How to Buy a Home in Pennsylvania with a PHFA Loan
If you are drawn to charming small towns, vibrant cities, or everything in between, you might want to call Pennsylvania home. With a lower cost of living than many neighboring states, a variety of housing options, and communities that fit nearly every lifestyle, it’s no surprise that more homebuyers are choosing to put down roots in the Keystone State.
Whether you’re a first-time homebuyer, relocating for work, or simply looking for more space, Pennsylvania has a lot to offer. If you’re wondering, “What would it really take to buy here?”, keep reading to learn what the housing market looks like in Pennsylvania, how programs offered by the Pennsylvania Housing Finance Agency can help make homeownership more affordable, and the key factors you should know before making the move.
Is Buying a Home in Pennsylvania Right for You?
Buying a home is a major milestone and choosing where to put down roots is just as important as choosing the home itself. Pennsylvania has been recognized as one of the nation’s best states to live in, earning high marks for quality of life and safety.
Pennsylvania ranks as the 5th most affordable state to live in. Compared to other Northeastern states, Pennsylvania offers more affordable home prices and a lower cost of living. Outside of larger cities like Philadelphia and Pittsburgh, PA home prices align better with local incomes and salaries.
Pennsylvania also offers an incredible variety of places to live. Whether you enjoy the energy of a city, prefer a quiet suburban neighborhood, or dream of living in a small town surrounded by rolling farmland, you’ll find communities that fit every lifestyle. Combined with a strong economy supported by industries like healthcare, education, manufacturing, technology, and agriculture, the state continues to be an attractive place to live and work.
Pennsylvania is also trying to make homeownership more accessible for current residents and those looking to move there. There are housing initiatives in motion to help expand housing opportunities and address inventory shortages to better support growing communities.
If Pennsylvania checks your boxes, the next step is understanding the resources available to you. One of the biggest advantages for eligible buyers is the Pennsylvania Housing Finance Agency (PHFA), which offers programs designed to make buying a home more affordable.
What Is the Pennsylvania Housing Finance Agency (PHFA)?
Saving for a down payment and closing costs is one of the biggest challenges homebuyers face. Fortunately, Pennsylvania offers programs designed to help make homeownership more affordable through the Pennsylvania Housing Finance Agency (PHFA).
The PHFA is a state agency created to expand access to affordable homeownership opportunities for Pennsylvania residents. Since 1972, PHFA has helped more than 150,000 families purchase homes by providing affordable mortgage financing, down payment assistance, and homebuyer education resources.
Rather than offering a one-size-fits-all solution, PHFA provides several mortgage and assistance programs designed to meet the needs of different buyers. Depending on the program and your eligibility, benefits may include:
- Competitive fixed interest rates
- Down payment and closing cost assistance
- Affordable monthly mortgage payments
- Financing options for eligible home repairs
- Mortgage servicing directly through PHFA
These programs can make buying a home more attainable for qualified borrowers while providing additional support throughout the homebuying journey.
DON’T FORGET
PHFA does not accept mortgage applications directly. You’ll need to work with a participating lender, like First Heritage Mortgage, to determine whether a PHFA mortgage fits your financial goals and to start the process.
PHFA Homebuyer Assistance Programs at a Glance
Here’s a quick overview of some of the most common assistance options available through PHFA.
| Program | How It Helps |
|---|---|
| PHFA Grant | Provides a $500 grant toward eligible down payment and closing costs. No repayment required. |
| Keystone Advantage Assistance | Offers a second mortgage with 0% interest to help cover eligible down payment and closing costs. |
| Keystone Forgivable in Ten Years (K-FIT) | Provides forgivable assistance that decreases over a 10-year period if program requirements are met. |
| Keystone Due At Time of Expiration (K-DATE) | Offers deferred assistance that becomes due when the home is sold, refinanced, or the first mortgage is paid off. |
| HOMEstead Assistance | Provides eligible buyers with additional down payment and closing cost assistance through a no-interest second mortgage. |
| Access Programs | Assistance for eligible homebuyers with disabilities, including accessibility modifications. |
| Mortgage Credit Certificate (MCC) | Allows eligible homebuyers to receive a federal tax credit on a portion of the mortgage interest they pay each year. |
How It Helps
Provides a \$500 grant toward eligible down payment and closing costs. No repayment required.
How It Helps
Offers a second mortgage with 0% interest to help cover eligible down payment and closing costs.
How It Helps
Provides forgivable assistance that decreases over a 10-year period if program requirements are met.
How It Helps
Offers deferred assistance that becomes due when the home is sold, refinanced, or the first mortgage is paid off.
How It Helps
Provides eligible buyers with additional down payment and closing cost assistance through a no-interest second mortgage.
How It Helps
Assistance for eligible homebuyers with disabilities, including accessibility modifications.
