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All about 1st time home buyer programs in Pennsylvania

Family inspecting a home for sale in State College, PA with their State College PA Realtor

Buying a home in Pennsylvania is easier than ever with these loan programs. Find out which one suits your needs.

First-time homebuyers’ education program in Pennsylvania

First-time homebuyers can approach ACTION-Housing for support and guidance before entering the market. This Housing and Urban Development (HUD)-approved agency provides online education, face-to-face counseling, and other resources to help buyers manage stress and avoid the common pitfalls of buying their first home.

According to the Federal Housing Authority (FHA), borrowers who undergo counseling have 40% likelihood of avoiding 60-day delinquency compared to similar borrowers who don’t receive counseling.

If you have concerns regarding credit repair, document review, and other issues, ACTION-Housing can connect you with a housing adviser who will discuss the various steps involved in the following processes:

  • Pre-qualifying for a mortgage
  • Buying a house
  • Buying property with bad credit

The Pennsylvania Housing Finance Agency (PHFA) offers an online home buying education course to help residents navigate the buying process.

PHFA and national programs

PHFA also offers several loan and down payment assistance programs in addition to national programs that help low and moderate-income buyers purchase their first homes with little to no down payment.

Here are some of the benefits of applying for assistance:

  • Down payment and closing cost assistance
  • Assistance for buyers with disabilities
  • Employer-assisted housing via participating employers
  • Refinancing programs
  • Tax credits (for eligible borrowers)

Each program will have its own standards and qualifications. Generally speaking, however, first-time buyers looking for assistance must meet the following requirements:

  • The home you intend to purchase should be your primary residence.
  • You must have a minimum credit score of 660 for certain programs.
  • You must complete home buyer education if your FICO score is lower than 680.
  • Your household income and the purchase price of the property should not exceed county limits.
  • Your liquid assets (which include investment accounts) should not exceed $50,000 after payment of closing costs. This can exclude your retirement accounts with certain restrictions.
  • You plan to put no more than 30% of your income towards monthly payments.

First-time homebuyers’ programs in Pennsylvania

PHFA’s home purchase programs offer 30-year fixed-rate mortgages (FRMs) with fewer fees and favorable interest rates. As already mentioned, each program has its own eligibility requirements and limits on household income and purchase price.

These loans include:

  • Conventional mortgages
  • Federal Housing Agency (FHA) loans
  • Veterans Affairs (VA) loans
  • U.S Department of Agriculture (USDA) loans for rural development

PHFA home loan programs worth looking into include:

  • HFA Preferred (Lo MI) loans
  • Keystone Government (K-Gov) loans
  • Keystone Home loans

HFA Preferred (Lo MI)
Most lenders require private mortgage insurance (PMI) for buyers whose down payment is less than 20% of the price of the property. If you’re concerned with PMI costs for your first home purchase, this loan program can help you secure low-cost mortgage insurance.

The HFA Preferred (Lo MI) loan program is ideal for buyers who are either purchasing or refinancing a primary, single-unit residence. One of the conditions of the loan includes a purchase price limit. Additionally, your household income must fall squarely within program limits, and you must provide at least $1,000 for the down payment. You’ll also be required to undergo homebuyer education at any PHFA-approved agency.

Keystone Government Loan (K-Gov)
This program enables participating mortgage lenders and brokers to give first-time homebuyers affordable mortgages via FHA loans, VA loans, and USDA rural development loans. If your FICO credit score is lower than 680, you must complete a homeowner education course.

Keystone Home Loan
This loan program is geared towards first-time homebuyers, discharged veterans, and buyers in specific Pennsylvania counties. Keystone Home has varying requirements for different loan types:

  • Conventional loans – Typically insured by the Pennsylvania Housing Insurance Fund (PHIF), borrowers must have a credit score of at least 660 in addition to 3% to 5% down payment.
  • FHA loans – Borrowers should be able to make a 3.5% down payment.
  • VA and USDA loans – These loans don’t require a down payment in most cases.

To qualify for the Keystone Home loan program, you’ll need to work within specified household income and purchase price limits, which differ per county. Click here to view the full list of income and price limits in your area.

Keystone Advantage Assistance Loan Program
This program lets you take out a second mortgage to be used for your down payment or closing costs. This is an interest-free loan with a 10-year repayment schedule. It can help you produce $6,000 or up to 4% of the purchase price, whichever is lower.

Requirements:

  • Credit score of at least 660
  • Minimum loan of $500
  • Liquid assets like your cash, bank balance, and stocks shouldn’t total more than $50,000 after closing

Buyers can apply for the Keystone Advantage Assistance Loan Program alongside other programs like Keystone Government Loan, Keystone Home, and HFA Preferred.

Additional PHFA programs include:

  • PHFA Down Payment and Closing Cost Assistance – PHFA helps ease the burden of down payments and closing costs.
  • HOMEstead Downpayment and Closing Cost Assistance Loan – This program can help buyers produce $1,000 to $10,000 in down payment in addition to closing cost assistance. Household income and purchase price limits vary by county, but it is not available in all counties and cities. Most homes containing lead-based paint or built before 1978 are not eligible for the program.
  • Mortgage Tax Credit Certificate – This can help reduce your federal tax bill, enabling eligible buyers to claim a 20% to 50% tax credit (up to $2,000 per year) off of mortgage interest payments.

For more questions about buying a home in State College, PA and the surrounding areas, you can contact the Heritage Realty Group, Inc. here. You can also call us at 814.231.0101 or email RLHoman363(at)gmail(dotted)com for inquiries. We’ve been helping clients find their dream home in Pennsylvania since 1987. We can’t wait to help you find yours.