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2022 Pennsylvania First-Time Homebuyer Programs

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Pennsylvania residents may get a helping hand when they purchase their first home, thanks to the array of statewide and local first-time homebuyer programs offered. These programs provide different forms of financial support to potential homeowners. Before applying you should be aware of eligibility requirements, including minimum occupancy periods, which can mean you must pay back your assistance funds if you refinance or sell your home before a certain amount of time. Read on to learn more about some of the first-time homebuyer programs available in Pennsylvania and how to qualify for them.

Pennsylvania statewide and local first-time homebuyer programs

First-time homebuyers in Pennsylvania may qualify for a statewide or local down payment assistance (DPA) program. How these programs function and the type of support they offer can vary.

Program nameAssistance amountAssistance typeWhere it’s available
The Down Payment and Closing Cost Assistance Program (DPCCAP)Up to $7,500Deferred loanPittsburgh
The Redevelopment Authority of the County of Washington Homebuyer Assistance ProgramUp to $24,500Deferred loanWashington County
Montgomery County First Time Homebuyers ProgramUp to $10,000Forgivable grantMontgomery County
Upper Darby Township First Time Homebuyer ProgramUp to $6,000Forgivable loanUpper Darby Township
Keystone Home LoanLoan for up to $461,400 purchase price limitHome purchase loan with competitive interest rates and lower feesStatewide
First Front DoorGrant of up to $5,000GrantStatewide

What to know about different types of down payment assistance

Every down payment assistance program for first-time homebuyers will be structured differently and will have unique application requirements. That being said, most of these programs follow a few basic structures.

Grants

Grant-based programs generally don’t make you pay back any of the assistance you receive. Grants can be offered on both a state and local level, and to qualify for a grant you typically need to secure a program-approved mortgage loan first. It’s fairly common for these first mortgages to come with higher interest rates in order to cover the costs of the grant.

Second mortgages

A second mortgage-based program will offer support after you take out a first mortgage. The second mortgage (which provides the financial assistance) acts as a lien on the property. Some programs will require you to make payments on the second mortgage, whereas others will forgive the entire loan amount if you live in the home for a certain period of time. Because of this, it’s important to research any second mortgage programs you’re considering thoroughly to make sure you’re aware of what you are agreeing to pay.

How Pennsylvania first-time homebuyer programs work

First-time homebuyer programs are a great way to get some financial support when it comes time to buy your first home. All Pennsylvania first-time homebuyer programs will have their own unique application process, but typically you can expect to need to take the following steps in order to qualify for assistance.

  1. Understand program requirements. Any first-time homebuyer program you apply to will have a specific set of eligibility requirements such as income level, homeownership status and occupancy of the home you want to buy. Before you apply, it’s helpful to confirm you meet all program applicant requirements so you don’t waste time.
  2. Buy a home in an eligible city. While some first-time homebuyer programs are available statewide, or even nationwide, others only apply to home purchases in certain cities, communities or counties. You need to find a program that matches up with where you want to buy a home.
  3. Meet length of ownership restrictions. You may have to remain living in the home for an agreed upon amount of time in order to fully benefit from the financial offerings of the program. If you choose to sell your home or refinance it before the occupancy period ends, you might have to pay back all or some of the aid you received.
  4. Undergo homeownership counseling or education. In order to qualify for financial support, you may be required to take some sort of homeownership education course or to undergo counseling that will guide you through what you need to know about homeownership.

Pennsylvania first-time homebuyer program requirements

Before you apply for any first-time homebuyer programs, spend a bit of time getting familiar with the requirements of any programs that you’re considering. Here’s a few examples of applicant requirements for Pennsylvania first-time homebuyer programs.

