2025 Pennsylvania First-Time Homebuyer Programs and Loans

Pennsylvania first-time homebuyer programs help Keystone State residents purchase a property with some financial support. While these programs work differently and have unique eligibility requirements, they can offer down payment assistance and/or homeownership grants.

If you’re hoping to buy a home in Pennsylvania as a first-time homebuyer or someone who has previously owned a home, it helps to understand the requirements for these programs and the steps for applying. Let’s take a look at several Pennsylvania first-time homebuyer programs and their major details.

First-time homebuyer programs in Pennsylvania

Several first-time homebuyer programs are facilitated through the Pennsylvania Housing Finance Agency (PHFA), a state agency that aims to improve affordability and housing options for low- and moderate-income families, older adults and people with special housing needs.

Some of the key first-time homebuyer programs available across Pennsylvania are:

• HFA Preferred Program: Good option for all Pennsylvania residents
• Keystone Home Loan Program: Good option for low down payments
• Keystone Advantage Assistance Loan Program: Good option for lower loan amounts
• Keystone Forgivable in Ten Years Loan Program (K-FIT): Good option for long-term homeownership
• PHFA Grant: Good option for down payment help

HFA Preferred (Lo MI)

The HFA Preferred™ (Lo MI) loan is one of the most useful first-time homebuyer programs in the commonwealth of Pennsylvania. This fully amortized 30-year fixed-rate loan program serves as a foundation that can be combined with other forms of down payment assistance. Although this first mortgage is available through traditional mortgage lenders, the PHFA services the loan. Benefits include low down payment requirements, flexibility on down payment sources, and the ability to pair the loan with other grants and assistance.

Note that you don’t have to be a first-time homebuyer to utilize this loan program in Pennsylvania, but you must meet income requirements.

Requirements

• Put down at least $1,000 from your own funds, but additional down payment funds can come from different sources, including PHFA grant
• Income must be at or below 80% of the area median income (AMI) for your county
• Must be used for your primary residence only
• Must take a homebuyer education course (which should be in person if credit score is below 680)
• Housing payment should be no more than 30% of your monthly income

Pros and cons

Keystone Home Loan Program

Pennsylvania’s Keystone Home Loan Program offers a 30-year fixed-rate mortgage geared to first-time homebuyers. However, veterans and others who are planning to purchase a home in Pennsylvania’s “targeted areas” may also qualify. Benefits of the program include low down payments or even no down payments, depending on the loan type. This program can also be combined with the Keystone Advantage Assistance Loan Program (explained below). The Keystone Home Loan Program provides conventional loans, Federal Housing Administration (FHA) loans, U.S. Department of Veterans Affairs (VA) loans and U.S. Department of Agriculture (USDA) loans.

Requirements

• Down payment of 3.5% for FHA loans or 3% to 5% for conventional mortgages (no down payment for VA or USDA loans)
• Minimum credit score of 660 for conventional loans, which are insured by the Pennsylvania Housing Insurance Fund (PHIF)
• Subject to income and purchase price limits
• Must be first-time homebuyer, veteran or individual buying in a targeted area of Pennsylvania
• Mortgage payment should be no more than 30% of income

Pros and cons

Keystone Advantage Assistance Loan Program

PHFA’s Keystone Advantage Assistance Loan Program provides a second mortgage that can be repaid over 10 years with no interest. The program helps buyers cover part of their down payment and closing costs. This program can be used in conjunction with the HFA Preferred (Lo MI) program, the Keystone Home Loan Program or a Keystone government loan (such as an FHA, VA or USDA loan). Eligible borrowers can receive up to 4% of the home’s purchase price or market value, or $6,000 — whichever is lower.

Requirements

• Minimum credit score of 660
• Liquid assets may not exceed $50,000
• $500 minimum loan amount
• Must get a first mortgage with PHFA
• Must meet all requirements of first mortgage

Pros and cons

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

With the Keystone Forgivable in Ten Years Loan Program, borrowers can receive up to 5% of their home’s purchase price or appraised value — whichever is lower. This assistance, which can be used to cover down payment or closing costs, comes in the form of a second mortgage that is forgiven over 10 years. This program can be used with the Keystone Home Loan.

