New Jersey’s down-payment assistance program helps some residents buy homes, but it falls short of addressing a bigger problem: too few homes that working families can afford, according to a new report from Friends of Affordable Housing.
The organization, formed in March by professionals in real estate development, architecture and planning, is urging the state to put more money into building affordable homes for sale.
Helping buyers with down payments “is a transaction tool, not a structural solution,” FOAH said in its press release.
“New Jersey should invest more heavily in producing affordable homes for sale, rather than relying primarily on down payment assistance for existing homes,” the report says.
The state offers between $10,000 and $22,000 in assistance, depending on the county and a buyer’s eligibility. While that money can help cover upfront costs, FOAH estimates that it reduces monthly payments by roughly $97 in the examples it reviewed – too little, the group argues, to overcome the gap between home prices and household incomes.
In Hudson County, for example, the report estimates that a household needs about $203,000 a year to afford a median-priced home, compared with a median household income of about $90,000.
FOAH also questions whether assistance is sufficiently focused on lower-income families. Its report lists income ceilings starting around $134,600 for one- and two-person households in many counties. Those ceilings do not exclude households earning less, but buyers still must qualify for a mortgage and afford the monthly payments.
“While targeted buyer assistance remains appropriate in certain cases, down payment assistance should not be relied upon as the primary response to the homeownership affordability crisis,” the report says.
The report comes as Gov. Mikie Sherrill pushes to expand housing. Her agenda includes a goal of doubling planned housing development on state-owned land from 20,000 to 40,000 homes, along with faster approvals, municipal partnerships, and expanded housing opportunities.
The plan, developed by the governor’s Housing Governing Council, includes five pillars:
• Deliver more homes where New Jerseyans want to live, work, and stay
• Increase New Jersey’s “speed to shovel” by making approvals faster, clearer, and more predictable
• Partner with municipalities to build and preserve housing
• Expand access to housing opportunities for New Jersey families
• Lower costs, fight unfair housing practices, and keep New Jerseyans housed
FOAH wants the state to use vacant and underused land for affordable housing and establish dedicated funding for homes that lower-income residents can buy.
Although rental housing needs to be part of the strategy, the report said support for homeownership needs to be stepped up, with affordable homeownership included in municipal plans when feasible.
Assistance should target households with the greatest need. The report also recommends shared-equity models, which let owners build equity while limiting resale prices so homes remain affordable for future buyers.
“The policy choice is clear: New Jersey can continue helping a limited number of buyers compete in an unaffordable market, or it can build the affordable ownership opportunities that families and communities need,” the report concludes.
