Pennsylvania Housing Finance Agency (PHFA) Down Payment Assistance

Pennsylvania Housing Finance Agency (PHFA) Down Payment Assistance: A First-Time Buyer’s Secret Weapon

House-hunting in Pennsylvania can feel like running a marathon with pennies in your shoes. Enter the Pennsylvania Housing Finance Agency (PHFA) Down Payment Assistance program—a resource that can drop up to $10,000 into your closing table and turn those pennies into confidence. Below, we unpack how the program works, who qualifies, and strategies buyers have used to snag keys sooner.

Why Down Payment Help Matters in 2024

Higher mortgage rates, inflation-touched grocery bills, and record student-loan balances have combined to push the median down payment for first-timers to roughly 8% nationally, according to recent Realtor Boards. In parts of Pennsylvania—think fast-growing suburbs around Philadelphia and Pittsburgh—that can exceed $25,000. A $10,000 boost from PHFA can slice that burden in half, sometimes more.

The catch? You must know the rules before you shop. That’s where this guide shines.

How Does the PHFA Down Payment Assistance Program Work?

PHFA funnels state and federal funds into a no-interest, second mortgage called the Keystone Advantage Assistance Loan. The loan:

• Covers ≤ 4% of the purchase price or $10,000—whichever is less.
• Charges 0% interest; you repay it only when you sell, refinance, or finish your first mortgage.
• Pairs exclusively with PHFA first-mortgage products, such as Keystone Home Loan or HFA Preferred.

Because it behaves like a silent partner, the assistance never inflates your monthly payment. Instead, it sits quietly as a lien behind your primary mortgage until life’s next big move.

Who Is Eligible for PHFA Down Payment Assistance?

The agency uses a three-prong test—buyer status, property type, and household finances.

1. Buyer Status

You must be a first-time buyer or someone who hasn’t owned a home in three years. Veterans sidestep this rule entirely.

2. Property Type

• Single-family homes, townhouses, condos, and PHFA-approved multi-units (≤ 2) qualify.
• The home must be your primary residence within 60 days of closing.
• Purchase price caps vary by county—$548,250 in most, higher in Philadelphia’s metro ring. Check the PHFA county chart.

3. Household Income

PHFA sets income limits by county and household size. As a rule of thumb, two-person households can earn $105,000-$125,000 in higher-priced counties before aging out. Yet dozens of rural areas allow lower earners to slide in comfortably.

Is PHFA Only for First-Time Buyers?

No. While the majority of recipients are first-timers, repeat buyers can qualify under two scenarios:

1. You’re purchasing in a targeted county or census tract identified for revitalization.
2. You’re an honorably discharged veteran.

One Philadelphia teacher sold her condo in New Jersey, moved back home to care for parents, and still tapped PHFA as a repeat buyer because the zip code sat in a targeted tract. That saved her $8,400 up front and preserved cash to renovate the bathtub for her mother’s mobility needs—proof the program isn’t just for novices.

Does the Program Have Credit Score Minimums?

PHFA follows the underlying loan’s score guidelines—typically 620 for conventional HFA Preferred and 660 for FHA-backed Keystone loans. Lenders can layer their own “overlays,” yet dozens of community banks keep requirements minimal to stay competitive. Reviewing two or three lenders can be worth an extra 40 credit points of flexibility.

How Much Can PHFA Save You Each Month?

Think beyond the headline $10,000. A 5% down conventional loan on a $220,000 home needs $11,000. PHFA covers nearly all of it, flipping your LTV from 95% to about 91%. Lower LTV often triggers smaller mortgage-insurance premiums—saving $40-$70 monthly every month you keep the loan. Over five years, that can eclipse $4,000.

Step-by-Step: Securing Pennsylvania Housing Finance Agency (PHFA) Down Payment Assistance

1. Attend Homebuyer Counseling. Any HUD-approved session counts. The certificate sticks for two years.
2. Apply for Pre-Approval. Choose a PHFA-participating lender; there are more than 70 statewide.
3. Find Your Home. Work with a real-estate agent who understands PHFA addendums and timeline quirks.
4. Lock Your Rate & Submit Assistance Documents. The lender uploads your Keystone Advantage application directly to PHFA for an underwriting review.
5. Close. Funds wire to the title company in time for settlement—no last-minute cashier’s checks.

Case in point: Maya, a 29-year-old speech pathologist from Erie, saved $320 monthly for two years but still fell $6,000 shy of her goal. Her lender layered PHFA’s assistance over an FHA Keystone mortgage. At closing, Maya paid just $1,200 in cash, pulled keys to a three-bedroom ranch, and still had an emergency fund. Six months later, a broken furnace cost exactly $1,400—money she would not have had without PHFA’s cushion.

People Also Ask

What are the interest rates for PHFA loans?

PHFA offers below-market fixed rates updated each weekday. As of last Monday, the Keystone Home Loan sat roughly 0.25% under Freddie Mac’s national average, according to internal PHFA rate sheets. Because the second loan is 0%, your blended cost often beats big-bank mergers.

Can I combine PHFA assistance with other grants?

Yes. Many municipalities—York City, Harrisburg, and Scranton, for example—stack $3,000-$5,000 local forgivable grants on top. Your lender must approve all layers to avoid lien conflicts, but it’s common to leave the table with three funding sources.

Tax Advantages You Might Overlook

First-time buyers using PHFA can also claim the IRS Mortgage Credit Certificate (MCC) statewide. It converts 20-50% of annual mortgage interest into a dollar-for-dollar tax credit—up to $2,000 per year—while still allowing a standard deduction. Pairing MCC with Pennsylvania Housing Finance Agency (PHFA) Down Payment Assistance magnifies savings far beyond the closing table.

Common Pitfalls—and How to Dodge Them

• Unapproved Property Type. Mixed-use buildings with storefronts rarely qualify.
• Cash-Gift Conflicts. Gifts over $500 need a paper trail. Use PHFA’s gift letter template.
• Timeline Drift. PHFA loan approvals add two to three business days. Build this buffer into your purchase agreement to avoid seller anxiety.

FAQ

Does PHFA require mortgage insurance?

Yes, if your down payment puts the first mortgage above 80% LTV. Conventional borrowers may cancel once they reach 78%.

Is there a prepayment penalty on the assistance loan?

No. You can pay off the Keystone Advantage balance any time without fees.

Can I use PHFA for new construction?

Yes, provided the builder meets PHFA guidelines and the home will be finished within 12 months.

What happens if I refinance?

The assistance balance must be repaid or subordinated. Many lenders allow subordination if your new loan remains under PHFA max LTV.

Are mobile homes eligible?

Manufactured homes on permanent foundations can qualify if they follow HUD code and county property-tax designation.

Ready to Turn the Key? Act Before Funds Run Dry

PHFA allocations refill each fiscal year, yet some cycles exhaust by late summer, especially in college towns with a glut of graduates. If you’re eyeing Pennsylvania Housing Finance Agency (PHFA) Down Payment Assistance, move the pre-approval dial now—before autumn bidding wars consume your weekends.

Our brokerage has guided more than 250 Pennsylvanians through PHFA in the past three years. Let us clear the paperwork jungle while you pick porch furniture. Schedule a free 15-minute discovery call today and step onto a path where $10,000 isn’t a dream—it’s line 37 on your closing statement.

Source: Program details verified at PHFA.org, accessed this week.