Lobbyists questioned a proposal by New Jersey’s governor to divert money from the state’s affordable housing trust fund for increased down payment assistance, arguing one shouldn’t be prioritized over the other.
The trust fund that contained $100 million in recent years helps local governments and developers build or preserve affordable homes for sale or rent. The state directs the money to projects of 25 or fewer units targeted at people making less than 80% of their area's median income. The state’s down payment program targets first-time and first-generation homebuyers who often have trouble coming up with the minimum upfront payment lenders require.
This isn’t the first time the state’s governor has tried to squeeze the trust fund for some other purpose, according to Housing and Community Development Network of New Jersey president Staci Berger.
“It is deeply disappointing that the governor’s budget again proposes to divert these funds, despite his promises to turn the page on these kinds of raids,” she said in a statement. “It will be impossible for people to use the down payment assistance program unless we build more affordable homes.”
Most states and many local governments maintain housing trust funds of varying amounts to help develop affordable homes. Together they provide more than $2.5 billion each year for housing needs, according to the research organization PolicyLink. New Jersey’s fund is supported with revenue from taxes on home sales, but there are many ways to pay for them. Henrico County, Virginia, for example, uses revenue from data center development for its fund.
Also common are state and local pots of money to help people with down payments and closing costs. In a recent national survey, 20% of people interested in buying a home said they thought they would never be able to save enough money to pay for these expenses. Eighty-one percent of respondents said these costs were a significant obstacle.
The median single-family home price across New Jersey was $565,000 in January, according to New Jersey Realtors, a 13% increase from one year earlier.
In a summary of his proposed annual budget, Murphy said he wants to maintain the down payment program at $40 million per year; all of it would come from the affordable housing trust fund. In 2024, just over half the money came from the fund, with about 4,100 families receiving down payment aid.
“The down payment assistance program has created pathways to homeownership for thousands of New Jerseyans,” Tyler Jones, a spokesperson for the governor, said in an email. “Our budget proposal appropriately balances building new affordable housing over the long-term with providing immediate housing assistance.”
Another housing advocacy group, the New Jersey-based Fair Share Housing Center, said in a statement that the affordable housing trust fund is “often the only source of funds for smaller developments, which do not qualify for federal funding.”
Instead of taking money from one affordable housing program to support the other, the group said, the state could support both by imposing a new fee on homes that sell for more than $1 million. The housing and community development network suggested a similar fee in its statement but proposed it for home sales above $2 million.
