrowers.
Initially created as part of the National Housing Act of 1934 to alleviate the financial pains of the Great Depression by helping the people enter the housing market. Today, these loans have evolved and improved to the point that they now have a down payment requirement of 3.5%, much lower than the usual 20% required by conventional loans.
FHA loans also offer lower monthly mortgage payments and reduced closing costs. In certain situations, customers can borrow more than the property is worth to finance repairs and upgrades required by the property. These loans can also purchase homes ranging from single-family homes, multi-family complexes (up to four units), and FHA-approved condos.
Before submitting an FHA loan application, the borrower must ensure that they meet the housing loan requirements. Some of the most important requirements include a credit score of 580 or lower in some cases, a valid social security number, a steady employment history, and a certificate of eligibility. The property must also meet FHA's loan limits for the County, which in Camden County are at $431,250 for a single-family home, $552,050 for a duplex, $667,350 for a triplex, $829,350 for a fourplex.
USDA Home Loans
The USDA's loans are for lower-income homebuyers who want to buy a modest single-family home in an area designated as a Rural development area. These loans' limitations do not stop them from offering some great incentives, which include; no down payment requirements, lower monthly costs, competitive interest rates, low mortgage insurance premiums, and flexible credit score requirements.
To be eligible for these loans, the applicant must be a U.S. Citizen, agree to occupy the dwelling as their primary residence and make an income that does not exceed 155% of the County's median household income. An applicant's credit score must be at least 640, although some lenders accept even lower credit scores. Currently, USDA loan limits for Camden County are $326,600.
VA Home Loans
Most real estate experts are considered the best government loans available; VA home loans are for Veterans, Active Duty Service Members, and eligible spouses. These loans offer several benefits, including no down payment requirements, lower monthly mortgage costs, and lower interest rates. Additionally, for a surviving spouse to be eligible for the VA loan, they must have lost their military spouse while in active duty or due to an injury that happened during their service.
These loans' goal is to provide current and former military members the opportunity to become homeowners anywhere in the country, especially since there are no VA loan limits after signing the Bluewater Navy Act of 2019. However, the removal of loan limits depends on the borrower's ability to make their monthly mortgage payments.
The removal of VA loan limits is meant exclusively for first-time borrowers since borrowers with more than one active VA loan are still subject to loan limits. In Camden County, these loan limits are at $548,250 for borrowers with more than one VA loan.
Government loans' benefits make homeownership available for applicants who might be hesitant about the high initial costs usually attributed to conventional home loans. They also provide peace of mind to lenders who take solace in knowing that the federal government insures their loan if the borrower is unable to pay their monthly mortgage payments. As a result, government loans are more lenient with their requirements. So take advantage of these loans and buy your dream home in Camden County, New Jersey, for little to no money down.
Phil Georgiades is the CLS for FedHome Loan Centers, a government-sponsored brokerage specializing in first-time buyer home loans. With more than 22 years of experience working in real estate, he and his team of real estate experts will answer any question you might have. For more information or submit a home loan application, give us a call at (877) 432-5626.