Pennsylvania First-Time Homebuyer Programs

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Updated on Wednesday, February 20, 2019

If you’re already living in the state, or love the idea of settling in a place rich in U.S. history, beautiful scenery and good food, Pennsylvania might be the place to buy your first residence. The Keystone State is the home of the Liberty Bell, it borders the Great Lakes and it’s the place where the iconic Philly cheesesteak sandwich was invented.

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Pennsylvania also offers many home loan and purchase-assistance programs that could make it more affordable to buy your first home there. These programs, most of which are open to both first-time and repeat homebuyers, offer forgivable and repayable loans that can be used to help with the down payment and closing costs on home purchases in the state. One of the programs, targeted to first-time homebuyers, offers a federal tax credit based on mortgage interest.

In February of 2019, we researched first-time homebuyer programs in Pennsylvania, which included reviewing the website of the Pennsylvania Housing Financing Agency, or PHFA, and other resources. Here’s what Pennsylvania first-time homebuyers need to know.

Pennsylvania first-time homebuyer programs

Founded in 1972, the PHFA is an agency affiliated with the state of Pennsylvania that manages the affordable housing programs, one of which helps first-time homebuyers purchase a home. The agency also helps to provide affordable homeownership and rental housing for low- and moderate-income adults and seniors.

The PHFA offers several home loan programs that work together with five purchase-assistance programs, including programs that help for homebuyers with disabilities and for lower-income workers whose employers partner with the PHFA to offer a homebuying program.

Eligibility for Pennsylvania assistance

Homebuyers with credit scores below 680 must complete homeownership counseling in person to obtain a loan through one of the PHFA programs.

HOMEstead Downpayment and Closing Cost Assistance Loan

This program assists with homebuying costs in the form of a second loan that is forgiven at 20% per year over five years.

Features

The HOMEstead Downpayment and Closing Cost Assistance Loan program offers:

  • Up to $10,000 to help with down payment and closing costs in the form of a zero-interest forgivable loan
  • In some cases, the money from the program can be used to make the mortgage more affordable by providing additional money down beyond the necessary amount

Eligibility

To participate in the HOMEstead Downpayment and Closing Cost Assistance Loan program, you must meet the following requirements:

  • Provide the minimum amount down out of your own funds as required by the program that is providing the mortgage loan
  • Meet PHFA income requirements, which vary based on the location of the home being purchased and the size of the homebuyer’s household
  • Meet PHFA purchase price requirements, which vary based on the county and whether you are purchasing a new or existing home
  • The home you are buying must not fall within an excluded area, which covers most major cities in Pennsylvania

How it works

To get started with the HOMEstead Downpayment and Closing Cost Assistance Loan program, contact a PHFA-approved homebuying counselor or lender, who will explain the requirements in more detail and walk you through the application process. Choose your county here to get a list of approved counseling agencies, or choose your county here to get a list of PHFA-approved lenders.

Keystone Advantage Assistance Loan Program

The Keystone Advantage Assistance Loan Program provides a second loan to help with purchase costs, such as the down payment or closing costs. The loan is repaid monthly over 10 years with no interest.

Features

The Keystone Advantage Assistance Loan Program offers:

  • A zero-interest repayable loan of up to either 4% of the purchase price or $6,000, whichever amount is lower
  • Can be used along with PHFA mortgage programs, including Fannie Mae HFA Preferred, HFA Preferred Risk Sharing, Keystone Government Loan or Keystone Home Loan
  • Available to first-time and repeat homebuyers

Eligibility

To be eligible for the Keystone Advantage Assistance Loan Program, you must meet the following requirements:

  • Credit score of at least 660
  • Minimum loan amount of $500
  • Loan can only be used for the minimum down payment and closing costs
  • Liquid assets owned by the borrower, including checking, savings, stocks and bonds, must be $50,000 or less total after subtracting the funds needed to close the loan
  • The program may not be combined with other home-purchase assistance programs except for the Access Modification Loan Program

How it works

To apply for the Keystone Advantage Assistance Loan Program, get in touch with a PHFA-approved homebuying counseling agency or lender, who will go over requirements and walk you through the application process. Choose your county here to get a list of approved counseling agencies, or choose your county here for a list of PHFA-approved lenders.

PHFA Mortgage Tax Credit Certificate

The PHFA Mortgage Tax Credit Certificate, or MCC, program allows first-time homebuyers to reduce their federal tax bill based on the amount of mortgage interest they pay.