How It Helps
Allows eligible homebuyers to receive a federal tax credit on a portion of the mortgage interest they pay each year.
It is important to note that each PHFA program has its own income limits, purchase price limits, credit score requirements, and eligibility guidelines. Some programs also require homebuyer education before closing, particularly for borrowers with lower credit scores.
Who Are PHFA Programs Best For?
While eligibility varies, PHFA programs are often a great fit for:
- First-time homebuyers who need help with their down payment or closing costs
- Buyers whose household income falls within program limits
- Homebuyers looking for affordable fixed-rate financing
- Buyers interested in homebuyer education and long-term financial success
If you’re not sure whether you qualify, that’s okay. Our team can review your financial situation, explain your options, and help determine whether a PHFA loan makes the most sense for your goals.
It All Starts with the Right Team
Get Pre-Qualified with a Lender
Before you start scrolling through listings and saving your favorite houses, you should get pre-qualified for a mortgage. A pre-qualification gives you a clear picture of what you can afford and is an important first step if you’re planning to take advantage of PHFA programs.
Knowing your price range early allows you to focus on homes that fit your financial goals and helps prevent disappointment later in the process for when you think you found “the one.” It also shows sellers that you’re a serious buyer with financing already underway, which can be especially valuable in competitive markets.
If you’re interested in using PHFA programs, getting pre-qualified with a participating, local lender is especially important. You will need to work with a participating lender, like First Heritage Mortgage, to determine if you qualify and begin the process.
Work with a Local Agent
Once you’re pre-approved, it’s time for the fun part of the homebuying journey—finding the right home. While online listings are a great place to start, having an experienced real estate agent in Pennsylvania can make the process much smoother.
A local real estate agent does more than just schedule house tours. They understand neighborhood trends, local market conditions, and what the homebuying process in that community is like. Their local expertise can help you identify what communities align with your budget, commute, housing needs, and long-term goals.
Buying a home is a team effort, and your real estate agent and lender are two of the most important players on your team. While your real estate agent helps you find the right home and negotiate the best possible terms, your lender keeps your financing on track so you can move confidently from offer to closing. Together, they help make your homebuying journey as smooth and stress-free as possible.
What Closing Costs Should You Expect in Pennsylvania?
By now, you’ve built your homebuying team, and started searching for the perfect home. But before you get the keys, it’s important to understand one of the final expenses you’ll encounter: closing costs.
Closing costs are the fees and expenses paid when you finalize the purchase of your home. They are separate from your down payment and can include a variety of costs associated with processing and completing your mortgage. One closing cost that often surprises first-time homebuyers is Pennsylvania’s realty transfer tax.
Unlike many states, Pennsylvania imposes a 1% state realty transfer tax on most real estate transactions. Most home purchases include a 1% state transfer tax plus an additional local transfer tax, so buyers often hear about a combined 2% transfer tax. The exact amount can vary depending on where you’re buying.
Because the transfer tax is negotiable, buyers and sellers often agree to split the cost, but every purchase agreement is different. Your real estate agent and loan officer can help you understand what is typical in your local market.
The good news is that some PHFA programs may help eligible buyers cover a portion of their down payment and closing costs, reducing the amount of cash needed at closing. Your lender can explain which programs you may qualify for and how they can fit into your financing plan.
FAQ About Homebuying in PA
Eligibility for PHFA programs varies based on the specific loan or assistance program. Factors such as household income, purchase price, credit score, and the property location may all be considered.
Yes, some PHFA programs are available to repeat homebuyers, while others are designed specifically for first-time buyers. Eligibility depends on the program you choose and whether you meet its requirements.
Closing costs vary depending on your loan, the purchase price of the home, and where you’re buying. They typically include lender fees, appraisal and title costs, prepaid taxes and homeowners insurance, and Pennsylvania’s realty transfer tax.
Pennsylvania charges a 1% state realty transfer tax, and many counties and municipalities also charge an additional local transfer tax. In many transactions, the buyer and seller split these costs, but the final arrangement is negotiable and outlined in the purchase agreement.
You get pre-qualifiedwith a lender. They will review your income, assets, debts, employment, and credit history. Based on that information, your lender can estimate how much you may qualify to borrow and discuss loan options that fit your financial goals.
If you’re interested in PHFA programs, you’ll need to work with a participating lender to determine your eligibility.
Yes, PHFA offers several assistance programs that may help eligible homebuyers cover a portion of their down payment and closing costs.
Whether you’re purchasing your first home, relocating to Pennsylvania, or exploring PHFA assistance programs, having the right lending partner can make all the difference.
As a PHFA-participating lender with loan officers licensed throughout Pennsylvania, First Heritage Mortgage can help you determine which mortgage and assistance programs best fit your financial situation and homeownership goals. If you’re ready to take the next step, connect with one of our loan officers today!
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