Home Purchase Loans
The Pennsylvania Housing Finance Agency (PHFA or the Agency) offers home purchase loans with competitive interest rates and lower fees. In addition to the PHFA first mortgage, some applicants may qualify for downpayment and/or closing cost assistance through the Keystone Advantage Assistance Loan or the HOMEstead Program.
If you are not sure where to begin, we suggest visiting our "Start Here" page for Homebuyers.
The Pennsylvania Housing Finance agency offers two conventional loan products that are designed specifically for HFAs (Housing Finance Agencies). These products offer a fully amortized 30 year fixed rate term. PHFA offers these programs through a network of approved participating lenders, with PHFA as the servicer. In other words, you will work with a lender up through the loan closing, but will make your monthly payments to PHFA for the life of your loan.
HFA Preferred Risk Sharing™(No MI)
The HFA Preferred Risk Sharing™(No MI) loan does not require mortgage insurance, which is insurance coverage that is commonly required by lenders when the borrower has a downpayment of less than 20 percent (20 %) of the purchase price. Typically there is a premium added to your monthly mortgage payment to cover the cost of this insurance. Since this additional payment is not required with HFA Preferred Risk Sharing™(No MI), the total monthly mortgage payment is typically lower than a loan with mortgage insurance included, even though the interest rate may be slightly higher.
HFA Preferred™(Lo MI)
With the HFA Preferred™(Lo MI) loan, mortgage insurance is provided by one of several private mortgage insurance companies when the borrower puts down less than 20 percent (20 %) towards the purchase of the home. Your lender will help you determine what the premium will cost for your specific situation.
The following eligibility requirements are shared by both the HFA Preferred Risk Sharing™(No MI) and the HFA Preferred™(Lo MI) loan programs:
- The household income cannot exceed the B. Limits - HFA Programs. The gross annual household income for all adults that intend to occupy the home within one year from loan closing cannot exceed the limit shown for your county. All sources of income must be included, except for income received by persons under age 18 and income received by dependents enrolled in a full-time undergraduate program.
- The loan must be used towards the purchase or refinance of a primary residence.
- There is no first time homebuyer requirement under these programs. The borrower may have an ownership interest in another residential dwelling at the time of loan closing.
- Borrowers are required to put down at least $1,000 from their own funds. The remaining funds can be from an acceptable gift or assistance program.
- Acceptable credit history and the ability to make monthly payments on the home are required. Generally, you should plan to use no more than 30 percent (30 %) of your income for your monthly mortgage payment. A participating lender or PHFA network counseling agency can help you determine how much of a home you can afford, as well as any credit issues you may need to work on.
- Sufficient funds are necessary to pay standard mortgage application and closing fees. Check with a PHFA participating lender to determine the specific costs. These would commonly include such things as credit reports, appraisals, title fees, transfer taxes, etc.
- Mortgage loans for two-unit properties are not permitted under these programs. Check out the Keystone Home and Keystone Government Home Purchase Loan programs if you are interested in purchasing one of these types of properties.
- Pre-closing homebuyer education must be completed for home purchase loans by at least one borrower. Borrowers with a FICO score at or above 680 can complete this requirement at a PHFA-approved counseling agency or by completing the online education program offered by PHFA or Framework®.
- Face-to-face homebuyer education must be completed by all borrowers purchasing a home with a FICO score below 680 at a PHFA approved counseling agency.
- Sufficient funds for a downpayment on your prospective home are required. The minimum downpayment is determined by your credit profile, as specified above.
- Borrowers who complete in person Pre-Purchase counseling prior to executing the agreement of sale may receive a $300 credit to be used towards closing costs. The Pre-Purchase counseling fulfills the homebuyer requirement which is mandatory for the HFA programs. The Pre-Purchase counseling must be completed in-person, with a HUD approved counseling organization which can be found on the list of the PHFA network of Approved Housing Counseling Agencies.
Keystone Home Loan Program
You may be eligible for a Keystone Home Loan if you meet the following six conditions:
- You are not a first-time homebuyer, but you plan to buy a home in a Targeted county or area or you are a discharged veteran of the United States Armed Forces. Target counties are indicated by a "T" in the listing of Purchase Price and Income Limits. Please note that some Non-Target counties have targeted neighborhoods within them. Those areas are listed by county and census tract starting on page three of the purchase price and the income limits above. To determine the census tract of a specific property, visit www.ffiec.gov, and select 'Geocoding/Mapping System'.
