Down Payment Assistance Programs for First-Time Homebuyers in Pennsylvania

There are 32 states larger than Pennsylvania; however, it takes the cake as the 5^th-most popular state in America. Dubbed the “Keystone State” for the role it played in the foundation of the United States, Penn enjoys a sterling reputation due to its rolling hills, lofty mountains, and roaring rivers. The Appalachian Mountains attract visitors from all over the country to Pennsylvania, many of whom decide to live here.

That’s when they face the state’s crumbling housing market. At the same time, over 70% of homes were affordable in Penn, and less than two-thirds have since the pandemic started. Home prices are up by 5.3%, and dwellings sell for $307,000 on average. Experts believe that this affordable housing crisis stems from a rapid rise in mortgage interest rates (lying incredibly at a whopping 6.05% for a 30-year term, as per Zillow).

However, the government has proposed investing $80 million to tackle this crisis. You’ll find many down payment assistance programs to help you buy your 1^st home. The Pennsylvania Housing Finance Agency (PHFA) collaborates with local initiatives to provide residents with valuable resources. That’s how people living in Penn can achieve their dream of homeownership and avoid the threat of homelessness as well.

Looking for Assistance in a Specific Part of Pennsylvania?

This page provides an overview of the assistance programs available to first-time homebuyers in Penn. It covers statewide and local resources. For specific information on down payment assistance in your area, refer to the local resource provided here:

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Down Payment Assistance in Pennsylvania

A recent study shows that almost 50% of renter households in Penn are overwhelmed by the affordable housing crisis. That’s why the Keystone State implements deliberate policies to solve this crisis. After all, in recent polls[GW2] , 83% of voters want to streamline the housing approval process, and almost everyone says that hotels/offices should be converted to housing.

You can still leverage down payment assistance programs to own a home in Penn. Stairs Financial offers insights into some of these affordable housing programs. Residents can use this relevant information to choose the ideal financial assistance option.

First Front Door Program

As per the First Front Door (FFD) Program, you can have ample funds to cover not just the down payment but the closing costs as well. For every dollar the homebuyer contributes, the program provides $3 to match the homebuyer’s savings.

Fundamentals

• Assistance type: Grants for down payment
• Sponsor: Federal Home Loan Bank of Pittsburgh (FHLBank Pittsburgh)
• Assistance amount: $15,000

Eligibility requirements

• You mustn’t have owned a home in the past three years.
• Get a minimum of 4 hours of homebuyer education to be eligible.
• Your household income mustn’t exceed 80% of that area’s median income.
• You should contribute at least $1,500 toward the down payment or closing cost.

HOMEstead Down Payment and Closing Cost Assistance Loan

As per the HOMEstead Program, eligible borrowers get up to $10,000 as a no-interest second mortgage for down payment and closing costs. This loan is forgiven at a rate of 20% per year over 5 years to lessen the financial burden on new homeowners.

Fundamentals

• Assistance type: Grants for down payment
• Sponsor: Pennsylvania Housing Finance Agency (PHFA)
• Assistance amount: $10,000

Eligibility requirements

• You mustn’t have owned a home in the past three years.
• Get a minimum of 8 hours of homebuyer education to get eligible.
• Your household income mustn’t exceed 80% of that area’s median income.
• You should contribute at least $1,000 toward the down payment or closing cost.

Employer-Assisted Housing Initiative

The famous Employer-Assisted Housing (EAH) Initiative helps moderate-income workers find affordable housing in Pennsylvania. It’s especially helpful for homebuyers who happen to be police personnel, medical workers, educators, laborers, county workers, etc. You get a down payment and closing cost assistance in the form of an interest-free loan, amortized over ten years.

Fundamentals

• Assistance type: Grants or matching funds
• Sponsor: Pennsylvania Housing Finance Agency (PHFA)
• Assistance amount: $8,000

Eligibility requirements

• You must not be a homeowner in the area under question.
• You’ll pre-purchase homebuyer training if it’s your first-ever house.
• You have to live in the property for a specified period (often at least 5 years).
• You should contribute a minimum personal investment toward the down payment.

