First-time home buyer programs in Pennsylvania: assistance, loans and real costs
Pennsylvania’s buyer-paid 1% transfer tax share is the single largest closing cost for most first-time buyers, and in Philadelphia it doubles — PHFA’s assistance programs are often what covers it. That is the one sentence to keep in mind while reading the programs below.
| State housing agency | Pennsylvania Housing Finance Agency (PHFA) |
|---|---|
| Median home price (approx.) | $270,000 — statewide order of magnitude; metros differ |
| 3.5% / 5% / 20% down | $9,450 / $13,500 / $54,000 on the median |
| Property tax (effective) | about 1.49% — roughly $4,023 a year on the median |
| Mortgage credit certificate | Yes — mortgage credit certificate offered |
| Transfer tax | Pennsylvania’s realty transfer tax is 2% in most of the state (1% state plus 1% local), customarily split equally between buyer and seller; Philadelphia’s local rate is higher, bringing the total there above 4%. |
What the state offers in Pennsylvania
The Pennsylvania Housing Finance Agency’s Keystone Home Loan offers below-market first mortgages to first-time buyers (and repeat buyers in targeted counties), with Keystone Advantage Assistance, HOMEstead and K-FIT for down payment and closing costs; Keystone Government and Keystone Flex serve other profiles, and PHFA issues Mortgage Credit Certificates.
The down payment help, and how it must be repaid
Keystone Advantage Assistance provides up to 4% of the price (capped at $6,000) as a 0% second repaid over ten years; HOMEstead provides up to $10,000 as a forgivable second (forgiven over five years) for lower-income buyers; K-FIT provides 5% of the lesser of price or appraisal as a forgivable second for eligible buyers.
Assistance structures matter as much as amounts: a grant is free; a forgivable second disappears if you stay long enough; a deferred second is repaid when you sell or refinance; a repayable second adds a monthly payment. Ask which one you are being offered. See how down payment assistance programs work.
Mortgage credit certificate (tax credit)
PHFA’s Mortgage Credit Certificate provides a federal tax credit on a portion of annual mortgage interest to first-time buyers within income and price limits, combinable with Keystone Government and Flex loans.
Eligibility limits
PHFA income and purchase price limits vary by county and household size; a 660 minimum credit score, a $1,000 minimum contribution and, for some products, homebuyer education are required. Liquid assets above a cap can reduce assistance.
Transfer taxes and closing costs in Pennsylvania
Pennsylvania’s realty transfer tax is 2% in most of the state (1% state plus 1% local), customarily split equally between buyer and seller; Philadelphia’s local rate is higher, bringing the total there above 4%.
The buyer’s 1% (or 2% in Philadelphia) share of the transfer tax makes Pennsylvania one of the costlier states to close in; total buyer costs commonly run 4% to 5% of the price including title and lender fees. Sellers can pay a share of these costs within program limits — see seller concessions — and our closing costs guide covers the rest.
Worked example: buying the median home in Pennsylvania
Take a $270,000 home — roughly the statewide median, though Pennsylvania’s metros vary widely — and an illustrative 6.5% rate. The table shows the cash down and the monthly principal and interest for the three structures first-time buyers use most, plus the property tax at Pennsylvania’s approximate 1.49% effective rate ($4,023 a year). Insurance and mortgage insurance come on top.
| Structure | Down payment | Loan amount | P&I at 6.5% (30 yr) | Property tax / mo (est.) |
|---|---|---|---|---|
| FHA, 3.5% down | $9,450 | $260,550 | $1,647 | $335 |
| Conventional, 5% down | $13,500 | $256,500 | $1,621 | $335 |
| Conventional, 20% down (no PMI) | $54,000 | $216,000 | $1,365 | $335 |
Illustrative rate and approximate state figures — not an offer or a quote. Full payment tables cover $150,000 to $800,000 at 5% to 8%; the affordability guide explains how lenders size the loan.
Frequently asked questions
Does Pennsylvania have down payment assistance for first-time buyers?
Keystone Advantage Assistance provides up to 4% of the price (capped at $6,000) as a 0% second repaid over ten years; HOMEstead provides up to $10,000 as a forgivable second (forgiven over five years) for lower-income buyers; K-FIT provides 5% of the lesser of price or appraisal as a forgivable second for eligible buyers. Program terms and amounts change with funding — confirm the current version with Pennsylvania Housing Finance Agency or an approved lender before you count on a figure.
Is there a first-time home buyer tax credit in Pennsylvania?
PHFA’s Mortgage Credit Certificate provides a federal tax credit on a portion of annual mortgage interest to first-time buyers within income and price limits, combinable with Keystone Government and Flex loans. An MCC must be issued at closing — it cannot be added to an existing loan — so ask about it before you choose a lender.
What are typical closing costs when buying a house in Pennsylvania?
The buyer’s 1% (or 2% in Philadelphia) share of the transfer tax makes Pennsylvania one of the costlier states to close in; total buyer costs commonly run 4% to 5% of the price including title and lender fees. Pennsylvania’s realty transfer tax is 2% in most of the state (1% state plus 1% local), customarily split equally between buyer and seller; Philadelphia’s local rate is higher, bringing the total there above 4%.
Related guides
- How much house can I afford? The math lenders actually use
- FHA vs conventional for a first-time buyer: which loan wins, and when
- 3% down conventional loans: HomeReady, Home Possible and Conventional 97
- Pre-approval vs pre-qualification: what sellers actually respect
Other Pennsylvania pages: hard money rules in Pennsylvania · foreclosure in Pennsylvania.