Philadelphia Mortgage Rates

Living in Philadelphia, PA

Philadelphia is the largest city in the Commonwealth of Pennsylvania and the sixth-most populous in the United States, with nearly 1.6 million residents, according to the U.S. Census Bureau. As one of America’s oldest cities, the City of Brotherly Love offers an appealing mix of historic charm and urban flair to residents and visitors alike. The Declaration of Independence and the Constitution were written in Philadelphia, and the city is home to the famous Liberty Bell, the symbol of American independence.

Philadelphia is just a short distance from other major metropolitan areas, including New York, New Jersey and Washington, D.C. With its world-class universities, hospitals, arts, recreation, vibrant neighborhoods and more, the Philadelphia region is a desirable place for many to live and work.

For its location and size, Philadelphia is relatively affordable compared to similar metropolitan areas. The median home price in Philadelphia was $168,225 in 2018, according to the Pew Charitable Trusts. The median home price for the entire Philadelphia-Camden-Wilmington metropolitan statistical area was significantly more, at $224,900 for the first quarter of 2019, according to the National Association of Realtors. It should be noted that MSA includes parts of New Jersey, Delaware and Maryland, along with the five counties that make up the Philadelphia region (Bucks, Chester, Delaware, Montgomery and Philadelphia, the latter of which includes the city).

The housing market in Philadelphia is robust, with Pew reporting that more homes were sold in Philadelphia in 2018 than in any year since 2006. Active listings in the Philadelphia metro area grew 3% in March, compared to the previous year, and new listings grew 1%, according to a Realtor.com report. During that same period, the median number of days on the market dropped by just one.

The rules and costs of buying a home in Philadelphia

Philadelphia has specific rules and regulations that will influence your home purchase in the city. Read below to learn about real estate laws, taxes, conforming loan limits and other regulations you’ll encounter when buying and owning a home.

  • Homebuyers are protected by Pennsylvania state law, in that sellers are required to complete a property disclosure form, issued by the Pennsylvania Real Estate Commission, about the condition of the home. Sellers must provide information about material defects or other factors that could have a noted effect on home values or resident safety. Information about roof issues, structural problems, pest problems and concerns with the home’s plumbing, electrical, sewage and water systems should be
  • Pennsylvania is a judicial foreclosure state, meaning lenders are required to file a lawsuit and go to court if a homeowner defaults on the mortgage. Pennsylvania statutes give lenders the right to deficiency judgments, or the right to take a borrower to court to receive the balance of the loan if the foreclosed property sells for less than the initial mortgage. Homeowners in danger of foreclosure could be eligible for loan assistance from the Pennsylvania Housing Finance Agency’s Homeowners’ Emergency Mortgage Assistance Program (HEMAP), and state law requires that lenders issue a notice to delinquent homeowners about the program. This fact sheet offers more information. Philadelphia also offers an assistance program for city homeowners, and you can check within your county to see if you’re eligible for a diversion program if you own a home in the region.
  • If you’re considering or going through a divorce, be aware that Pennsylvania is an equitable distribution state, which means spouses can determine how they want to divide their property; and if they can’t agree, a court will decide for them. Unlike the 50/50 split in community property states, courts in Pennsylvania will work to divide assets by considering multiple factors, such as the length of the marriage and differences in spousal income and assets. Also important to note: In equitable distribution states, spousal debt inclusion is not required for VA, FHA and USDA loan approval.
  • Closings in Philadelphia may be handled by either a licensed attorney or title company.

Taxes

A transfer tax results from any transference of ownership of property, and lenders must disclose the tax amount that will be the responsibility of the buyer and seller once a specific property is identified. Pennsylvania transfer taxes are 1% of the value of the real estate, and some counties levy an additional amount to benefit schools and meet other local needs. Philadelphia, for example, issues a 3.278% realty transfer tax, meaning that city residents can expect to pay a total of 4.278% in transfer taxes when buying and selling a home.

The median annual property tax bill in Pennsylvania is $2,223 per year, based on a tax rate of 1.35%, according to Tax-Rates.org. That places the state 16th among the 50 states in average property taxes collected. Larger areas often have higher tax rates, and the Philadelphia region is no exception. Chester County, located just outside Philadelphia, has the highest property tax average in the state, at $4,192 annually. Bucks County is $4,090, Delaware County is $3,877 and Montgomery County is $3,834. If you own a home in Philadelphia County, however, you’re in luck. Tax rates are lower than the state median, coming in at $1,236 annually.

If these rates are unaffordable for you, Pennsylvania offers property tax reductions for certain populations. Eligible low-income state residents over 65, widows and widowers over 50 and disabled people over 18 qualify if their income is no more than $35,000 per year, allowing them to receive a maximum standard rebate of $650. Supplemental rebates can boost that total to $975. In addition, disabled veterans can receive a property tax exemption that reduces the taxable value of their homes, resulting in lower tax payments.

