First-time home buyers shift to fixer-uppers in downtown Jersey City

Downtown Jersey City can be a tough place for first-time home buyers:  entry-level single-family homes that are move-in ready are non-existent.  Buyers are often not aware that they can get a renovation mortgage that combines the purchase price with the cost of improvements.  This summer I worked with two clients, one who was looking to buy, and the other was selling a fixer-upper.

Hamilton Park Townhouse

The first fixer-upper on 9th Street sold for $769,000 where an adjoining home (depicted above to the left) sold a few weeks earlier for $1 million.  Another fixer-upper I sold around the block on Coles Street sold for $770,000, where similar homes sold for up to $1.15 million.  These homes were purchased for $230,000 to $380,000 less than similar homes on the same block, which was perfect for buyers looking to save money and do the renovations themselves.


Entry-level homes are scarce, whether new or used. Most move-in ready townhouses in the downtown Jersey City market are priced at or above $1 Million.  The decline in entry-level affordable housing is stark.  Faced with a shortage of affordable homes, it makes sense to consider buying and fixing up dwellings that are outdated or in need of repair.

The two major types of renovation loans are the FHA 203(k) loan, insured by the Federal Housing Administration, and the HomeStyle loan, guaranteed by Fannie Mae. Both cover most home improvements, whether major or minor.  FHA’s 203(k) loan is for primary residence s only. It requires a minimum credit score of 500 with a down payment of at least 10 percent; a credit score of 580 or higher allows a down payment of 3.5 percent. These loans can’t be used for work that the FHA deems a luxury, such as installing a swimming pool.

Fannie Mae’s HomeStyle loan may be used to buy and fix up a primary residence, second home or investment property. It requires a minimum credit score of 620. Minimum down payment is 3 percent or 5 percent, depending on whether the home is owner-occupied and the borrower is a first-time homebuyer or has a low to moderate income.


After finding a licensed Real Estate Agent and the house you want, choose a lender, decide on a loan type and hire a HUD consultant.  Then, with the consultant’s guidance, get estimates from contractors.  Your lender will need copies of the estimates.  The renovation work may begin immediately after you close the loan. Be sure the contractor is financially strong because HUD does not allow payments in advance of work.  Work is done first, inspected and then progress payments are made.   When the improvements are complete, you’ll have your home the way you want it — sooner than you might have thought possible, with a nice boost in home equity.

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