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Pennsylvania First-Time Homebuyer Programs of 2019

Buying your first home can be a time of great excitement. But saving up for the costs associated with your dream home may feel daunting.

Luckily, there are homebuyer programs offered through the Pennsylvania Housing Finance Agency (PHFA) that can help first-time buyers navigate the process. Through a number of  programs, the PHFA offers lower interest rates, down payment and closing cost assistance and even mortgage tax credits. Many of these offerings can be combined, helping to make homeownership more accessible to all.

In this guide, we will cover:

Pennsylvania first-time homebuyer programs

In addition to its wide variety of loan, down payment assistance and tax credit programs, PHFA also offers free counseling and education programs for homebuyers.

In January 2019, we researched the most current information on first-time homebuyer programs in Pennsylvania, which included reviewing guidelines from the PHFA. Here’s what first-time buyers in Pennsylvania need to know.

Eligibility for Pennsylvania first-time homebuyer programs

Each program comes with its own set of eligibility requirements. For all PHFA programs, buyers with a credit score of less than 680 are required to complete an in-person, pre-purchase course before enrolling.

Note: You can check current mortgage rates for the state of Pennsylvania here.

HFA Preferred Risk Sharing

Features

  • Fixed-rate, 30-year HomeReady loans through Fannie Mae
  • No private mortgage insurance required with down payments of less than 20% — although the mortgage rate may be slightly higher
  • Lower fees
  • $300 closing costs credit for buyers who complete pre-purchase counseling

Eligibility

  • Credit score of 620 or higher; credit score of 680 is required for manual underwriting
  • Maximum debt-to-income ratio of of 50% — or 36% if the buyer’s credit score falls between 680 and 700 and the loan is manually underwritten
  • Income limit of $95,620, unless the buyer is located in the Bucks, Chester, Delaware, Montgomery or Philadelphia regions, where the limit is $113,500
  • One-unit property intended for use as a primary residence
  • Buyer contributes at least 1% or $1,000 of their own funds — whichever amount is lesser
  • Homebuyer pre-purchase counseling required for at least one buyer

How it works

To begin your application for this program, reach out to a participating lender.

HFA Preferred

Features

  • Fixed-rate, 30-year HomeReady loans through Fannie Mae
  • Lower fees
  • $300 closing costs credit for buyers who complete pre-purchase counseling

Eligibility

  • Eligibility requirements are identical to the HFA Preferred Risk Sharing program.

How it works

PHFA’s HFA Preferred program functions exactly like the HFA Preferred Risk Sharing program — except buyers pay private mortgage insurance. Unlike the HFA Preferred Risk Sharing program, buyers who elect to pay mortgage insurance through the HFA Preferred program will not have an elevated interest rate.

One of PHFA’s participating lenders can help you understand which program to select based on your homeownership goals and unique financial situation.

Keystone Home Loan

Features

  • 30-year, fixed-rate loans through conventional lenders FHA, VA and USDA-RD
  • Below-market interest rate
  • Lower fees

Eligibility

  • First-time homebuyer — unless the buyer has not owned a home in three years, is a discharged veteran or plans to buy a home in a targeted area (view targeted areas, which are listed with a “T”)
  • Maximum purchase price and income limits vary by region (view maximum purchase prices and income limits)
  • One- or two-unit properties
  • For FHA and conventional loans, buyer contributes at least 1% or $1,000 of their own funds — whichever amount is lesser
  • 3% to 5% minimum down payment for conventional loans and 3.5% minimum down payment for FHA loans (most VA and RD loans require no down payment)
  • Maximum debt-to-income ratio of 50% for conventional loans and 45% for FHA, VA and USDA-RD loans
  • Minimum credit score of 620; buyers in need of private mortgage insurance for a conventional loan must have a minimum credit score of 660

How it works

PHFA’s network of participating lenders can help you begin your application.

Keystone Government Loan (K-Gov)

Features

  • 30-year, fixed-rate loans through the FHA, VA and the USDA-RD program
  • Below-market interest rate
  • Lower fees

Eligibility

  • All loans underwritten using the federal agency’s guidelines — so various income limits, mortgage insurance requirements and other restrictions may apply
  • For FHA loans, buyer contributes at least 1% or $1,000 of their own funds — whichever amount is lesser
  • One- or two-unit properties
  • 45% debt-to-income ratio, unless the loan is manually underwritten — in which case the federal agency’s guidelines are used
  • Minimum credit score of 620

How it works

The Keystone Government Loan (or K-Gov program) is a sister program to the PHFA’s Keystone Home Loan. Stuck choosing between the Keystone Government Loan and the Keystone Home Loan? The government program can take advantage of the state’s mortgage credit certificate program, and the Keystone Home Loan cannot.

If you’re ready to begin your application, PHFA’s network of participating lenders can help you choose which federal program is best for you.

Keystone Advantage Assistance Loan

Features

  • Down payment and closing cost assistance of up to 4% of the home’s purchase or $6,000 — whichever is less — in the form of a second mortgage
  • Buyers working for employers that participate in the Employer Assisted Housing program can receive a second mortgage of up to $8,000
  • Zero percent interest
  • Can be used with conventional, FHA, VA or RD loans
  • Repaid monthly over 10 years
  • Can be used alongside the PHFA’s HFA Preferred, HFA Preferred Risk Sharing, Keystone Government Loan or Keystone Home loan

Eligibility

  • Minimum credit score of 660
  • Minimum loan of $500
  • Borrowers may not have more than $50,000 in liquid assets after closing the loan

How it works

This program works in conjunction with a number of other PHFA assistance programs, so buyers can enjoy a lower interest rate and down payment assistance. If your employer participates in PHFA’s Employer Assisted Housing program, you can receive even more money — up to $8,000. Work with a participating lender to begin your application.

Mortgage credit certificate

Features

  • Tax credit of up to $2,000 of the mortgage interest paid per year
  • May be combined with the Keystone Advantage Assistance Loan

Eligibility

How it works

To determine your eligibility and apply, work with a participating lender.

HOMEStead Downpayment and Closing Cost Assistance Loan

Features

  • Up to $10,000 in down payment and closing cost assistance for buyers using the Keystone Home Loan
  • No-interest loan forgiven over five years

Eligibility

  • Minimum loan amount of $1,000
  • Income limits and maximum home prices vary by county (view income limits and maximum purchase prices)
  • Minimum down payment varies by lender
  • Funding available on a first-come, first-served basis
  • Home must meet federal regulations for lead-based paint — which excludes most homes built before 1978

How it works

PHFA’s HOMEStead Downpayment and Closing Cost Assistance Loan helps buyers utilizing the Keystone Home Loan pay for closing costs and afford a larger down payment. Work with one of PHFA’s participating lenders to enroll in this program.

National first-time homebuyer programs

No matter whether you’re looking for the perfect mortgage program or in need of down payment assistance, PHFA’s slate of homebuyer programs will help you buy your dream home sooner. But if none of the state’s programs suits your needs, a number of federal agencies including the FHA, VA and USDA also offer assistance — including specialized loan programs, down payment assistance grants and revitalization loans. Read LendingTree’s guide to learn more about nationwide programs for first-time homebuyers.

 

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