NJ Property Taxes Explained
Everything you need to know about navigating New Jersey's property taxes and how they impact your monthly mortgage payment.
Understanding New Jersey Property Taxes
New Jersey consistently ranks as having the highest property taxes in the United States. While this funds the state's top-tier public school systems and local infrastructure, it plays a massive role in how much house you can afford and how lenders calculate your mortgage qualification.
Impact on DTI
Property taxes are part of your monthly PITI payment. Higher taxes mean a higher Debt-to-Income ratio, which can limit your max loan amount.
Town by Town
Tax rates vary wildly between municipalities. Paramus, for example, has lower tax rates due to its heavy commercial retail base.
Escrow Accounts
Most lenders require an escrow account, meaning you pay 1/12th of your annual property tax bill alongside your mortgage every month.
How Are Taxes Calculated?
Your property tax bill is calculated by multiplying the assessed value of your home by the local tax rate. It's important to note that the "assessed value" is often different from the "market value" or purchase price of the home.
NJ Tax Relief Programs (ANCHOR)
The state of New Jersey offers the ANCHOR (Affordable New Jersey Communities for Homeowners and Renters) program, which provides property tax relief to residents who own or rent property in NJ as their principal residence and meet specific income limits.
At Area Lending, we carefully factor in local property taxes when issuing your pre-approval so you aren't caught off guard by your final monthly payment.
Want to know how much you can afford?
Contact us to calculate your precise purchasing power factoring in New Jersey's property taxes.
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