First Time Home Buyer Programs in Pennsylvania 2021

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The Pennsylvania Housing Finance Agency (PHFA) is a non-profit organization created by a government legislature that provides several mortgage programs to help home buyers. PHFA aims to provide affordable housing to all residents of Pennsylvania. Their home buyer programs target a variety of situations, which gives home buyers several options. PHFA mortgages and programs offer financial benefits that include competitive mortgage rates, fewer fees, and down payment assistance.

First-Time Home Buyer Eligibility Calculator

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Find out what programs you're eligible for
Pennsylvania State Programs
NoProgramTypeJurisdiction
1HFA PreferredTMMain ProgramsPennsylvania State
2Keystone Home Loan Program
3Keystone Advantage Assistance Loan ProgramOptional Add-Ons
4Mortgage Tax Credit Certificate
5HOMEstead Downpayment and Closing Cost Assistance
6Employer Assisted Housing (EAH)
7Programs for Persons with DisabilitiesRestricted Eligibility to Persons with Disabilities
Federal Programs
NoProgramTypeJurisdiction
IConventional MortgageFannie Mae and Freddie MacFederal
IIFHA LoanFederal Housing Association
IIIVA LoanUS Department of Veterans Affairs
IVRD LoanU.S. Department of Agriculture

Pennsylvania State Programs

Main Programs

PHFA offers mortgage programs with competitive mortgage rates and lower fees: HFA PreferredTM, Keystone Home Loan Program, and Keystone Government Loan Program.

1. HFA PreferredTM

The HFA PreferredTM loan program offers a conventional loan with a 30-year fixed-rate term and is not limited to first-time home buyers. If you make less than a 20% down payment, you will have to buy private mortgage insurance (PMI) to protect the lender from default risk. The mortgage rate and minimum down payment will depend on your financial circumstance, the lender, and the current benchmark rates like the Prime Rate, which is linked to the Federal Funds Rate.

  • The mortgage loan cannot be for a two-unit property
  • Supply a down payment of at least $1,000 using your own money (no down payment assistance programs)
  • Your household income must be lower than your county’s maximum income limit
  • Complete a home buyer education course through the PHFA or Framework. You can also complete a Pre-Purchase education course offered by PHFA-Approved Agencies, which will fulfill your education course requirement and provide a $300 credit toward your closing costs.

For more information, visit the PHFA Home Purchase Loans page and to apply, talk to a PHFA-approved lender.

2. Keystone Home Loan Program

The Keystone Home Loan Program offers loans with lower borrower requirements to first-time home buyers, which are insured by the Pennsylvania Housing Insurance Fund (PHIF). Your mortgage rate will depend on your financial circumstance, the lender, and the current benchmark rates like the Prime Rate.

For more information on this program and extra eligibility details, visit the PHFA Home Purchase Loans page. To apply, talk to a PHFA-approved lender.

PHFA offers several purchase assistance programs that act as optional add-ons to your primary mortgage. These programs include:

  • Keystone Advantage Assistance Program
  • Mortgage Tax Credit Certificate
  • HOMEstead Downpayment
  • and Closing Cost Assistance
  • Employer Assisted Housing (EAH)

3. Keystone Advantage Assistance Loan Program

The Keystone Advantage Assistance Loan Program offers a second mortgage to help meet your minimum down payment or pay for closing costs. With this program, you can receive the minimum of 4% of the purchase price, or 4% of the market value, or $6,000. This second mortgage has no mortgage rate but it is paid back through monthly payments over a 10-year mortgage term. Other than the Access Modification Loan program, you cannot use this program with any other PHFA Assistance Program.

  • Minimum credit score of 660
  • Minimum loan amount of $500
  • Your liquid assets must not exceed $50,000 after deducting closing costs (includes cash, checking accounts, savings accounts, stocks, bonds, certificates of deposit, and other liquid assets)

Only available with the following primary mortgages:

  • HFA PreferredTM Loan
  • Keystone Home Loan
  • Keystone Government Loan

4. Mortgage Tax Credit Certificate

The Mortgage Tax Credit Certificate (MCC) program offers the option to use 20% - 50% of your annual mortgage interest payments as a federal tax credit. This program has a maximum total annual claim of $2,000. Mortgage interest is the portion of your monthly payment that does not go toward paying off the mortgage’s principal amount and is determined by your mortgage rate. This program can be used with the Keystone Advantage Assistance Program but it cannot be used with the Keystone Home Loan Program. You can continue to benefit from your MCC for as long as you pay interest on the primary mortgage you used to obtain it.

For more information about getting an MCC and to calculate how much you can benefit from having an MCC, visit PHFA’s official website.

