Pennsylvania First-Time Home Buyer: 2022 Programs & Grants

Peter Warden
Peter Warden
The Mortgage Reports Editor
April 25, 2022 - 7 min read

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 provide educational courses and counseling, sometimes free of charge.

Best of all, many of these organizations offer cash assistance to first-time buyers. You could end up with thousands in loans or grants to help with your down payment and closing costs if you qualify. Ready to get started?


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Pennsylvania home buyer overview

The median sales price for homes in Pennsylvania was $197,790 in March 2022. According to the Pennsylvania Association of Realtors, that’s over a 10% increase year-over-year.

PA home buyer stats

Average Home Sale Price in PA1$197,790
Minimum Down Payment in PA (3%)$5,930
20% Down Payment in PA$39,560
Average Credit Score in PA2723
Maximum PA Home Buyer Grant3Forgivable loan of 5% of the home’s value with no top dollar limit (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 US Department of Agriculture), you may not need any down payment at all.

First-time home buyer loans in Pennsylvania

If you’re a first-time home buyer in Pennsylvania with a 20% down payment, you can get a conventional loan with a low interest rate. And you never have to pay for private mortgage insurance (PMI).

Of course, few first-time buyers have saved enough for 20% down. But the good news is, you don’t need that much. Not by a long shot.

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 also let you use gifted money or down payment assistance (DPA) to cover the down payment and closing costs. So 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 can help you find the right match based on your finances and home buying goals.

PA first-time home buyer programs

The Pennsylvania Housing Finance Agency (PHFA) offers a selection of loan programs, many of which come with down payment assistance. These are meant to promote affordable housing for first-time buyers in PA.

PHFA loan programs include:

  • HFA Preferred loan: A 30-year fixed-rate mortgage with mortgage payments made to the PHFA
  • Keystone Home Loan Program: These can include conventional, FHA, VA, or USDA home loans. Zero to 5% down payment may be required
  • Keystone Government Loan (K-Gov): This program only offers government-backed FHA, VA, or USDA Rural Development (RD) loans

Qualifying home buyers could save up to $2,000 each year in tax breaks if they qualify for PHFA’s Mortgage Tax Credit Certificate (MCC).

PHFA also offers free homebuyer education and counseling through one of its approved counseling agencies. Indeed, if your credit score is lower than 680, it insists you complete an in-person course if you’re using one of its mortgage programs.

To get a mortgage through this organization, you’ll have to pick a private company from its list of approved lenders. And some of its programs have income limits and home purchase price caps as well as minimum credit scores.

PA first-time home buyer grants

The PHFA has some unusually attractive down payment and closing cost assistance programs. However, these tend to be forgivable loans rather than outright grants.

Keystone Forgivable in Ten Years Loan Program (K-FIT)

This program lets you borrow up to 5% of the home’s market or appraised value, whichever is less. But that loan comes with special terms:

  • Each year, 10% of the loan is forgiven. So, if you move after Year 1, you have to pay back 90% of the sum you borrowed. But if you’re still in primary residence after Year 10, you’ll owe nothing
  • You’ll need a credit score of 660 and less than $50,000 in liquid assets to qualify

Keystone Advantage Assistance Loan Program

This assisted-housing program gives you an interest-free second mortgage that you have to repay over 10 years. It lets you borrow up to 4% of the home’s market or appraised value, whichever is less. But the total you can borrow is capped at $6,000.

HOMEstead Down Payment and Closing Cost Assistance Loan

Another good offering from the PHFA is the HOMEstead program. This lets you borrow up to $10,000 as a no-interest, second mortgage loan.

  • A bit like K-FIT, the HOMEstead loan is forgiven year-by-year over a set period
  • In this case, that’s only five years. So your loan balance drops 20% each year even though you make no payments
  • Providing you still own the home and remain in primary residence for five years, you’ll have to repay nothing at the end of that time

Each of these programs has its own eligibility requirements and other conditions. So click the “assistance programs" link on PHFA’s website to see whether you’re likely to qualify.

Buying a home in Pennsylvania’s major cities

Unsurprisingly, home prices 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.

Philadelphia first-time home buyers

In March 2022, the median list price of homes in Philadelphia was $270,000. That was an increase of 3.9% year-over-year, according to Realtor.com.

If you want to buy a home at that median price, your down payment options might fall between:

  • $8,100 for 3% down payment
  • $54,000 for 20% down payment

The City of Philadelphia’s Division of Housing and Community Development (DHCD) supports the City of Philadelphia’s “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 lower) to assist first-time homebuyers reduce the principal, cover down payment and loan closing costs.”

You must be a first-time buyer and complete a homeownership education course to qualify. And there are caps on eligible household income. Details are shown on the Philly First Home program webpage.

Pittsburgh first-time home buyers

The median home listing price in Pittsburgh was $230,000 in March 2022, according to Realtor.com. That was actually down 2.1% year-over-year.

If you want to buy a home at that median price, your down payment options might fall between:

  • $6,900 for 3% down payment
  • $46,000 for 20% down payment

The Urban Redevelopment Authority of Pittsburgh (URA) says it: “offers a grant to help with down payment and closing costs. Borrowers who earn 80 percent or less of the Area Median Income (AMI) can receive a Down Payment/Closing Cost Assistance Grant of $3,000.”

Fannie Mae has a lookup tool that lets you find the area median income where you wish to buy.

Allentown first-time home buyers

The median home listing price in Allentown was $220,000 in March 2022, according to Realtor.com. That was up by 19% year-over-year.

If you want to buy a home at that median price, your down payment options might fall between:

  • $6,600 for 3% down payment
  • $44,000 for 20% down payment

The City of Allentown says it supports “down payment and closing cost assistance for low/moderate-income households and first-time homebuyer programs run by several nonprofit housing developers.” However, its website doesn’t offer much information on how to apply.

If you’d like more details, try completing the city’s online citizen contact form or just 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 for statewide, regional, and local homeowner resources. These can help you find down payment assistance programs and other homebuyer help in your area.

PA first-time home buyer resources by county

Allegheny
Beaver
Berks
Bucks
Chester
Cumberland
Dauphin
Delaware
Lancaster
Luzerne
Montgomery
Washington
Westmoreland

You can also find this list on HUD’s webpage for PA first-time home buyers.

What are today’s mortgage rates in Pennsylvania?

You can see today’s live mortgage interest rates in Pennsylvania here.

When you’re ready to start the home buying process, experiment with a mortgage calculator to see how down payment and interest rates will affect your monthly mortgage payment. Then make sure you get personalized rate quotes from at least three to five mortgage lenders.

Don’t just look at advertised rates online; actually apply for preapproval and compare the interest rates and monthly payments you’re offered. That’s the only way to know you’re getting the best deal possible on your new home loan.


1Source: Pennsylvania Association of Realtors Housing Report

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

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