First-Time Home Buyer Programs in Pennsylvania

Pennsylvania's statewide homebuyer programs come from the Pennsylvania Housing Finance Agency (PHFA). PHFA offers home purchase loans and separate purchase assistance options that may help with down payment and closing costs, and you apply through a participating lender while PHFA's approved counselors offer free homebuyer education. Eligibility and terms vary by borrower, property and program, so confirm the details with PHFA and a participating lender.

What PHFA is

PHFA is Pennsylvania's state housing finance agency. Its homeownership work includes mortgage programs for buyers, assistance for the cash needed at closing, refinance options, and programs for home repairs and accessibility.

PHFA does not take your application itself. A participating lender or broker processes and closes your loan. After closing, PHFA buys the loan, and you make your mortgage payments to PHFA for the life of the loan. That last point is a little different from many state programs, so it is worth knowing up front who you will be paying.

PHFA homebuyer programs by name

PHFA organizes its homebuyer programs into home purchase loans and purchase assistance.

Home purchase loans

• HFA Preferred (Lo MI).
• Keystone Home Loan Program.
• Keystone Government Loan Program.
• Keystone Flex with K-FIT and Keystone Flex with K-DATE. Keystone Flex first mortgages paired with one of PHFA's assistance loans.
• Keystone Flex Purchase and Improvement with K-FIT and with K-DATE. Keystone Flex options for buying a home and financing improvements as part of the purchase, paired with assistance.

Your lender can explain how each of these first mortgages differs, including the loan type behind it and the kind of mortgage insurance involved, and which ones you may be eligible for.

Purchase assistance

PHFA says these options may provide down payment and closing cost assistance:

• PHFA Grant.
• Keystone Advantage Assistance Loan Program.
• Keystone Forgivable in Ten Years Loan Program (K-FIT).
• Keystone Due At Time of Expiration (K-DATE).
• Programs for Persons with Disabilities.
• Employer Assisted Housing (EAH).

PHFA also lists home improvement and repair programs, such as the Access Home Modification Program, that may matter if you are buying a home that needs accessibility changes or repairs.

The assistance options are structured differently. Some are grants, some are loans that are forgiven over time, and some are deferred loans that become due later. Ask your lender to explain how each one you are offered works, including what happens if you sell or refinance.

Income limits, purchase price limits, credit guidelines and funding can all change. Check eligibility and current terms with PHFA and a participating lender before you count on any program.

Homebuyer education and counseling in Pennsylvania

PHFA offers free homebuyer counseling and education through its approved counseling agencies, and it also lists an online homebuyer course. PHFA strongly encourages counseling before you sign a sales agreement, especially for first-time buyers. Depending on your credit profile, PHFA may require you to complete an in-person course before closing, so ask your lender early whether that applies to you.

A good first step, according to PHFA, is to contact a PHFA-approved homebuyer counselor and a participating lender at about the same time.

A counseling session is a good place to get specific. Bring recent pay stubs, a list of your monthly debts, your savings balances and any questions about your credit. A counselor can help you spot what to fix before you apply, plan for the cash you will need beyond the down payment, such as inspections and moving costs, and understand the documents you will sign at closing.

More broadly, HUD-approved housing counselors provide free or low-cost help with budgeting, deciding how much home you can afford, understanding the mortgage process and preparing for closing.

How to work with a PHFA participating lender

1. Find a participating lender. PHFA lists participating lenders on its website. Ask each one which PHFA programs it offers, because not every lender offers every option.
2. Talk to a counselor too. PHFA recommends reaching out to an approved counselor and a participating lender at the start. The counselor can help with budgeting and credit; the lender handles the loan.
3. Match the loan to the home. If the home needs work, ask about the Keystone Flex Purchase and Improvement options. If you or a household member has a disability, ask about Programs for Persons with Disabilities and the Access Home Modification Program.
4. Compare Loan Estimates. Get a Loan Estimate for the PHFA option and any other loan you are considering, and compare cash to close and monthly costs on the same form.

Approval is subject to credit approval, property review and program guidelines. A lender can tell you whether you may qualify, but cannot promise eligibility before reviewing your full application.

Pennsylvania closing items to know about

Realty transfer tax

Pennsylvania imposes a state realty transfer tax on transfers of real estate made by deed, instrument, long-term lease or other writing. Local governments may impose an additional local realty transfer tax, and localities may share that revenue with school districts and municipalities. County Recorders of Deeds collect both the state and local portions.

The grantor (seller) and grantee (buyer) are jointly and severally liable for the tax, which means either party can be held responsible for the full amount. Your sales agreement may address how the tax is divided, so read that section carefully and ask your real estate agent or closing agent how it is handled where you are buying.

Homestead and farmstead exclusion

Under Pennsylvania's Taxpayer Relief Act, the state distributes property tax reduction allocations to school districts through a homestead or farmstead exclusion. The exclusion reduces the assessed value of each qualifying property by the same amount before school property tax is computed. Only a primary residence is eligible, and condominium and cooperative units used as the owner's home can qualify.

If you are buying a farm property that will also be your home, ask the county about the farmstead side of the exclusion, which has its own qualifying rules.

The exclusion is not available in every school district; it depends on local funding. To apply, contact your county assessment office for its homestead and farmstead application. Filing windows are set locally, so check soon after you close, and talk to a tax professional about how it affects your tax bill.

Pennsylvania first-time buyer checklist

• Review PHFA's home purchase loans and purchase assistance options.
• Contact a PHFA-approved homebuyer counselor, ideally before you sign a sales agreement.
• Ask a participating lender which PHFA programs it offers and whether an in-person course will be required for you.
• If the home needs repairs or accessibility changes, ask about purchase-and-improvement and home modification options.
• Gather income, asset, employment and credit documents.
• Read how the sales agreement assigns state and local realty transfer tax.
• Compare Loan Estimates side by side.
• After closing, file a homestead exclusion application with your county assessment office.

Frequently asked questions

Next steps

• First-Time Home Buyer Loans
• Pennsylvania mortgage overview
• First-time buyer loans in Pennsylvania
• First-time buyer loans in Philadelphia
• First-time buyer loans in Pittsburgh
• First-time buyer loans in Allentown
• First-time buyer loans in Harrisburg
• First-time buyer loans in Lancaster
• First-time buyer loans in Scranton
• First-time buyer loans in Reading
• First-time buyer loans in York
• First-time buyer loans in Erie
• First-time buyer loans in Pottstown
• First-time buyer loans in State College
• First-time buyer loans in Lebanon

Sources

• PHFA: Homebuyers
• Pennsylvania Department of Revenue: Realty Transfer Tax
• Pennsylvania DCED: Property Tax Relief Through Homestead Exclusion
• HUD: Housing Counseling and You (First-Time Homebuyers)