5. HOMEstead Downpayment and Closing Cost Assistance

The HOMEstead Downpayment and Closing Cost Assistance program offers a forgivable second mortgage of up to $10,000 to help meet your minimum down payment or pay for closing costs. This loan has no mortgage rate and 20% of the principal amount is forgiven each year throughout its 5-year mortgage term. That means that you do not need to make any payments on this loan and after 5 years, it will be forgiven as long as you do not sell your house, refinance, repay, or end your mortgage contract in any way. If you do end your mortgage contract, you must pay the remainder of the loan as one lump sum payment.

  • Minimum loan amount of $1,000
  • Your household income must be lower than your county’s maximum income limit
  • The price of your home must be lower than your county’s maximum purchase price limit
  • The home must be within a county listed in the above limits

For more information and further details about eligibility, visit PHFA’s Official Assistance Loans page.

6. Employer Assisted Housing (EAH)

The Employer Assisted Housing (EAH) Initiative allows participating employers to offer a monetary home purchase benefit to employees. Eligible employees can receive a Keystone Advantage Assistance Loan of up to $8,000 for down payment and closing cost assistance, which is $2,000 more than the original Keystone Advantage Assistance Loan Program. This loan has no mortgage rate and is repaid through monthly payments over a 10-year mortgage term.

Unlike the original program, there are no eligibility requirements other than working for a participating employer.

To apply for this program, talk to a PHFA-approved lender.

Restricted Eligibility to Persons with Disabilities

PHFA offers buyers with disabilities or household members with disabilities an exclusive program to help with home purchases: Programs for Persons with Disabilities.

7. Programs for Persons with Disabilities

The Programs for Persons with Disabilities offers several add-on benefits to home buyers that are eligible for one of PHFA’s other mortgage programs.

  • Up to a $15,000 no-interest assistance loan if the buyer’s household income does not exceed 90% of the statewide family median income. This may not be used with other assistance programs
  • Eligible for the HOMEstead program. This may not be used with other assistance programs.
  • Eligible for the PHFA’s Access Home Modification Program, which offers a no-interest loan between $1,000 and $10,000 if you have a PHFA Keystone Home Loan or Keystone Government Loan. This program is used to help you make modifications to your home to accommodate a disability. This loan does not require repayment if the property is your principal residence.

If you choose to take advantage of PHFA’s Access Home Modification Program, you must provide the lender with a contract. To learn more about the Programs for Persons with Disabilities and for details on how to apply for the Access Home Modification Program, visit PHFA’s Official Assistance Loans page.

Federal Programs

Federal programs are available in every state and provide different benefits to improve housing affordability. In Pennsylvania, loans insured by federally-backed agencies (FHA, VA, and USDA) are provided through the Keystone Government Loan Program (K-Gov) The loans include the FHA loan,VA loan, and USDA loan.

I. Conventional Loan

Conventional loans are always available and are privately insured. Conforming loans are insured by federally-backed associations like Fannie Mae and Freddie Mac. These associations have specific programs, which aim to make housing more affordable. Fannie Mae has the HomeReady program, which has a lower minimum down payment of 3%. Freddie Mac has the HomePossible program, which has low minimum down payment requirements, low mortgage rates, and no credit score requirements.

II. FHA Loan

The Federal Housing Administration (FHA) uses FHA-approved lenders to guarantee mortgages that aim to help low to moderate-income earners. These loans only require a minimum down payment of 3.5% and a minimum credit score of 500 but still have competitive FHA mortgage rates. The mortgages come as fixed and adjustable-rate loans with mortgage terms of 15 or 30 years. FHA Loans also have lower FHA Mortgage Insurance Premiums (MIP)and you can use an FHA Loan calculator to see how this impacts your monthly payments. For more information about FHA Loans, visit the FHA Loans page.

III. VA Loan

The United States Department of Veterans Affairs (VA) uses VA-approved lenders to guarantee mortgages that aim to help certified veterans. There is no minimum credit score or minimum down payment requirement.VA Loans typically have lower VA mortgage rates and do not require mortgage insurance payments. To see the breakdown of your monthly payment for a VA Loan, use a VA Loan calculator. For more information about VA Loans, visit the VA Loans page.

IV. RD Home Loan

The United States Department of Agriculture (USDA) uses USDA-approved lenders to guarantee mortgages that aim to help home buyers in rural areas with low to moderate incomes. Rural Development (RD) areas are set by the USDA and you can use the USDA Eligibility Map to see if you qualify. There is no credit score requirement but lenders will make sure your debt-to-income ratio is less than 41%. There are multiple loan programs offered by the USDA, which you can find on the USDA Loans page.

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