Requirements

• Minimum credit score of 660
• Liquid assets may not exceed $50,000
• Minimum loan amount of $500
• Must stay in the home for 10 years to receive full forgiveness
• Must meet income and purchase price requirements
• Must complete an approved homebuyer education course

Pros and cons

PHFA Grant

The PHFA Grant provides $500 in assistance to homebuyers who need help with down payment and closing costs. This grant is available with the HFA Preferred (Lo MI) loan and doesn’t need to be repaid. Eligible applicants can combine this grant with the Keystone Advantage Assistance Loan Program.

Requirements

• Must meet requirements for HFA Preferred (Lo MI) loan
• Must put down at least $1,000 from your own funds, but additional down payment funds can come from other sources
• Income must be at or below 80% of the area median income (AMI) for your county
• Home must be used as your primary residence only
• Must take a homebuyer education course (which should be in person if your credit score is below 680)
• Housing payment should be no more than 30% of monthly income

Pros and cons

Pennsylvania first-time homebuyer qualifications

Requirements for Pennsylvania first-time homebuyer programs can vary, so read over each program’s details before you apply. This can help you determine if your financial situation meets the minimum qualifications for down payment assistance or help with closing costs. You’ll also want to know how your credit score compares to the average credit score in Pennsylvania, which is 722, according to Experian.

Steps to apply for a first-time homebuyer program

1. Compare loan and assistance programs. First, familiarize yourself with the PHFA’s first-time homebuyer programs, which include loans, grants, assistance for down payments and closing costs, and programs for buyers with disabilities. Compare each program side-by-side to determine which ones may help you get into your new home.
2. Figure out which program(s) you qualify for. Next, determine which program you’re eligible for based on your income, credit score, the amount of down payment you have, where in Pennsylvania you want to purchase, and other factors. Some Pennsylvania programs require buyers to put down at least $1,000 of their own funds to purchase a home. Keep in mind that some programs can be used in tandem, and it’s possible to qualify for more than one PHFA first-time homebuyer program simultaneously.
3. Participate in homebuyer education programs (if required). Some PHFA first-time homebuyer programs require applicants to complete a homebuyer education course. The PHFA says you may be able to complete this education program online if your credit score is at least 680, but face-to-face instruction is required for scores below that threshold.
4. Look for an approved lender. Once you’ve met eligibility requirements and completed the homebuyer education course (if required), you can apply for PHFA programs directly through a participating mortgage lender. You should get preapproved for a loan before you begin house shopping.
5. Begin shopping for a home. Once you know which Pennsylvania first-time homebuyer programs you qualify for and have a lender assigned to help, you can start your home search. While you can browse available homes online, you’ll want to choose a realtor who can show you properties in person as well.

Understanding Pennsylvania first-time homebuyer down payment assistance

Down payment assistance programs help Pennsylvania residents come up with the cash they need to close on a home. Fortunately, 68 out of 73 of the state’s homebuyer assistance programs had available funding as of the fourth quarter of 2024, according to Down Payment Resource’s homeownership program index.

Here’s a look at the different types of Pennsylvania first-time homebuyer down payment assistance programs available.

Deferred second mortgage

Requires repayment? Depends

A deferred second mortgage, also known as a “soft second” loan, doesn’t accrue interest. Repayment may not be required on a deferred second mortgage until homeowners pay off their first mortgage, refinance or sell the home.

Forgivable second mortgage

Requires repayment? Typically no

A forgivable second mortgage doesn’t require monthly payments or accrue interest. That said, buyers will need to live in the home for a specific period to have their loan forgiven. If they refinance, sell or pay off their first mortgage before the timeline ends, they’ll typically need to repay a portion or all of the loan.

The Keystone Forgivable in Ten Years Loan Program (K-FIT) is an example of this type of down payment assistance program in Pennsylvania.

Grant

Requires repayment? No

Individuals who qualify for first-time homebuyer grants won’t have to pay the money back. However, other requirements must be met. An example of this in Pennsylvania is the $500 PHFA Grant, which is available for buyers who qualify for the HFA Preferred (Lo MI) loan program.

Mortgage credit certificate

Requires repayment? No

A mortgage credit certificate (MCC) is a federal income tax credit available to homebuyers who meet specific requirements. These credits are typically available to low- and moderate-income buyers purchasing a single-family residence they plan to occupy as their primary home.

