What to know about buying a house in Pennsylvania
Pennsylvania first-time home buyers have plenty of support from both statewide and local organizations.
These offer educational programs and counseling, occasionally at no cost. Best of all, many of these groups provide cash assistance to first-time buyers.
If you qualify, you could end up with thousands in loans or grants to help with your down payment and closing costs. Here’s how to get started.Verify your home buying eligibility in Pennsylvania. Start here
In this article (Skip to ...)
- PA home buyer programs
- First-time buyer grants
- PA home buyer key stats
- Home loan options
- Buying in Pennsylvania’s cities
- PA mortgage rates
PA first-time home buyer programs
The Pennsylvania Housing Finance Agency (PHFA) offers a number of loan programs, and many of them come with down payment assistance. These are meant to promote affordable housing for first-time buyers in PA.
Pennsylvania first-time home buyers may also be able to get a mortgage credit certificate (MCC) from the PHFA. An MCC is a tax credit that reduces the amount of federal income tax you have to pay. This frees up more income to qualify for a home loan and afford your monthly payments.
PHFA also offers free home buyer education and counseling through one of its approved counseling agencies. If your credit score is less than 680, it requires an in-person course to use one of its mortgage programs.Verify your home buying eligibility in PA. Start here
HFA Preferred (Lo MI)
The HFA Preferred is a 30-year fixed-rate mortgage with flexible underwriting guidelines and a 3% down payment requirement. It also provides mortgage insurance at below-market rates for borrowers with less than 20% down. One distinctive feature of this loan program is that mortgage repayments are made to the PHFA rather than your lender.
Keystone Home Loan Program
First-time home buyers, veterans, and buyers in specific Pennsylvania counties can finance their home purchase with a conventional loan or one of the government-backed mortgages: FHA, VA, or USDA. You’ll need to meet the program’s purchase price and income limits.
Keystone Government Loan (K-Gov)
Borrowers who want a government-backed loan to pay for a home purchase may find that the K-Gov has more flexible underwriting rules. This PHFA program may have less stringent requirements for qualified buyers. However, you must speak with a participating lender to determine your eligibility.
PHFA eligibility requirements
To obtain a mortgage through this organization, you must select a private company from its approved lender list. Furthermore, some of its programs have income limits, home purchase price caps, and minimum credit score requirements. The PHFA website has more information about its homeownership assistance programs.
PA first-time home buyer grants
The PHFA offers a number of appealing down payment and closing cost assistance programs for Pennsylvania first-time home buyers. However, these are usually forgivable loans rather than outright grants. Each of these programs has its own set of eligibility requirements and restrictions. So, go to the PHFA website and look for an assistance program that is well-suited to your financial situation.Let us help find the right mortgage for you. Start here
Keystone Forgivable in Ten Years Loan Program (K-FIT)
You can borrow up to 5% of the home’s market or appraised value, whichever is lower. However, the terms of this loan are unique: 10% of the loan is forgiven annually. If you move after the first year, you must repay 90% of the amount you borrowed. But if you’re still living in your primary residence after 10 years, you won’t owe anything.
To qualify, you must have a credit score of 660 and less than $50,000 in liquid assets. The K-FIT loan program may be used on Conventional, FHA, VA or RD loans.
Keystone Advantage Assistance Loan Program
This housing assistance program provides an interest-free second mortgage that must be repaid over ten years. It allows you to borrow up to 4% of the market or appraised value of your home, whichever is less. But the total you can borrow is capped at $6,000.
HOMEstead Down Payment and Closing Cost Assistance Loan
The PHFA’s HOMEstead program is yet another excellent offering. This allows you to borrow up to $10,000 as a no-interest second mortgage loan.
The HOMEstead loan, like the K-FIT, is forgiven year by year over a specified time period. That’s only five years in this case. As a result, even if you make no payments, your loan amount decreases by 20% each year. If you keep the house as your primary residence for five years, your loan will be completely forgiven at the end of that period.
Access Down Payment and Closing Cost Assistance Program
Home buyers with disabilities or disabled family members may be eligible for funding to cover the cost of accessibility modifications, as well as a no-interest loan of up to $15,000 for down payment and closing cost assistance.
You must meet household income limits. This program cannot be combined with any other PHFA down payment assistance program.
First Front Door Program
First Front Door (FFD) can help you with closing costs and down payment. For every $1 you contribute, FFD will provide $3 in assistance, up to $5,000. The loan is forgiven if the property is not sold prior to five years, but is not forgiven if sold prior to five years.
Pennsylvania first-time home buyer key stats
The median sales price for homes in Pennsylvania was $225,278 in July 2023, according to the Pennsylvania Association of Realtors1. That increased 2% year-over-year.
Many Pennsylvania first-time home buyers face a real estate market with limited inventory and rising price inflation. However, there is still hope for new homeowners in the Keystone State. You might be eligible for one of several homeownership programs that can get you into a home sooner than you think.Verify your home buying eligibility in PA. Start here
PA home buyer stats
|Median Home Sale Price in PA1||$225,278|
|Minimum Down Payment in PA (3%)||$6,759|
|20% Down Payment in PA||$45,056|
|Average Credit Score in PA2||723|
|Maximum PA Home Buyer Grant3||Forgivable loan of 5% (PFHA Keystone)|
Down payment amounts are based on the state's most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.
If you're eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the U.S. Department of Agriculture), you may not need any down payment at all.
Loans for Pennsylvania first-time home buyers
If you’re a first-time home buyer in Pennsylvania with a 20% down payment, you can get a conventional loan with a competitive interest rate without private mortgage insurance (PMI).
