Pennsylvania First-Time Home Buyer Programs For 2022

Known for historic sites like Gettysburg, big cities like Philadelphia and a diverse geography that includes everything from mountains to lakes and rivers, the state of Pennsylvania has a lot to offer its residents.

But as can be said for most of the U.S., buying a home in Pennsylvania will cost you a fair chunk of change. If you’re a Pennsylvania first-time home buyer, which mortgage programs should you take advantage of to save on your home purchase? And if you’re still trying to decide where to live within the Keystone State, what are the best cities to consider?

First-Time Home Buyer Programs And Grants Available In Pennsylvania

Organizations like the Pennsylvania Housing Finance Agency (PHFA) offer loan options and assistance programs for residents looking to buy a home in Pennsylvania.

But how do each of these programs stack up when compared side-by-side? Let’s take a peek before we dive into each option in more detail.

Once you’ve settled on the best place to live in Pennsylvania for you and your family, consider the following options to help with financing.

While we’ll provide details on each loan below, if you’d like more information on the Keystone Home Loan Program, Keystone Government Loan, Keystone Forgivable Ten Years (K-FIT) and the FHA Preferred^TM (Lo MI) program, visit the PFHA Home Purchase Loans page.

Keystone Home Loan

The Keystone Home Loan Program, provided by the PHFA, offers conventional mortgage loans to first-time home buyers and repeat home buyers who plan to purchase a home in a targeted county or area. First-time home buyers are defined as anyone who has not owned a property as their principal residence within the last three years.

This loan option, which is insured by the Pennsylvania Housing Insurance Fund (PHIF), requires a 3% – 5% down payment and a credit score of 660 to qualify. Purchase price and income limits also apply, though these limits vary between counties. To find the specific limits in your area, visit the PHFA website.

Keystone Government Loan

Similar to the Keystone Home Loan, the Keystone Government Loan Program is provided by the PHFA. These government loans come in several forms: FHA loans, VA loans and USDA loans, backed by the Federal Housing Administration, the U.S. Department of Veterans Affairs and the U.S. Department of Agriculture, respectively.

Specific guidelines for eligibility will depend on the loan type and lender, but the PHFA has a few guidelines of their own that must be met in order to qualify for the program, including income and purchase price limits. Borrowers with credit scores lower than 680 will be required to complete a home buying education course to qualify. This program is available to everyone, not just first-time home buyers, and can be paired alongside other PHFA down payment assistance offerings, which we’ll cover more later.

Keystone Advantage Assistance Loan Program

The Keystone Advantage Assistance Loan Program offers a second mortgage to help Pennsylvania home buyers cover their down payment and closing costs. Qualifying borrowers can receive up to 4% of their purchase price or home’s market value, or up to $6,000, which is to be repaid monthly over ten years with zero interest.

This assistance option can be used in conjunction with the Keystone Home Loan or the Keystone Government Loan. It can also be paired with the HFA Preferred program, which helps to reduce mortgage insurance costs. We’ll talk more about that option in just a bit.

To qualify for this form of assistance, borrowers will need a minimum credit score of 660 and their liquid assets at the time of sale cannot exceed $50,000.

Keystone Forgivable In Ten Years Loan Program

The Keystone Forgivable In Ten Years Loan Program (K-FIT) provides down payment and closing cost assistance in the form of a forgivable second mortgage. Qualifying home buyers can receive up to 5% of the purchase price of the property or the appraised value (whichever is less) to be used toward home buying costs. These funds are forgiven annually over the course of 10 years at a rate of 10% per year.

To qualify for K-FIT assistance, borrowers will need a minimum credit score of 660 and must be able to contribute at least $1,000 or 1% of the loan amount for a down payment.

HFA Preferred Program

The HFA Preferred Loan Program (Lo MI) is a conventional loan offering designed to help home buyers reduce their private mortgage insurance (PMI) premium costs. This 30-year fixed-rate mortgage loan is available with participating lenders, who you’ll work with through closing, though monthly mortgage payments will be made directly to the PHFA. Though this loan option is not limited to first-time home buyers, it must be used for the purchase or refinance of a primary residence.

To qualify, household income cannot exceed local income limits. Those with a credit score below 680 will also be required to attend an in-person home buyer education course at a PHFA approved agency. Borrowers who qualify for the HFA Preferred Program may also qualify to receive a $500 PHFA grant to use toward down payment and closing costs.

HOMEstead Assistance Loan

The HOMEstead Assistance Loan option is another closing cost and down payment assistance offering. This option comes in the form of a second mortgage, which is forgivable at 20% per year over 5 years.