Keep these things in mind about DPA programs

Down payment assistance (DPA) programs may or may not be used alongside loans for first-time homebuyers. It all depends on the specific requirements and limitations of various programs. You should also note that income limits can apply and that most programs are for primary residences only. Further, these programs may or may not be available to you if you already own another property, and some programs are for purchase loans only (not for mortgage refinance loans).Also, be aware that some loan assistance must be paid back if you sell your home or refinance your mortgage.

How much of a down payment do I need to buy a house in Pennsylvania?

Mortgage statistics for home loans nationwide show that average down payment amounts for first-time homebuyers vary widely by state. A recent LendingTree study showed that the average down payment for first-time buyers in Pennsylvania was $38,062 in 2024. The average home loan for first-time Pennsylvania homebuyers that year was $264,840, which works out to an average down payment of about 14%.

Can I qualify for down payment assistance in Pennsylvania?

Qualifications for down payment assistance programs in Pennsylvania can vary. For example, you typically need to meet the qualifications for the first mortgage, which may include minimum credit score and down payment requirements, income and purchase price restrictions, and the requirement to complete a homebuyer education course.

How do I apply for Pennsylvania first-time homebuyer down payment assistance?

PHFA down payment assistance programs require you to work with a participating lender, apply for funding and get approved. Remember that some down payment assistance programs offer funds that don’t need to be repaid, whereas others come in the form of a loan that requires monthly payments.

 Here’s what you need to know about the process of applying for a home loan.

Other first-time homebuyer loan programs

While Pennsylvania boasts several first-time homebuyer programs, below are several national programs that are also worthy of your consideration.

Conventional loans

Conventional mortgages offer competitive mortgage rates and flexible loan terms, though they aren’t backed by the government. Buyers who purchase a home with a conventional mortgage must meet eligibility requirements that vary by lender. Additionally, private mortgage insurance (PMI) is required for borrowers who put down less than 20% of the purchase price.

FHA loans

Federal Housing Administration (FHA) home loans are popular with first-time homebuyers since a credit score of 580 or higher allows them to put down as little as 3.5% of the purchase price. Buyers with credit scores as low as 500 can also qualify for FHA loans with a down payment of 10%. These loans come with competitive FHA mortgage rates and no income limits — however, FHA loan limits will apply.

VA loans

Military members, veterans and eligible spouses may be able to qualify for a VA loan, which is backed by the U.S. Department of Veterans Affairs. These loans don’t require down payments and come with competitive VA loan rates. While there’s no minimum credit score requirement for VA loans, VA lenders typically require a 620 score or higher.

USDA loans

USDA loans are available through the U.S. Department of Agriculture and have no down payment requirements. However, these loans can only be used for homes that are in areas of the country deemed rural by the USDA. Note that income limits apply for these loans as well, so not everyone can qualify.

What are the best first-time homebuyer loans?

The best home loan for you can depend on your income, how much you plan to spend on a property, your credit score and how much savings you have for a down payment. The chart below shows which loan program works best for different types of buyers.

Home price trends in Pennsylvania’s major areas

Home prices have increased dramatically nationwide since 2020, and costs for homes in Pennsylvania are no exception. However, some regions of the state have seen steeper increases over the last several years, according to data from the Federal Housing Finance Agency (FHFA).

In the Philadelphia metro area, home prices rose 5.64% year-over-year in the fourth quarter of 2024 and 41.74% over a five-year period. Meanwhile, the Pittsburgh metro saw similar trends — a 5.87% year-over-year increase in 2024 and a 45.46% rise over five years. Another Pennsylvania metro area with a high annual price increase — Scranton–Wilkes-Barre, PA — saw prices rise 10.09% year over year and 62.11% over the previous five years.

Is there a first-time homebuyer tax credit in Pennsylvania?

There’s no longer a federal tax credit for first-time homebuyers in any state, including Pennsylvania. However, there are some tax breaks you can qualify for when you buy a home.

What are the current mortgage rate trends in Pennsylvania?

Data from the Consumer Financial Protection Bureau (CFPB) shows the average buyer in Pennsylvania with a 0% down payment and a credit score of 680 to 699 could secure a rate of 6.88% or lower for a 30-year, fixed-rate mortgage. For a 15-year loan, the rate for the same buyer could be 6.70% or lower.

The mortgage interest rate predictions from LendingTree forecast that interest rates will remain above 6% into 2025.