You and all other adults who intend to live in the home within 12 months from closing are first-time homebuyers. This is defined as someone who has not owned (had Title to) their principal residence during the previous three years.
- The gross annual household income for all adults that intend to occupy the home within one year from loan closing does not exceed the Keystone Home Loan Program income limit. All sources of income must be included, except for income received by persons under age 18 and income received by dependants enrolled in a full-time undergraduate program.
- The purchase price of your prospective home does not exceed the Keystone Home Loan Program purchase price limit. This includes all costs for a complete home. It is also known as the total acquisition cost. The appraised value of land owned outright for more than two years does not need to be included.
- You have an acceptable credit history and the ability to make monthly payments on the home you expect to buy. Generally, you should plan to use no more than 30 percent (30 %) of your income for your monthly mortgage payment. A participating lender or PHFA network counseling agency can help you determine how much of a home you can afford, as well as any credit issues you may need to work on.
- You have sufficient funds to pay standard mortgage application and closing fees. Check with a PHFA participating lender to determine the specific costs. These would commonly include such things as credit reports, appraisals, title fees, etc.
- You have sufficient funds for a downpayment on your prospective home. Borrowers who have a downpayment of less than 20 percent (20 %) of the home’s purchase price or appraised value are required to obtain mortgage insurance to protect the lender and PHFA in the event that the mortgage becomes delinquent (you fall behind on your payments). The amount of the downpayment differs according to the loan type as listed below.
Conventional uninsured loans: Conventional loans currently require a 20 percent (20 %) downpayment under the Keystone Home Loan program, regardless of the credit score. The downpayment can come as a gift from an immediate family member (parent, sibling, child, grandparent, aunt or uncle) or a nonprofit organization.
FHA loans: These loans are insured by the Federal Housing Administration (FHA) and require a borrower to have a 3.5 percent (3.5 %) minimum investment.
VA and RD loan: Loans guaranteed by either the Veterans Administration (VA) or Rural Development (RD) require no downpayment in most cases. RD loans are not available in Philadelphia and Delaware counties and other major cities.
Borrower should be aware that not all participating lenders offer FHA, VA or RD loans. Also, those loan types may have additional eligibility requirements regarding the buyer and/or the property.
Buyers who want to make access modifications but don't qualify for a loan through Keystone Home Loan may be able to combine the Keystone Government Loan with PHFA Access Modification assistance.
Keystone Government Loan
The Keystone Government Loan Program (K-Gov) provides first mortgage financing on loans insured by the Federal Housing Administration (FHA) or guaranteed by Rural Development (RD) or the Department of Veterans' Affairs (VA). Loans are underwritten using the guidelines of the respective federal agency providing the insurance/guaranty. PHFA does not impose any additional guidelines except as noted below.
- Your eligibility is determined by the PHFA participating lender using the guidelines of the respective federal agency (FHA, RD, or VA).
- There are no income or purchase price limits specific to PHFA; however, the FHA and VA maximum loan limits still apply, as do the RD income limits.
- You are not required to be a first-time homebuyer.
- You will have fewer forms to sign at or before closing.
Borrowers meeting PHFA's income and purchase price limits may also choose to apply for the Keystone Home Loan program or may qualify for a Mortgage Tax Credit Certificate, which can be combined with the Keystone Advantage Assistance loan.
In addition to the Keystone Government first mortgage, some applicants may qualify for downpayment and/or closing cost assistance through the Keystone Advantage Assistance Loan.
How to Apply
If you meet the conditions above, contact a PHFA participating lender to start your mortgage application. PHFA also offers homebuyers the opportunity to receive homebuyer counseling and education through one of its approved counseling agencies. We strongly encourage you to seek the assistance of a counselor before you sign a sales agreement, especially if you are a first-time buyer. Any borrower with a FICO credit score lower than 680 is required to complete a course prior to closing on their loan.
Borrowers should be aware that not all participating lenders offer FHA, RD, and/or VA loans. Also, those loan types may have additional eligibility requirements regarding the buyer and/or the property.