First time home buyers in the state of Pennsylvania will be happy to know that there are a number of programs in their state offering low-cost loans and down payment assistance. Without these programs it would be impossible for many first time home buyers to realize their dream of homeownership. But thanks to various grants and private programs, low income and other eligible home buyers can get the assistance they need.
Where some states have a limited number of resources for such programs, Pennsylvania has quite a bit available. There are programs administered through state government and participating lenders, as well as a fair number of local and county programs as well. If you are just beginning your home search your real estate agent and mortgage lender should both be able to guide you in the process of applying for first time assistance. If not, they can certainly point you in the right direction.
Pennsylvania Housing Finance Agency
In Pennsylvania, the state government entity charged with the task of overseeing housing opportunities in known as the Pennsylvania Housing Finance Agency (PHFA). The agency was created in 1972 and has since generated more than $10 billion in assistance to tens of thousands of Pennsylvania home buyers. Although it is a state agency, it is not funded in any way by tax dollars. Instead, PHFA is funded solely by the sale of safe securities.
The state currently has eight different loan assistant programs for home buyers. Of those eight, three are specifically aimed at first time home buyers in Pennsylvania. The other five include first time home buyer opportunities, but they are open to any Pennsylvania resident who meets the requirements. For this reason, we’ll only discuss the three specific first time home buyer programs here.
Keystone at Home Loan Program
The Keystone Home Loan Program has the highest income limits and fewest restrictions. Because of this, it is the most widely used program in the state. That said it also has the highest interest rate which is just below the current prime rate. In order to be eligible for this program you must be a first-time home buyer unless the property you're trying to purchase is located within a designated development area. You also must demonstrate sufficient income to meet all of your obligations as well as pay your monthly mortgage payments.
Keystone Assistance Home Loan
For first time home buyers who need help with closing costs and down payment, Pennsylvania makes available the Keystone Assistance Home Loan. This program provides an additional 0% interest secondary loan to help pay closing costs. The secondary loan will not exceed $1500 under the Keystone program or $3000 under the Keystone Plus program. Regardless, the secondary loan has no monthly payments and does not need to be satisfied until the home is sold or the mortgage is paid in full. Applicants must meet all of the same requirements that come with the Keystone Home Loan. In addition, their total material assets after closing cannot exceed more than 5% of the home's value.
Homestead Downpayment and Closing Cost Assistance Loan
Known simply as HOMEstead, this program provides significant assistance for closing costs and down payment up to $10,000. In order to be eligible for this program you must meet very strict income eligibility requirements and the property purchased must meet certain federal guidelines.
This program runs as a secondary, interest-free loan attached to the mortgage but without monthly payments as long as the homeowner keeps current with his mortgage payments. It is forgiven at a rate of 20% per year over the first five years of the mortgage. As long as mortgage payments remain current during that time, and the homeowner lives in the house as his primary residence, the loan can be completely forgiven.
Local and County Programs
Certain cities and counties in Pennsylvania administer their own first time home buyer assistance programs. These programs can be in the form of low-cost loans, direct down payment assistance, or a combination of both. In some cases, the assistance is even in the form of a grant. The HUD website lists the following programs as currently active in September 2011. Keep in mind that there will be some eligibility requirements and residency requirements attached to these programs.
- Bucks County First Time Homebuyer Program (FTHB)
- Carbondale First Time Homebuyer Assistance Program
- Chester Economic Development Authority Moderate Income Homebuyer Assistance Program (MIHAP)
- Chester Homebuyer Assistance Program (HAP)
- Dauphin County First Time Home Buyers Program (FTHB)
- Jeannette Downpayment and Closing Cost Assistance Program (DAP)
- Luzerne County The Growing Homeowners Initiative Program (GHI)
- Pennsylvania Trehab Center Inc Homeownership Program (HP)
- Philadelphia Neighborhood Housing Services, Inc. Settlement Cost Assistance GRANT
- Philadelphia Settlement Grant Program
- Schuylkill County Schuylkill Community Action Closing Cost Assistance Program (CCAP)
- Scranton Homebuyers Assistance Program (HAP)
- York 3/2 Low, Moderate & Unlimited Income Mortgage Assistance Program (MAP)
- York County 3/2 Low Income Program (LIP)