Of course, few first-time buyers have saved enough for 20% down. The good news is that you don’t need that much. Not by a long shot.Find the best first-time home buyer loan for you. Start here
Borrowers can often get into a new home with as little as 3% or even 0% down using one of these low-down-payment mortgage programs:
- Conventional 97: From Freddie Mac or Fannie Mae. 3% down payment and 620 minimum FICO score. You can usually stop paying mortgage insurance after a few years
- FHA loan: Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. But you’re on the hook for mortgage insurance premiums (MIP) until you refinance to a different type of mortgage, move, or pay off your loan
- VA loan: Only for veterans and service members. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so apply if you’re eligible
- USDA loan: For those on low-to-moderate incomes buying in designated rural areas (so high-density populations like Philadelphia and Delaware counties rarely qualify). Zero down payment required. Credit score requirements vary by lender but often 640. Low mortgage insurance rates
- Pennsylvania Housing Finance Agency loans: May include competitive interest rates and down payment assistance. More information below
Note that government loan programs (including FHA, VA, and USDA home loans) require you to buy a primary residence. That means you can’t use these loans for a vacation home or investment property.
Most programs for Pennsylvania first-time home buyers allow gifted money or down payment assistance (DPA) to cover the down payment and closing costs. Depending on the mortgage loan you choose, you could potentially get into your new house with minimal cash out of pocket.
If you’re not sure which program to choose for your first mortgage loan, your lender or real estate agent can help you find the right match based on your finances and home-buying goals.
Buying a home in Pennsylvania’s major cities
Home prices in Philadelphia decreased midway through 2023. This can be good news for first-time buyers. But if you’re hoping to purchase real estate in Pittsburgh or Allentown, be prepared for soaring home prices.
Unsurprisingly, housing costs in Pennsylvania’s three biggest cities are higher than the statewide average. So if you’re planning on buying in or near a major metro area, you’ll want to know what to expect.Verify your home buying eligibility in PA. Start here
Philadelphia first-time home buyers
The median list price for a home in Philadelphia was $255,000 in July 2023, according to Realtor.com. This fell 7.2% from the previous year.
If you want to buy a home at that median price, your down payment options could be anything from:
- $7,650 for 3% down payment
- $51,000 for 20% down payment
The City of Philadelphia’s Division of Housing and Community Development (DHCD) supports the Philly First Home program. This can provide a homebuyer assistance grant of up to $10,000 (or 6% of the home’s purchase price, whichever is less) to help first-time homebuyers pay down the principal, cover the down payment, and cover loan closing costs.
To qualify, you must be a first-time homebuyer and complete a homebuyer education course. Additionally, there are income caps for qualifying buyers. Details are provided on the website for the Philly First Home program.
Pittsburgh first-time home buyers
The median home listing price in Pittsburgh was $259,900 in July 2023. According to Realtor.com, home prices in Pittsburgh are up 4.4% year-over-year.
If you want to buy a home at that median price, your down payment options might fall between:
- $7,797 for 3% down payment
- $51,980 for 20% down payment
The Urban Redevelopment Authority of Pittsburgh (URA) offers a grant to help with the down payment and closing costs. Borrowers earning 80% or less of the area median income (AMI) are eligible for a $3,000 down payment and closing cost assistance grant.
Fannie Mae has a lookup tool that lets you find the area median income where you wish to buy.Let us help find the right mortgage for your first home in Pittsburgh. Start here
Allentown first-time home buyers
In July 2023, the median listing price for a home in Allentown was $262,000. According to Realtor.com, this increased 3.8% from the previous year.
If you want to buy a home at that median price, your down payment options might fall between:
- $7,860 for 3% down payment
- $52,400 for 20% down payment
The City of Allentown helps low- and moderate-income families with down payments and closing costs. It also supports first-time homebuyer programs run by a number of non-profit housing developers. However, its website provides little information about how to apply. If you would like additional information, please fill out the city’s online citizen contact form or call (610) 439-5999.
Where to find home buying help in Pennsylvania
The Pennsylvania Housing Finance Agency should provide free advice to any first-time home buyer in PA. In addition, the U.S. Department of Housing and Urban Development (HUD) provides a few lists of statewide, regional, and local homeowner resources. These can help you find down payment assistance programs and other homebuyer help in your area.Verify your home buying eligibility in PA. Start here
Statewide and regional home buyer programs in Pennsylvania
- Pennsylvania Housing Finance Agency: Home loans for first-time homebuyers in PA as well as down payment assistance programs
- Philadelphia’s Division of Housing and Community Development (DHCD): Homebuyer education courses and Philly First Home Program
- Urban Redevelopment Authority of Pittsburgh’s Neighborhood Housing Program (NHP)
- City of Allentown’s Neighborhood Stabilization Program (NSP)
- Habitat for Humanity: Through volunteer labor, builds and rehabilitates houses for families in need
- U.S. Department of Agriculture Rural Housing: Homebuyer programs in rural communities
What are today’s mortgage rates in Pennsylvania?
When you’re ready to begin the home-buying process, use a mortgage calculator to see how different down payments and interest rates will affect your monthly mortgage payment. Then, get customized rate quotes from at least three to five mortgage lenders.
Also, don’t just look at advertised rates on the internet. Apply for preapproval and compare the interest rates and fees offered to you. That is the only way to ensure you get the best deal on your new home loan.Time to make a move? Let us find the right mortgage for you
2Source: Experian.com study of 2021 and 2020 data
3Based on a review of the state's available DPA grants at the time this was written