Buying your first home in Pennsylvania? You’re in luck! The Pennsylvania Housing Finance Agency (PHFA) offers several first-time homebuyer programs in PA to make homeownership more affordable. These programs come with competitive interest rates, lower fees, and flexible financing options to help you secure your dream home.

Whether you need a low down payment, closing cost assistance, or a forgivable loan, there’s a home buying assistance PA program designed for you. Below, we’ll break down the key programs PHFA offers and how they can benefit first-time buyers.

Who Is Considered a First-Time Homebuyer in Pennsylvania?

In Pennsylvania, a first-time homebuyer is typically someone who has not owned a primary residence in the past three years.

However, federal and state housing authorities also extend first-time buyer status to specific groups. This includes single parents and displaced homemakers who previously owned a home with a spouse, individuals who have only owned a mobile home not permanently affixed to a foundation, and those who owned a property that didn’t meet state or local building codes.

Additionally, veterans and buyers in federally designated target areas may qualify for first-time homebuyer benefits, even if they’ve owned a home before.

First-Time Homebuyer Programs in PA

#01 HFA Preferred™ (Lo MI) Loan Program

The HFA Preferred™ (Lo MI) program is a conventional loan option designed specifically for first-time homebuyers in PA through the Pennsylvania Housing Finance Agency (PHFA). This loan provides a fixed 30-year mortgage with affordable interest rates and lower mortgage insurance costs.

Unlike traditional mortgages, this program is serviced by PHFA—meaning you’ll work with an approved lender during the loan process, but all payments will be made directly to PHFA for the life of the loan.

Key Benefits & Eligibility

Requires less than 20% down while still providing mortgage insurance through private providers.
Borrowers must contribute at least $1,000 from their own funds, while the rest can come from an approved gift or assistance program.
Must be used for a primary residence (not eligible for two-unit properties).
Income limits apply, which vary by county. You can find more details here.
Borrowers may qualify for a $500 PHFA Grant to help with closing costs and the down payment (this grant does not require repayment).
Homebuyer education is required:

If your FICO score is 680 or higher, you can complete the course online or through a PHFA-approved agency.
If your FICO score is below 680, face-to-face counseling at a PHFA-approved agency is required.

This program is a great choice for buyers who need a low down payment option with manageable mortgage insurance costs.

#02 Keystone Home Loan Program

The Keystone Home Loan Program offers a 30-year fixed-rate mortgage designed primarily for first-time homebuyers in PA. However, certain exceptions apply—veterans and buyers purchasing homes in designated “targeted areas” can also qualify.

Who Can Apply?

You may be eligible if:

You are a first-time homebuyer OR a veteran OR buying in a targeted county or area.
Your household income falls within program limits.
The home purchase price does not exceed program limits.
You have an acceptable credit history and can afford the monthly payments.
You have enough funds to cover mortgage application and closing fees.

Down Payment & Loan Options

The down payment requirement depends on the loan type:

VA & RD Loans – No down payment required (RD loans unavailable in Philadelphia and Delaware counties).
FHA Loans – Minimum 3.5% down payment.
Conventional Loans (PHIF Insured) – Minimum 3% to 5% down payment, with a minimum 660 credit score required.

Additionally, if your down payment is less than 20%, mortgage insurance will be required to protect both the lender and PHFA.

This program is ideal for buyers seeking affordable financing options with flexible eligibility criteria.

#03 Keystone Advantage Assistance Loan Program

The Keystone Advantage Assistance Loan Program provides down payment and closing cost assistance to help first-time homebuyers in PA cover upfront expenses. This program offers a second mortgage loan of up to 4% of the home’s purchase price or $6,000 (whichever is lower), which is repaid in monthly installments over 10 years at 0% interest.

Who Can Apply?

To qualify, borrowers must:

Have a minimum credit score of 660.
Use the assistance only for down payment and/or closing costs.
Apply for a loan amount of at least $500.
Have liquid assets below $50,000 after closing costs (excluding retirement accounts unless withdrawals are penalty-free).

Additional Program Details

This assistance cannot be combined with other PHFA aid programs (except for the Access Modification Loan Program).
Works with Conventional, FHA, VA, and RD loans, but borrowers must meet all related underwriting and down payment requirements.

This program is ideal for homebuyers who need extra financial support for upfront costs without the burden of additional interest.

#04 Keystone Forgivable in Ten Years Loan Program (K-FIT)

The Keystone Forgivable in Ten Years Loan Program (K-FIT) helps first-time homebuyers in PA cover down payment and closing costs through a second mortgage loan. Borrowers can receive 5% of the home’s purchase price or appraised value (whichever is lower) without a maximum limit. The best part? This loan is forgiven over 10 years at a rate of 10% per year, meaning homeowners who stay in their home for a decade won’t have to repay it.

Who Can Apply?

To qualify, borrowers must:

Have a minimum credit score of 660.
Use the loan only for down payment and/or closing costs.
Apply for a minimum loan amount of $500.
Have liquid assets below $50,000 after closing (excluding retirement accounts unless withdrawals are penalty-free).