Features

The PHFA Mortgage Tax Credit Certificate program offers:

  • A federal tax credit of 20% to 50% of the mortgage interest paid each year, at a maximum of $2,000 a year

Eligibility

To participate in the PHFA Mortgage Tax Credit Certificate program, you must meet the following requirements:

  • The buyer and other adults who will live in the home within a year of closing must be first-time homebuyers, meaning they have not had ownership of their primary residence in the past three years; or they must be a veteran or be purchasing the home in a federally targeted area
  • Must not exceed the Keystone Home Loan income and purchase price limits, which vary by county and the number of members in the household
  • Borrowers must complete paperwork that includes an affidavit
  • Cannot be used with a Keystone Home Loan

How it works

To apply for the PHFA Mortgage Tax Credit Certificate program, reach out to a PHFA-approved homebuying counselor or lender, who will talk with you about requirements and help you apply for the program, if you qualify. Choose your county here to get a list of approved counseling agencies, or choose your county here for a list of PHFA- approved lenders.

Employer Assisted Housing Initiative

The Employer Assisted Housing Initiative works with the Keystone Advantage Assistance Loan program, boosting the amount normally available through that program to help low- or moderate-income workers. The program is designed to help workers in primarily public-sector jobs, such as county workers, school employees and police and fire personnel, for whom homeownership might otherwise be out of reach.

Features

The Employer Assisted Housing Initiative offers:

  • Up to $8,000 in down-payment and closing-cost assistance (higher than the 4% of purchase price or $6,000 usually available through the Keystone Assistance program) that can be repaid over 10 years

Eligibility

To be eligible for the Employer Assisted Housing (EAH) Initiative, you must meet the following requirements:

  • Must work for an EAH participating employer
  • Credit score must be at least 660
  • Minimum loan amount is $500
  • Loan can only be used toward the minimum down payment and closing costs
  • The borrower’s liquid assets, which include checking, savings, stocks and bonds, must be $50,000 or less after subtracting the amount needed to close the loan
  • May not be combined with other home purchase assistance programs except for the Access Modification Loan Program for homebuyers with disabilities

How it works

To apply for the Employer Assisted Housing Initiative, verify that your employer participates in the program, then contact a PHFA-approved homebuying counselor or lender, who will explain requirements in more detail and walk you through the application process. Choose your county here to get a list of approved counseling agencies, or choose your county here for a list of PHFA- approved lenders.

Programs for Persons with Disabilities

Programs for Persons with Disabilities encompasses several specific programs that allow homebuyers with disabilities to purchase a home more affordably and also make necessary modifications to an existing home.

Features

Programs for Persons with Disabilities offers:

  • The Access Home Modification Program, with a zero-interest loan of between $1,000 and $10,000, which does not need to be repaid if you stay in the home as your primary residence. It’s to be used to make necessary modifications (for example, addition of an access ramp or grab bars, widening of doors or hallways, or installation of a lift) to an existing home
  • Up to $15,000 in down-payment and closing-cost assistance through the Access Downpayment and Closing Cost Assistance Program for buyers using the Access Home Modification Program
  • Up to $10,000 in down-payment or closing-cost assistance for first-time homebuyers through the HOMEstead program, which can be used in conjunction with Programs for Persons with Disabilities

Eligibility

To be eligible for Programs for Persons with Disabilities requirements, you must meet the following requirements:

  • Homebuyer or family member living in the household must have a permanent disability
  • Must be purchasing a home using one of the PHFA mortgage loan programs
  • To get the forgivable home modification loan, income must not be higher than 80% of the statewide family median income
  • Provide the lender with a detailed contract with a state-registered contractor for planned home modifications

How it works

To apply for Programs for Persons with Disabilities, contact a PHFA-approved homebuying counselor or lender, who will help you figure out if you qualify and help guide you through the application process. Choose your county here to get a list of approved counseling agencies, or choose your county here for a list of PHFA-approved lenders.

National first-time homebuyer programs

In addition to the first-time homebuyer programs offered by the state of Pennsylvania, you may also want to check into federal first-time homebuyer programs. It’s smart to look at a variety of programs, including their benefits and requirements, to find the one that best fits your needs as a first-time homebuyer in Pennsylvania. See our general guide to first-time homebuyer programs to learn more about federal programs before you start searching for your perfect Pennsylvania home.