Program name Credit score minimumDTI ratio maximumMaximum income limitHow long you have to live in home
The Down Payment and Closing Cost Assistance Program (DPCCAP)Not availableNot availableUp to 115% of AMI, from $47,500 to $110,750, depending on household size10 years
The Redevelopment Authority of the County of Washington Homebuyer Assistance ProgramVaries by lenderVaries by lending institution$47,500 to $78,750, depending on household size10 years
Montgomery County First Time Homebuyers ProgramVaries by lenderVaries by lender$52,950 to $75,60015 years
Upper Darby Township First Time Homebuyer ProgramVaries by lenderVaries by lender$52,950 to $99,80010 years
Keystone Home LoanVaries by lenderVaries by lender$81,000 to $135,200, depending on household sizeN/A
First Front DoorVaries by lenderVaries by lenderUp to 80% percent of the area median income; $45,350 to $85,550 depending on household sizeFive years

THINGS YOU SHOULD KNOW

First-time homebuyer programs usually have income restrictions, so it’s important to be aware of which programs your income will exclude you from. How these income restrictions work vary. With some programs, there will be a set dollar limit for a variety of household sizes. Other programs base limitations on how much you make compared to local average income limits. You can learn more about Pennsylvania’s current income limits by visiting the HUD website and providing your state and county information.

National first-time homebuyer programs

There are also nationwide first-time homebuyer programs that you may qualify for. Generally, you need to qualify for one of these programs in order to be eligible for more local ones. These loan programs aren’t exclusive to first-time homebuyers, so you may find you can still get support even if you aren’t new to homeownership.

Conventional loans. You can secure a conventional loan through a private lender, especially if you have a high credit score. If you want a larger loan amount, a conventional loan is likely a better fit than a government backed loan like an FHA loan, which generally has smaller loan amounts. Typically, you must have a 620 credit score to qualify for a conventional mortgage loan. Two popular conventional loans for first-time homebuyers are Fannie Mae HomeReady® and Freddie Mac Home Possible®.

FHA loans. This is a type of government-backed loan insured by the Federal Housing Administration (FHA) that is a good fit for first-time homebuyers with lower incomes who may struggle to qualify for conventional financing. To qualify for an FHA loan you do need to provide proof of two years of stable income. They also require two types of FHA mortgage insurance, but you may qualify with a credit score as low as 500.

VA loans. Active-duty and veteran service members may qualify for a VA loan from The U.S. Department of Veterans Affairs (VA) that can be used to buy up to a four-unit dwelling to be lived in as a primary residence. With a VA loan, no down payment or private mortgage insurance (PMI) is required.

USDA loans. A USDA loan is also a government loan, and it is guaranteed by the U.S. Department of Agriculture. USDA loans are intended to finance homes in rural areas (as defined by the USDA) and don’t require PMI or a down payment.

FAQs about Pennsylvania first-time homebuyer programs

Who qualifies as a first-time homebuyer in Pennsylvania?

If you haven’t owned a home in the past three years (ending on the date of purchase), generally you are considered to be a first-time homebuyer, per HUD. However, it’s worth confirming how each program you apply for classifies first-time homebuyers.

Can I qualify for down payment assistance in Pennsylvania?

You can qualify for down payment assistance in Pennsylvania if you meet all of the program requirements surrounding factors like income and location.

How much of a down payment do I need to buy a house in Pennsylvania?

Each program you apply for will have different down payment requirements. For example, down payments aren’t required to take out a VA loan, but to qualify for a FHA loan you need to make a down payment of at least 3.5%.

Home price trends in Pennsylvania major areas

The price of your home affects your monthly mortgage payments and the more a home costs, the more you’ll spend on monthly mortgage payments over the course of a 30-year home loan. According to National Association of Realtors (NAR) data, monthly mortgage costs in some major counties such as Montgomery County are on the rise. The median home price, year over year, rose 13.5% to $395,463. Monthly mortgage payments were up from $1,290 to $1,516. In Philadelphia County, median home prices also rose 13.5%, to $219,144. This means a monthly mortgage payment of $840 from $715 in the previous year.

Home prices in Jefferson County are also on the rise, with the median home price up 13.1% to $123,424, year over year. This translates to a monthly mortgage payment of $473, up from $404.

 

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