Keystone Advantage Assistance Loan for Home Purchase

The Keystone Advantage Assistance Loan Program qualifies borrowers to get $6,000 for down payment and closing costs on their first home. It can also be used in combination with other home purchase loan programs, such as the HFA Preferred™ (Lo MI), Keystone Government Loan, Keystone Home Loan, etc. It is structured as a second mortgage that must be repaid over a term of 10 years at 0% interest.

Fundamentals

• Assistance type: Second mortgage loan
• Sponsor: Pennsylvania Housing Finance Agency (PHFA)
• Assistance amount: $6,000

Eligibility requirements

• You need a credit score of 660.
• The minimum loan amount is $500.
• You must be a 1^st mortgage through PHFA.
• Your liquid assets mustn’t exceed the $50,000 limit.
• You should complete an approved homebuyer education course.

HUD Good Neighbor Next Door Program

This program is targeted at teachers, firefighters, emergency workers, law enforcement officers, etc. It’s a great way for Pennsylvania residents to get a generous discount on the list price of potential homes. A simple condition is that the buyer commits to residing in that place after purchase for 36 months. As per the HUD Good Neighbor Program, buyers get a 50% discount on the home purchase price.

Fundamentals

• Assistance type: Home price discount
• Sponsor: U.S. Department of Housing and Urban Development (HUD)
• Assistance amount: 50% discount

Eligibility requirements

• Your would-be home must be located in a designated revitalization area.
• Make this newly purchased home your primary residence for the next 3 years.
• You must be employed as a law enforcement officer, firefighter, emergency medical technician (EMT), or teacher (pre-Kindergarten through 12th grade).

Pennsylvania Down Payment Assistance Program FAQs

Here are some common questions from first-time homebuyers in Pennsylvania seeking assistance with down payments:

1.  What types of assistance are available to buy a house in Pennsylvania?

The state of Penn offers different types of assistance. They come in the form of grants (you do not have to pay it back), forgivable loans (these loans are forgiven in certain circumstances), and matched savings programs (where the program matches the amount that a buyer has saved).

2.  Can you get Biden first-time home buyer assistance in the state of Pennsylvania?

Unfortunately, there is no Biden First-Time Home Buyer Act or other tax credits like that available in any state in America right now. That’s because Congress hasn’t passed this proposed legislation. However, the government has other initiatives to help you buy your first home.

3.  How do you buy a house for the first time in the state of Pennsylvania?

You can start buying your first home in the Keystone State by:

• Improve your credit score (at least 580).
• Look for average down payments in Penn (around $32,000 in 2023).
• Explore the first-time homebuyer assistance programs mentioned above.
• Partake in homebuyer education programs to get pre-approved for mortgages.
• Find a realtor, start house hunting, make an offer, and finalize it after inspecting your potential new home.

4.  Are there any local programs available in Pennsylvania for homebuyers?

Many counties and cities in Penn have unique down payment assistance programs for locals. An eligible first-time homebuyer in Philadelphia can get up to $10,000 under the Philly First Home Program. Also, a resident of Pittsburgh can access $7,500 by applying to the Down Payment and Closing Cost Assistance Program.

5.  What if you have a disability? Can you still apply for an assistance program?

Specific programs are available for homebuyers with disabilities in Pennsylvania as well. Similarly, future homeowners living in disabled families can avail of the Closing Cost Assistance Program, which gives them $15,000. These assistance programs help homebuyers afford to purchase a new property in Pennsylvania without having to cut down on the cost of caregiving for their loved one/s with different abilities.

Disclaimer: This article is for informational purposes only and should not be considered as legal or financial advice. Please consult an attorney, mortgage lender, or CPA for guidance on your specific situation.

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