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PHFA: Keystone Advantage Assistance Loan Program

Happy home buyers standing next to a for sale sign with a sold stickerWelcome to our article on the Keystone Advantage Assistance Loan Program. This article will provide an overview of the program and how it can benefit potential homebuyers. The program is designed to help individuals and families achieve their dream of homeownership by providing financial assistance for down payment and closing costs. Join us as we explore the details of this valuable program and how it can make owning a home more attainable for many individuals.

General Program Description

The Keystone Advantage Assistance Loan enables eligible homebuyers to borrow funds to cover their down payment requirements (excluding their minimum required contribution) and closing costs associated with purchasing a home.

The assistance provided is capped at the lesser purchase price or appraised value, with a maximum limit of four percent or $6,000, whichever is lower.

Buyers purchasing a new home that has never been occupied can receive assistance of up to $6,000.

Loan Terms and Usage

The maximum amount of aid available to eligible homebuyers is determined by the lesser of the purchase price or appraised value. Assistance through Advantage cannot exceed four percent or $6,000, whichever is lower. 

The minimum loan amount is set at $500. These funds must be used specifically to cover the borrower’s minimum down payment and customary closing costs associated with the purchase. 

The maximum assistance allowable for buyers acquiring a new, never-before-occupied home is $6,000. The Advantage loan carries no interest, but its principal amount is spread over a 10-year term. 

Borrowers are not subject to any penalties for early repayment of the Advantage loan. To qualify, borrowers must utilize maximum financing through PHFA. 

Any excess Advantage funds beyond the borrower’s down payment obligation must be allocated toward covering closing costs. These funds cannot supplement down payments beyond the required minimums, depending on the loan type. 

Additionally, they cannot be used to finance VA or USDA guaranty fees or the FHA Upfront Mortgage Insurance Premium, as these expenses may be funded through the first mortgage. Guidelines outlined in the PHFA Sellers’ Guide and applicable FHA, VA, or RD must be adhered to, including loan-to-value and down payment requirements. 

The Advantage program cannot be combined with other PHFA assistance programs except for the Access Modification Loan Program.

Advantage Assistance Example:

Sales Price $50,000 $100,000 $150,000
Assistance 4% X 4% X 4% X 4%
Assistance Loan $2,000 $4,000 $6,000
Monthly Payment $16.67 $33.33 $50.00

Eligibility Requirements and Procedures

Homebuyers must meet the criteria of the applicable PHFA first mortgage program and adhere to specific eligibility guidelines, including a liquid asset limitation of $50,000 after deducting the funds needed to close on the loan.

Borrowers with middle credit scores below 680 must complete an in-person homebuyer education class or counseling session provided by PHFA-approved organizations.

Those with scores of 680 or higher may complete these requirements through telephonic or online courses.

Liquid Asset Limitation

The liquid asset limit is a crucial factor. After accounting for the funds needed to repay the loan, the borrower's liquid assets cannot exceed $50,000. This includes cash, savings, checking accounts, equities, bonds, certificates of deposit, and other liquid assets. Retirement assets from 401(k)s, IRAs, and pension plans may be considered for individuals meeting age requirements, retired, and able to withdraw funds without penalties.

Homebuyer Education

Homebuyers with middle credit scores below 680 must attend an in-person homebuyer education class or counseling session before closing conducted by one of PHFA’s approved counseling organizations. Online courses are not permitted for these borrowers.

For loans where all borrowers have a middle credit score of 680 or higher, at least one borrower must complete a homebuyer education class or counseling session before closing. A PHFA-approved counseling organization must provide the session. Telephonic and online courses are acceptable for borrowers with a FICO score of 680 or higher, with approved online courses being those offered by HomeView® or PHFA.

A copy of the counseling certificate(s) must be included in the purchase package submitted to PHFA.

Lender Instructions and Procedures

The Advantage loan is locked concurrently with the first mortgage, and the payment is factored into the borrower’s housing-to-income ratio for underwriting purposes.

At closing, while the first mortgage closes in the lender's name, the subordinate Advantage loan closes in PHFA’s name.

Lenders are responsible for preparing compliant forms such as the Loan Estimate and Closing Disclosure for the Advantage loan and ensuring they are recorded in the second lien position.

Conclusion: Keystone Advantage Assistance Loan Program

In conclusion, the Keystone Advantage Assistance Loan Program offers aspiring homebuyers a crucial opportunity to overcome financial hurdles and take a significant step toward owning their homes. By assisting with down payment and closing costs, this program strives to make homeownership more accessible and achievable for individuals and families.

The detailed overview of the program outlined in this article sheds light on its benefits and potential impact on those seeking to enter the housing market. We encourage all interested parties to explore further information on the Keystone Advantage Assistance Loan Program and consider how it could help turn their homeownership dreams into reality. Take advantage of this valuable resource and embark on your journey toward becoming a homeowner today.

PHFA Sellers Guide (page 59)

Recommended Reading
PHFA: Keystone Government Loan Program
PHFA: Keystone Home Loan Program
PHFA: Keystone Forgivable in Ten Years Loan Program (K-fit)
PHFA: Keystone Flex Loan Program