Conforming loan limits

Most counties in Pennsylvania, including those that make up the greater Philadelphia area, have a maximum conforming loan limit of $484,350 for single-family homes.

Conforming loan limits set the maximum amounts borrowers can take on for loans backed by government-sponsored entities Fannie Mae and Freddie Mac. The limits are set each year by the Federal Housing Finance Agency.

Programs for homebuyers in Philadelphia

State and local government agencies offer assistance for mortgage financing, refinancing and other programs that help residents purchase homes.

Philly First Home

The Philadelphia Housing Development Corporation offers the Philly First Home program, which provides a grant of up to $10,000 (or 6% of the purchase price, whichever is less) to assist first-time homebuyers with down payment and/or closing costs. The grant must be repaid if you move or refinance before living in the home for 15 years.

Who qualifies:

  • Borrower must be a first-time homebuyer
  • Must purchase a single-family home or duplex in Philadelphia (no condominiums)
  • Must have a family income lower than specific maximums ($75,720 for a single buyer, $108,120 for a family of four)
  • Must complete a homeownership counseling program before signing the sale agreement

Learn more

Keystone Advantage Assistance Loan

This program offers a second mortgage to help buyers with down payment and closing costs. The loan has a 10-year term with 0% interest, and eligible borrowers can receive the lesser of $6,000, or up to 4% of the purchase price of their home.

Who qualifies:

  • Borrower must already be eligible for a PHFA primary mortgage
  • Must have a minimum credit score of 660
  • Must have no more than $50,000 in liquid assets (e.g., cash in checking and savings accounts, stocks, bonds and CDs) after deducting funds needed to close the loan
  • Program may be used with conventional, FHA, VA or USDA loans

Learn more

HFA Preferred (Lo MI)

Buyers who put down less than 20% of the purchase price of their home can receive 30-year, fixed-rate conventional home loans through a network of PHFA lenders and pay less in private mortgage insurance than under an FHA or other low-down-payment program. Your lender can help determine your exact premiums based on your particular situation.

Who qualifies:

  • Borrowers must put down at least $1,000 of their own funds
  • Must have an acceptable credit history and the ability to make monthly mortgage payments
  • Household income cannot exceed county-based income limits
  • At least one buyer must complete an in-person homebuyer education course (for borrowers with credit scores above 680, courses are not required to be completed in person and can be done online)

Learn more

Keystone Home Loan

This home loan program can offer a more affordable mortgage requiring no more than 0% to 5% down.

Who qualifies:

  • First-time homebuyers, previous buyers purchasing in federally designated targeted areas (Philadelphia County is defined as a target area) and discharged veterans of the U.S. Armed Forces
  • Both income and purchase price limits apply, established by county
  • Borrower must have acceptable credit history and be able to make monthly payments
  • Borrower must also have enough funds for a down payment, application fees and closing costs
  • Mortgage insurance is required for those planning to put down less than 20%

Learn more

Mortgage credit certificate

For borrowers already approved for a PHFA home loan, the agency also offers a mortgage credit certificate that delivers a federal tax credit for 20% to 50% of the mortgage interest paid in any given year. The tax credit is capped at $2,000 per year.

Who qualifies:

  • First-time homebuyers, veterans and non-first-time homebuyers purchasing a home in a targeted area
  • Both income and purchase price limits apply; these are the same as for a Keystone Home Loan

Learn more

Rate shopping tips

One of the most important steps in the homebuying process is shopping for rates among lenders. Here are four tips you should follow.

Contact at least three lenders on the same day

Because rates can vary day by day, it’s important to contact multiple lenders on a single day in order to get a fair comparison of rate offers. You should contact a minimum of three to get a good idea of your rate options.

Give each lender the same information

It’s impossible to get a true comparison of lender offers if you give each of them different information. Instead, give every lender the same information about the type of loan you want, where the home you want to buy is located, the loan amount you are looking for and your personal financial information. Loan shopping won’t be productive if the different lenders have differing information.

Add up all the lender fees to confirm the costs

From origination fees to appraisal fees to title fees, each figure charged by a lender adds an expense to the overall cost of your home purchase. In addition, you need to consider other fees, such as home insurance, flood insurance and property taxes. Be sure to understand all the fees involved so you aren’t surprised later on in the homebuying process.

Know when to lock in the rate

A rate lock allows you to lock in the interest quoted by your lender so it stays the same even if interest rates rise. Rates are typically locked for an average of around 30 days, although you may be able to file for an extension past the expiration date, possibly for a fee. Some lenders may offer a float-down provision that allows you to adjust your rate if interest rates decrease after you lock yours in.

The information in this article is accurate as of the date of publishing.