First-Time Homebuyer Programs in Pennsylvania

The down payment on a new home is often the biggest hurdle for first-time homebuyers. In Pennsylvania, where the average home value is $269,276, you would need a down payment of $53,855 to avoid private mortgage insurance.

Fortunately, there are first-time homebuyer programs available in Pennsylvania to help you achieve homeownership. There are also mortgages that allow first-time homebuyers to put less down on a home, but these usually have income requirements and require mortgage insurance. MoneyGeek explores several state-specific and government-backed first-time homebuyer programs for people from different financial backgrounds.

Pennsylvania offers grants and loans to assist first-time homebuyers with down payment and closing costs. We have compiled the first-time homebuyer programs offered by the Pennsylvania Housing Finance Agency (PHFA) to help you find the best option for your particular needs and situation.

The HFA Preferred™ (Lo MI) loan is a conventional loan for borrowers through approved lenders, serviced by PHFA. It offers a 30-year fixed-rate loan and includes mortgage insurance if the borrower’s down payment is below 20%. The program has various income limits based on location and includes a $500 grant for eligible borrowers to help cover down payment or closing costs. Borrowers can also earn a $300 credit by completing pre-purchase counseling.

The Keystone Home Loan Program from PHFA offers first mortgage financing with competitive interest rates. It supports both first-time and certain repeat homebuyers in designated target areas or veterans. The loan is available for single-family homes, with specific income and purchase price limits based on location and loan type. Down payments of less than 20% require mortgage insurance.

The PHFA Grant provides eligible homebuyers a $500 grant to help cover down payment and closing costs. Available exclusively for borrowers using the HFA Preferred™ (Lo MI) loan program, this grant does not require repayment and is specifically designated for home purchases. Eligible borrowers can also combine the PHFA Grant with additional assistance programs like the Keystone Advantage Assistance Loan to help further reduce upfront costs.

The Keystone Advantage Assistance Loan Program provides financial support for eligible homebuyers to help cover closing costs and down payment expenses. This second mortgage allows borrowers to obtain up to 4% of the purchase price or market value (whichever is less) with a maximum of $6,000. The loan has a 0% interest rate and is repayable over ten years, making it more affordable for borrowers needing additional assistance. This program is intended to be combined with PHFA's first mortgage loan programs.

Aside from statewide first-time homebuyer programs in Pennsylvania, there are also city-specific programs available to help you pursue homeownership in a city of your choosing. Check out the table below for some of the cities in Pennsylvania that provide first-time homebuyer programs for potential residents.

Zero-down-payment loan programs in Pennsylvania allow you to purchase a home without putting money down. USDA and VA loans are two government-backed options that require no down payment.

USDA loans are designed to assist homebuyers in rural areas, offering a pathway to homeownership through the U.S. Department of Agriculture's Rural Development Guaranteed Housing Loan program. These loans aim to make homeownership more accessible by providing favorable terms to those who might not qualify for conventional loans.

USDA loans offer significant benefits, including the possibility of zero down payment and competitive interest rates. These loans are geared towards low- to moderate-income households, making homeownership more affordable. Additionally, they can cover various types of properties, including new and existing homes, as long as they meet the program's criteria.

To qualify for a USDA loan, your property must be located in a USDA-eligible rural area, typically with a population of less than 35,000 people. The property should not exceed 2,000 square feet. Furthermore, there are income limits based on where you live. For instance, in Elk County, PA, the income limit for a four-person household is $68,800, whereas in Union County, PA, it is $75,700. These criteria ensure that the program targets those who truly need assistance in purchasing a home.

VA loans, issued by the U.S. Department of Veterans Affairs, are designed to help veterans, active-duty service members, and certain members of the National Guard and Reserves purchase homes. These loans offer several advantages that make them an attractive option for eligible borrowers.

VA loans offer several benefits, including a no-down payment requirement, making homeownership more accessible. They also come with no private mortgage insurance (PMI) requirement, which can save borrowers money over the life of the loan. Additionally, VA loans typically have lower interest rates compared to private loans. As of November 2024, the APR for a 15-year fixed-rate VA loan in Pennsylvania is 6.36%, while the APR for a 30-year fixed-rate VA loan is 6.41%.

To qualify for a VA loan, you must meet certain eligibility requirements, including specific length of service or service commitment, duty status, and character of service. Additionally, you must meet income limits that vary based on your location. A valid Certificate of Eligibility (COE) is also required to apply for a VA loan.

First-time homebuyers in Pennsylvania can take advantage of low-down-payment loan programs that allow them to finance their home with a down payment of 3.5% or less. These programs include conventional, FHA and FHA 203(k) loans.

FHA loans and conventional loans are the two most common types of mortgages, often compared by homebuyers. FHA loans require a minimum down payment of 3.5%, while conventional loans may require as low as 3% for first-time homebuyers. Conventional loans typically have stricter credit score and debt-to-income ratio requirements, making FHA loans more accessible for those with lower credit scores.

As of November 2024, the APR for a 15-year fixed-rate conforming loan in Pennsylvania is 5.96%. In comparison, the APR for a 15-year fixed-rate FHA loan is 7.39%. APRs on FHA loans can be higher due to additional fees and costs associated with government-backed loans.

Use our FHA vs. conventional loan calculator below to compare both FHA and conventional mortgage programs and determine the best option for you.

To help you find the best first-time homebuyer program in Pennsylvania, we have answered frequently asked questions, bringing you closer to achieving homeownership.

Explore additional MoneyGeek resources for first-time homebuyers in Pennsylvania to help you with the homebuying process.