Borrowers will need to meet local income and purchase price limits and be purchasing a home in an eligible area to qualify. You can check purchase price limits to find eligible areas. Like with other PHFA loans, a minimum credit score of 660 is required.

PHFA Mortgage Credit Certificate

The PHFA’s Mortgage Credit Certificate (MCC) helps home buyers claim a tax credit for up to 50% of their mortgage interest paid each year, capped at $2,000 annually, for as many years as the property remains their principal residence and they pay interest on their mortgage. The specific credit percentage will depend on the individual borrower’s loan amount.

Home buyers who meet the qualifying requirements of a PHFA mortgage loan will be eligible for an MCC, which can be used alongside the following loan programs:

• HFA Preferred Loan
• Keystone Home Loan
• Keystone Government Loan
• Keystone Advantage Assistance Loan

First Front Door Program

The First Front Door (FFD) Program is a home buying grant program provided by Federal Home Loan (FHL) Bank of Pittsburgh. The program is available to first-time home buyers who have not owned a primary residence in the last 3 years.

This is a down payment and closing cost assistance program where for every $1 contributed by the home buyer, FFD will provide an additional $3, up to a maximum grant amount of $5,000.

To qualify, the home buyer’s income cannot exceed 80% of the area median income. The completion of four hours of homeownership counseling is also required.

ACCESS Home Modification Program

The ACCESS Home Modification Program was created to help people living with disabilities, or with family members who have disabilities, that require a home with accessibility modifications. This assistance option comes in the form of a deferred payment loan, which has no interest and no monthly payment. The loan will need to be repaid if the property is sold or transferred.

This option is available to be used with one of the home loans provided by the PHFA. To qualify, borrowers must have a permanent disability or live with a family member with a permanent disability.

Local Pennsylvania First-Time Home Buyer Programs

In addition to state-wide offerings, there are several local, city-based first-time home buyer assistance programs and grants that Pennsylvanians can leverage when purchasing property. From Allentown to Philadelphia to Pittsburgh, if you’re still choosing a place in Pennsylvania to call home, consider the following cities.

Allentown

• Medium Home Price: $200,000
• Median Household Income: $43,816
• Allentown Listings

The city of Allentown offers a wide variety of housing grants including The Community Development Grant Program (CDBG), which aims to further develop urban communities by helping people with low to moderate incomes purchase homes.

Prospective home buyers should note that all the grants offered in Allentown are considered reimbursement grants, meaning qualified borrowers will receive the funds after the expenses have been incurred.

Philadelphia

• Median Home Price: $279,832
• Median Household Income: $49,127
• Philadelphia Listings

Philadelphia’s Division of Housing and Community Development (DHCD) offers the Philly First Home Program – a first-time home buyer assistance grant available to those who complete a free, city-funded homeownership counseling program before signing an Agreement of Sale on their home purchase.

Qualifying home buyers can receive up to 6% of the home’s purchase price, capped at $10,000, to be used toward down payment and closing costs. To qualify, borrowers cannot have owned a home in the past 3 years and must be purchasing a single-family home or duplex located within Philadelphia city limits. Income limits must also be met.

Pittsburgh

• Median Home Price: $230,665
• Median Household Income: $50,536
• Pittsburgh Listings

The Urban Redevelopment Authority of Pittsburgh (URA) is the economic development agency for the city, focused on creating more affordable housing, among other initiatives. This agency offers two affordable housing programs to its city residents: The Neighborhood Housing Program (NHP) and the Housing Recovery Program-Developer (HRP-D), both of which are second mortgage programs with deferred payments and zero interest.

With these programs, the URA sponsors the construction or rehabilitation of homes within the city, which are then resold to income-eligible buyers. To help make this more affordable, the URA also offers a down payment and closing cost assistance grant of up to $3,000. To qualify for assistance, the borrower’s income cannot exceed 80% of the area median income.

The Bottom Line

Pennsylvanians – listen up! The Keystone State offers numerous first-time home buyer programs that can make homeownership more affordable and attainable. If the upfront costs associated with home buying have you stressed, be sure to consider these options to see how they can support you in your home buying journey.

By leveraging the various options we’ve discussed throughout this article, you may be further along in your journey than you originally anticipated. So, if you’re ready to take the next step toward purchasing a home in Pennsylvania, begin by applying online with our friends at Rocket Mortgage^® today.

*Data from the September 2022 Rocket Homes Trend Report for each city was used for the median home sold values. Median household income for each city was sourced from the U.S. Census Bureau. All statistics are accurate as of October 6, 2022.