Pennsylvania first-time homebuyer assistance programs
Pennsylvania has a number of helpful programs for first-time homebuyers — and repeat buyers — to obtain affordable mortgages. In addition, there are Pennsylvania assistance programs that can provide funds for a down payment and closing costs.
The Pennsylvania Housing Finance Agency (PHFA) partners with lenders and brokers to offer mortgages with competitive interest rates and low fees. The participating lenders take borrower applications and process the mortgages. PHFA purchases the loans after closing, and borrowers make monthly payments directly to the agency.
Pennsylvania first-time homebuyer loan programs
PHFA oversees 30-year, fixed-rate mortgage programs with affordable interest rates and fewer fees. The mortgages can be conventional, FHA, VA or USDA loans. Each program has different eligibility requirements and restrictions, including household income or home price limits.
HFA Preferred (Lo MI)
The added expense of private mortgage insurance (PMI) can be an obstacle for first-time homebuyers in Pennsylvania. Lenders typically require PMI when you make a down payment of less than 20 percent of the price of the home. The HFA Preferred (Lo MI) loan helps homebuyers with small down payments get lower-cost insurance.
The program is open to those purchasing or refinancing a primary home with a single unit, as well as those obtaining homebuying and renovation funds with one mortgage. You don’t have to be a first-time homebuyer to apply for this program, and there are no purchase price limits. However, to qualify, your household income must fall within program limits, and you must contribute at least $1,000 of your own funds toward the down payment.
You’ll also need to complete a homebuyer education course at a PHFA-approved housing counseling agency. Those with FICO scores of 680 or higher can complete the course online at PHFA or Framework.
Keystone Home Loan
The Keystone Home loan program serves first-time homebuyers, discharged veterans of the armed forces and buyers of homes in targeted Pennsylvania counties. To qualify, you’ll need to meet the Keystone Home Loan program’s household income and purchase price limits.
Keystone Government Loan (K-Gov)
The Keystone Government Loan (K-Gov) program connects homebuyers to an FHA, VA or USDA loan. You don’t have to be a first-time buyer to apply for this program, but other standard underwriting guidelines apply for each type of loan. If your credit score is lower than 680, you must take a homeowner education course, too.
Keystone Flex Loan
You might be eligible for one of two (or both) routes in the Keystone Flex mortgage program:
- Keystone Flex mortgage with a K-FIT loan: This loan program is similar to the standard Keystone Home Loan, with the added benefit of K-FIT, or the Keystone Forgivable in Ten Years Loan. This second mortgage provides down payment and closing cost assistance up to 5 percent of either the home’s purchase price or appraised value (whichever is lower). PHFA forgives this second mortgage debt after 10 years.
- Keystone Flex Purchase and Improvement mortgage with a K-FIT loan: This loan program provides the funds to buy and renovate a home, all in one mortgage. In addition to the funds to buy the home, you could borrow up to $30,000 more for repairs or renovations. (However, you can only spend the funds on eligible home improvements.) You can also pair this mortgage with K-FIT assistance.
Pennsylvania down payment assistance
Along with the K-FIT loans described above, PHFA also offers the following down payment help:
Keystone Advantage Assistance Loan Program
The Keystone Advantage Assistance Loan Program is a second mortgage up to 4 percent of the home price or $6,000, whichever is lower. This interest-free loan must be put toward your down payment or closing costs, and you’ll repay it over 10 years. The program can be combined with an HFA Preferred (Lo MI), Keystone Home or K-Gov first mortgage.
PHFA Grant
PHFA provides free $500 grants to borrowers obtaining an HFA Preferred (Lo MI) loan. This can be combined with the Keystone Advantage Assistance loan.
HOMEstead Downpayment and Closing Cost Assistance Loan
The HOMEstead program can provide between $1,000 and $10,000 in down payment and closing cost assistance. The no-interest second mortgage loan is forgiven after five years.
The program has household income limits and home price limits that vary by county, but it is not offered in all counties and cities. Due to federal regulations for lead-based paint, most homes built before 1978 are ineligible.
Access Downpayment and Closing Cost Assistance Program
The Access Downpayment and Closing Cost Assistance loan is another type of no-interest second mortgage for up to $15,000. It’s available to qualified buyers living with a disability or those residing with someone living with a disability.
Other first-time homebuyer loan programs
Mortgage credit certificate (MCC)
A mortgage credit certificate (MCC) can reduce your federal tax bill. It can be used to claim a tax credit of up to $2,000 per year. Not every Pennsylvania homebuyer will qualify, however, and there is a fee to use the certificate. To estimate your tax credit, use PHFA’s MCC calculator.
Local homebuyer assistance programs
In addition to statewide assistance programs for first-time homebuyers in Pennsylvania, there could be programs to help you buy a home in your city.
The City of Philadelphia, for example, administers the Philly First Home program that offers grants of up to $10,000 (or 6 percent of the home’s purchase price, whichever is lower).
Likewise, Pennsylvania first-time homebuyers living in Delaware County might be eligible for the Homeownership First Program, which provides up to $10,000 in down payment and closing cost help to low- and moderate-income borrowers.
In Williamsport, the city’s Homebuyer GAP Assistance Program offers a zero-percent deferred loan for up to 20 percent of a home’s purchase price to qualified applicants.
While you’re considering local programs, check out these popular nationally available loan programs, too:
- FHA loans – If you have a less-than-stellar credit score or limited savings, consider an FHA loan. These loans are widely available, have a minimum credit score of 580 and require a down payment as little as 3.5 percent.
- VA loans – If you’re a member of the military or veteran, you could qualify for a VA loan, which requires no down payment.
- USDA loans – USDA loans don’t have a down payment requirement, but are only available to borrowers buying in a USDA-eligible rural area. You typically need a credit score of 640 or higher to qualify.
- Good Neighbor Next Door program – This HUD program has a very low down payment requirement on homes in certain areas, coupled with the ability to save 50 percent on the purchase price.
Get started
As you prepare to become a first-time homebuyer, here are some next steps:
- Do your homework. Once you’re ready to become a first-time homebuyer in Pennsylvania, your next step is to find a PHFA-approved lender.
- Work on your credit score. It’s the most important factor in determining your mortgage rate, so focus on boosting your number.
- Compare lenders. Whether or not you get a mortgage through one of these programs, it’s still important to shop around with multiple lenders in your area to find the most competitive rates. Doing so can save you tens of thousands in interest through the life of your loan.
