Pennsylvania First-Time Home Buyer Programs of 2021

By NerdWallet 
Edited by Amanda Derengowski
Pennsylvania First-Time Home Buyer Programs

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The Pennsylvania Housing Finance Agency offers down payment and closing cost assistance to first-time home buyers in the Keystone State. The PHFA also provides mortgage loan programs, refinancing and home improvement loans.

To be considered a first-time home buyer, you must not have owned your primary residence during the past three years. Veterans or buyers in certain target counties don’t have to meet first-time home buyer restrictions to take advantage of PHFA programs.

National first-time home buyer programs

The PHFA offers a lot of loan and down payment assistance programs, but you also have additional resources to consider. There are national programs aimed at low- to moderate-income prospective homeowners, with low — and even no — down payment requirements.

Conventional mortgage

Best for:

Low down payments, limited mortgage insurance premiums

What you need to know:

A conventional mortgage is a home loan that isn’t guaranteed or insured by the federal government. Conventional mortgages that conform to the requirements set forth by Fannie Mae and Freddie Mac allow down payments as low as 3% for first-time buyers or lower-income home buyers. Unlike FHA loans, conventional loans allow borrowers to eventually cancel their mortgage insurance or avoid mortgage insurance altogether if they put at least 20% down.

VA loans

Best for:

Military, low down payments

What you need to know:

The U.S. Department of Veterans Affairs helps service members, veterans and surviving spouses buy homes. VA loans are especially generous, providing competitive interest rates, often requiring no down payment or mortgage insurance. Although there is no official minimum credit score, most VA-approved lenders require scores of at least 640.

FHA loans

Best for:

Low credit score, low down payments

What you need to know:

This is the go-to program for many first-time home buyers with lower credit scores. The Federal Housing Administration allows down payments as low as 3.5% for those with credit scores of 580 or higher. The FHA will insure loans for borrowers with scores as low as 500 but requires a 10% down payment for a score that low. Mortgage insurance is required for the life of an FHA loan and cannot be canceled.

USDA loans

Best for:

Low down payments, rural

What you need to know:

A USDA home loan is a zero-down-payment mortgage for eligible rural and suburban home buyers. USDA loans are issued by the U.S. Department of Agriculture through the USDA Rural Development Guaranteed Housing Loan Program. There are income limitations, which vary by region. Applicants with credit scores of 640 or higher receive streamlined processing. Those with scores below that must meet more stringent underwriting standards.

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PHFA highlights and eligibility

The following programs are specifically tailored to Pennsylvania residents. While each program has its own qualifying standards, a PHFA-approved lender can help you navigate the details.


  • Down payment and closing cost assistance.

  • Programs for borrowers with disabilities.

  • Tax credits may apply.

  • Programs for purchase and refinancing.

  • 30-year fixed-interest loans.

  • Employer-assisted housing available through participating employers.


  • Borrowers’ liquid assets, including investment accounts, must be no greater than $50,000 after payment of closing costs (retirement accounts may be excluded with certain restrictions).

  • You should plan to use no more than 30% of your income to make your monthly payment.

  • Household income and purchase price cannot exceed county limits.

  • The home must be your primary residence.

  • Minimum credit score of 660 for some programs.

  • Borrowers with FICO scores lower than 680 must complete home buyer education.

PHFA first-time home buyer loan programs

HFA Preferred Risk Sharing

Best for:

Low mortgage insurance

What you need to know:

This program eliminates the typical requirement that borrowers who put down less than 20% must pay mortgage insurance premiums. Your monthly mortgage payment is usually lower, though your loan’s interest rate may be slightly higher. There is no first-time buyer restriction for this program.

HFA Preferred

Best for:

Low mortgage insurance

What you need to know:

This loan includes mortgage insurance for borrowers with less than 20% down. There is no first-time buyer restriction for this program.

Keystone Government Loan Program

Best for:

Government-backed loans

What you need to know:

If you do decide to go the government-loan route, the PHFA offers mortgages backed by the Federal Housing Administration, the Rural Development program of the USDA, and the Department of Veterans Affairs. There may be fewer conditions to meet to qualify for the program; however, government loans have their own specific benefits and limitations that vary by provider.

Keystone Home Loan Program

Best for:

Military, rural

What you need to know:

This program is suited for first-time home buyers, discharged veterans of the armed forces or buyers interested in properties in certain targeted Pennsylvania counties. The loans can be conventional, FHA- or VA-backed mortgages, or rural development loans. Purchase price and income limits apply.

Keystone Advantage Assistance Loan Program

Best for:

Down payment assistance, closing cost assistance

What you need to know:

This is a second mortgage loan that helps with the down payment and closing costs. Qualified borrowers can receive up to 4% of the purchase price or market value of the home or $6,000, whichever is less. Repayment of the cash assistance is calculated over a 10-year period with 0% interest.

Mortgage Credit Certificate

Best for:

Tax credits

What you need to know:

A mortgage credit certificate is available for eligible buyers that allows a tax credit of 20% to 50% of the mortgage interest you pay annually, up to $2,000. A tax credit is a dollar-for-dollar discount applied to the federal taxes you owe. As long as you own and occupy the home as your primary residence, you can use the tax credit each year for the life of the loan.

Programs For Persons With Disabilities

Best for:


What you need to know:

Home buyers with a disability or who are living with a household member with a disability may qualify for up to $15,000 in a no-interest down payment and closing costs loan to make accessibility modifications to the home they’re purchasing.

First-time buyers with disability qualifications may also be eligible for an additional $10,000 loan at 0% interest, as a part of the Homestead program noted below. Income and property limitations, including the home’s location, may apply.

Homestead Down Payment and Closing Cost Assistance

Best for:

Down payment assistance, closing cost assistance

What you need to know:

Eligible buyers may be able to receive up to $10,000 in assistance in the form of a forgivable loan. Homestead assistance is forgiven at a rate of 20% per year over five years. The program is available in certain areas of Pennsylvania, but it excludes most major cities and seven counties, which offer their own federally sponsored assistance.

Employer-Assisted Housing

Best for:

Down payment assistance, closing cost assistance

What you need to know

You may work for a company that participates in this initiative. Participating employers — which include banks, health systems, universities and others — offer home buyer assistance of up to $8,000. The benefit is structured as a 10-year interest-free loan.

Summary: 2021 PHFA first-time home buyer programs

  • HFA Preferred Risk Sharing home loan with no mortgage insurance requirement.

  • HFA Preferred home loan with mortgage insurance.

  • Keystone government loan program for borrowers of FHA, USDA and VA loans.

  • Keystone home loan program for purchasing property in certain targeted areas.

  • Keystone Advantage Assistance loan program providing down payment and closing cost assistance.

  • Mortgage credit certificate providing annual tax credit.

  • Programs for persons with disabilities to help with down payment and closing costs.

  • Homestead forgivable loan for down payment and closing cost assistance.

  • Employer-assisted housing program providing assistance to employees of participating companies and institutions.

Keep in mind, the lender you work with may have additional borrower requirements than those stated in any state assistance program. That can include credit score minimums or other credit qualifications. Find out all you can about the programs you’re interested in, then talk to a few lenders about your options.

For full details on any Pennsylvania Housing Finance Agency program, visit the PHFA website.

You also can find Pennsylvania lenders that participate in PHFA programs.

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