Additional Program Details

K-FIT cannot be combined with other PHFA assistance programs (except for the ACCESS Home Modification Loan Program).
Available for Conventional, FHA, VA, and RD loans, but borrowers must meet all loan underwriting and down payment requirements.

The K-FIT program is perfect for homebuyers looking for extra financial help upfront, especially those planning to stay in their homes long-term.

#05 PHFA Grant

The PHFA Grant offers $500 in grant assistance to help cover down payment and closing costs for homebuyers using the HFA Preferred™ (Lo MI) loan. Unlike a loan, this grant does not need to be repaid, making it a great way to reduce upfront home-buying expenses.

How Can You Use the PHFA Grant?

It is available exclusively for borrowers obtaining the HFA Preferred™ (Lo MI) loan.
The grant can be combined with the Keystone Advantage Assistance Loan Program for additional financial support.

For first-time homebuyers in PA looking for extra savings, the PHFA Grant provides a simple way to lower out-of-pocket costs when purchasing a home.

#06 HOMEstead Downpayment and Closing Cost Assistance Loan

The HOMEstead Downpayment and Closing Cost Assistance Loan provides eligible homebuyers with up to $10,000 in assistance to help cover downpayment and closing costs. This assistance is offered as a no-interest, second mortgage loan, which is forgiven at 20% per year over five years for loans closed on or after January 1, 2007. The minimum loan amount is $1,000.

Eligibility Requirements

Borrowers must meet the minimum downpayment requirement set by the agency insuring or guaranteeing the loan.
HOMEstead funds can cover the remaining downpayment and closing costs.
In some cases, based on family need, additional assistance may be provided to make the property more affordable.

Additional Details

The first mortgage is provided by PHFA at the same rate as the Keystone Home Loan program.

Other First-Time Homebuyer Assistance Programs in PA

Philly First Home Program

The Philly First Home Program offers financial assistance to help first-time homebuyers cover their down payment, closing costs, or reduce their loan principal. Eligible buyers can receive a grant of up to $10,000 or 6% of the home's purchase price—whichever is lower.

Eligibility Requirements

To qualify for the program, homebuyers must meet the following criteria:

Be a first-time homebuyer or have not owned a home in the past three years.
Complete one-on-one homeownership counseling through a City-funded housing counseling agency before signing an Agreement of Sale.
The Agreement of Sale must be signed on or after May 2, 2022 by both the buyer and the seller.
Meet the income eligibility guidelines. For example:

A two-person household must have an annual income of $91,800 or less.
A four-person household must have an annual income of $114,700 or less.
You can learn more about other family size income requirements here.

Eligible Properties

The home must be a single-family home or duplex located in Philadelphia.
Condominiums are not eligible for this program.

First Front Door Program

The First Front Door (FFD) Program provides downpayment and closing cost assistance to eligible first-time homebuyers through participating FHLBank Pittsburgh (FHLBank) members that offer first-mortgage financing. Homebuyers who contribute at least $1,500 toward their downpayment and closing costs may receive a grant of up to $15,000.

Keys to Equity Fund

To expand homeownership opportunities for minority and first-generation first-time homebuyers, the First Front Door Keys to Equity Fund (Keys) was established. Eligible homebuyers who contribute at least $1,000 toward their downpayment and closing costs may receive a grant of up to $20,000.

Important Dates

The 2025 Keys funding round opens on March 18, 2025.
The 2025 FFD funding round opens on April 22, 2025.

First-Time Home Buying Assistance in PA - FAQs

Can I Qualify for Down Payment Assistance in Pennsylvania?

Yes, Pennsylvania offers multiple down payment assistance programs for eligible homebuyers. Qualifications vary by program but typically include income limits, credit score requirements, and first-time homebuyer status.

What Are the Current Mortgage Rate Trends in Pennsylvania?

As of the latest data from Zillow, Pennsylvania’s 30-year fixed mortgage rate remains stable at 6.54%, which is 9 basis points higher than the national average rate of 6.45%.

How Do I Apply for Pennsylvania First-Time Homebuyer Down Payment Assistance?

To apply for down payment assistance, homebuyers must first determine their eligibility based on income, credit score, and property location. Applications are typically submitted through participating lenders or housing agencies offering the specific program.

How Much of a Down Payment Do I Need to Buy a House in Pennsylvania?

The required down payment varies depending on the loan type. Conventional loans typically require 3% to 5%, while FHA loans require a minimum of 3.5%. Some programs, like VA and USDA loans, offer zero down payment options for eligible buyers.

Is There Any Assistance Program for First-Time Home Buyers of Berks County, PA?

Berks county residents can take advantage of following assistance programs:

Do First-Time Homebuyers With Bad Credit Qualify for Homeownership Assistance?

Yes, first-time homebuyers with bad credit may still qualify for homeownership assistance, but eligibility depends on the program. Many down payment assistance programs in Pennsylvania, including those offered by PHFA, require a minimum credit score—typically around 660.

However, some programs, such as FHA loans, accept lower credit scores, sometimes as low as 580, with a larger down payment. Additionally, working with a housing counselor or improving your credit before applying can increase your chances of qualifying for assistance.

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First-Time Homebuyer Programs in PA: What You Need to Know

Who Is Considered a First-Time Homebuyer in Pennsylvania?