Pennsylvania First-Time Home Buyer: 2023 Programs and Grants
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 groups 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. Here’s how to get started.
Verify your home buying eligibility in PA. Start here (Mar 15th, 2023)
In this article (Skip to ...)
- PA home buyer overview
- Home loan options
- PA home buyer programs
- First-time buyer grants
- Buying in Pennsylvania’s cities
- Resources
- PA mortgage rates
Pennsylvania home buyer overview
The median sales price for homes in Pennsylvania was $210,132 in October 2022, according to the Pennsylvania Association of Realtors. That was over a 9.5% increase year-over-year.
Many first-time home buyers in Pennsylvania face a real estate market with limited inventory and rising price inflation. But there is hope for first-timers in The Keystone State. You may qualify for one of several homeownership programs that can put you into a home sooner than you thought.
Verify your home buying eligibility in PA. Start here (Mar 15th, 2023)
PA home buyer stats
| Average Home Sale Price in PA1 | $210,132 |
| Minimum Down Payment in PA (3%) | $6,300 |
| 20% Down Payment in PA | $42,025 |
| 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.
Verify your home buying eligibility in PA. Start here (Mar 15th, 2023)
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 competitive 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 that you don’t need that much. Not by a long shot.
Find the best first-time home buyer loan for you. Start here (Mar 15th, 2023)
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 or real estate agent 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 Agency4 (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.
Pennsylvania first-time home buyers may also be eligible for a mortgage credit certificate (MCC) through 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. 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.
Verify your home buying eligibility in PA. Start here (Mar 15th, 2023)
HFA Preferred (Lo MI)
The HFA Preferred is a 30-year fixed-rate mortgage with flexible underwriting requirements and a 3% minimum down payment. It also offers below-market mortgage insurance rates for borrowers with less than 20% down. One unique aspect of this loan program is that mortgage payments are made to the PHFA instead of your lender.
Keystone Home Loan Program
First-time home buyers, veterans, and buyers in targeted Pennsylvania counties can finance a home using either a conventional loan or any 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 to finance a home purchase with a government-backed loan may find more agreeable underwriting guidelines with the K-Gov. This PHFA program can offer easier requirements for qualifying buyers. But you’ll need to speak with a loan officer to see if you’re the right fit.
PHFA eligibility requirements
To get a mortgage through this organization, you’ll have to pick a private company from its list of approved lenders. Additionally, some of its programs have income limits and home purchase price caps as well as minimum credit scores. More information about PHFA’s homeownership assistance programs is available on its website.
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. 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.
Let us help find the right mortgage for you (Mar 15th, 2023)
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.
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. Provided you own the home as a primary residence for five years, your loan will be fully forgiven at the end of that time.
Access Down Payment and Closing Cost Assistance Program
Home buyers with a disability or a disabled household member may qualify 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’ll need to meet household income limits. And you cannot use this program along with another PHFA down payment assistance program.
PA first-time home buyer grants
Home prices in Philadelphia and Pittsburgh remained stagnant in the fourth quarter of 2022. This can be good news for first-time buyers. But if you’re hoping to purchase real estate in Allentown, then 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 (Mar 15th, 2023)
Philadelphia first-time home buyers
The median list price of homes in Philadelphia was $264,900 in November 2022. That remained flat 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:
- $7,950 for 3% down payment
- $53,000 for 20% down payment
The City of Philadelphia’s Division of Housing and Community Development5 (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 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 $225,000 in November 2022. Sale prices in Pittsburg are also flat 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:
- $6,750 for 3% down payment
- $45,000 for 20% down payment
The Urban Redevelopment Authority of Pittsburgh6 (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 $239,900 in November 2022. That was up by 13.9% 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:
- $7,200 for 3% down payment
- $47,980 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 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 (Mar 15th, 2023)
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.
And don’t just look at advertised rates online; actually apply for preapproval and compare the interest rates and fees you’re offered. Because that’s the only way to know you’re getting the best deal possible on your new home loan.
Time to make a move? Let us find the right mortgage for you (Mar 15th, 2023)
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
4Pennsylvania Housing Finance Agency
