PHFA Keystone Flex with K-FIT: Flexible Pennsylvania Home Loan Program

The Keystone Flex with K-FIT program is a flexible Pennsylvania home loan program designed to help homebuyers purchase a primary residence throughout the state. The Pennsylvania Housing Finance Agency pairs the Keystone Flex first mortgage with the Keystone Forgivable in Ten Years assistance loan to provide comprehensive financing solutions. This program offers flexible lending terms with down payment help that makes homeownership more achievable for qualified buyers.

The program comes in two purchase versions. Both options allow borrowers to combine traditional mortgage financing with forgivable down payment and closing cost assistance. This approach helps qualified Pennsylvania homebuyers reduce their out-of-pocket costs when purchasing their home.

Key Features of Keystone Flex with K-FIT

• Down payment assistance up to 5 percent of purchase price or appraised value
• Loan forgiveness over 10 years at a rate of 10 percent per year
• Financing available from 95 percent to 97 percent of purchase price or appraised value
• Forgivable loan with no maximum dollar amount
• Available for conventional, FHA, VA, and RD loan types
• Minimum FICO score of 660 required

Keystone Flex Product Options

The PHFA Keystone Flex program offers three distinct products to meet different borrower needs. The K-Flex with K-FIT serves first-time and repeat homebuyers looking for purchase financing. This option provides conventional, FHA, VA, and RD financing paired with down payment assistance.

The K-Flex Purchase and Improvement with K-FIT combines home purchase with up to $30,000 in improvement funds. This version is limited to conventional financing only. Borrowers can address repairs or upgrades at the same time they purchase their home.

The K-Flex refinance option helps existing homeowners refinance their primary residence. This product is available for all loan types except RD loans. Refinance borrowers do not require homebuyer education to qualify.

Loan-to-Value and Financing Terms

Keystone Flex purchase borrowers may finance between 95 percent and 97 percent of the purchase price or appraised value, whichever is less. Loans with LTV ratios at or below 94.99 percent do not qualify for these programs. This requirement ensures that borrowers are utilizing maximum PHFA financing to reduce their upfront costs.

For conventional refinance loans, cash back is limited to the greater of 1 percent of the unpaid mortgage balance or $2,000. FHA refinance loans may receive up to $500 in cash back. Cash out refinancing allows up to $10,000 in available equity for conventional, FHA, and VA loans, provided all applicable government guidelines are met.

The K-FIT Assistance Loan Explained

K-FIT provides down payment and closing cost assistance specifically designed for qualified homebuyers. The forgivable loan amount cannot exceed 5 percent of the lesser of the purchase price or appraised value. There is no maximum dollar amount for this assistance. The minimum loan amount is $500.

The loan is structured to be forgiven gradually over time. Annual forgiveness occurs at a rate of 10 percent per year, meaning the entire loan balance is forgiven after 10 years of ownership. This approach rewards long-term homeownership and helps borrowers build equity without increasing their monthly mortgage payment.

K-FIT funds must be used for the borrower's minimum down payment requirement and/or closing costs. Any assistance exceeding the down payment requirement goes toward reasonable and customary closing costs typically paid by the buyer. K-FIT funds may not exceed the applicable minimum down payment requirement for the specific loan type.

Eligibility Requirements for Keystone Flex with K-FIT

Borrowers seeking Keystone Flex with K-FIT financing must have a middle FICO score of at least 660. There is no first-time homebuyer requirement under the K-Flex programs. Buyers may have an ownership interest in another residential dwelling at the time of loan closing.

The income limit for this program varies by location throughout Pennsylvania. Total qualifying income cannot exceed the listed income limit for the area where the property is located. Borrowers should verify the specific income limits for their region before applying.

The purchase price limit also varies by location. Borrowers must confirm that their intended property purchase price falls within the program limits for their specific area.

Down Payment and Borrower Contribution

Borrowers must contribute the lesser of $1,000 or 1 percent from their own funds. This minimum contribution ensures borrower investment in the transaction. The balance of the down payment must come from the K-FIT assistance loan.

Borrowers may also utilize an eligible Community Second or other acceptable assistance programs that meet federal government requirements depending on the loan type. PHFA's Affordable Housing Assistance Program checklist must be submitted in the file for all non-PHFA administered assistance funds.

Liquid Asset Limitations and Financial Requirements

K-FIT borrowers must have liquid assets of no more than $50,000 after deducting the funds needed to close on the loan. Liquid assets include cash and funds in checking and savings accounts, stocks, bonds, certificates of deposit, and similar liquid accounts.

Retirement account funds, such as 401k contributions, IRAs, and pension funds, are only considered if they can be withdrawn without penalty. This typically applies to borrowers who have reached the age requirement or are already retired.

Homebuyer Education Requirements

Homebuyer education is a mandatory component of the K-FIT program. All borrowers with a middle credit score below 680 must complete an in-person homebuyer education class or counseling session before closing. Online courses are not accepted for borrowers with credit scores below 680.

Borrowers with a middle FICO of 680 or higher must complete homebuyer education before closing, but only one borrower on the application needs to complete the requirement. These borrowers may choose from in-person, telephonic, or online courses. Acceptable online courses include those provided by HomeView or PHFA.

A copy of the counseling certificate must be included in the purchase package submitted to PHFA for loan approval.

How Keystone Flex with K-FIT Compares to Other Programs

The Keystone Flex program offers more flexibility than the standard Keystone Home Loan Program. KHL borrowers must be first-time homebuyers and face stricter income and purchase price limits. Keystone Flex has no first-time buyer requirement and higher financing limits.

The K-FIT assistance component sets this program apart from conventional options. The forgivable loan structure means borrowers do not make monthly payments on the down payment assistance. This reduces their debt-to-income ratio compared to programs using subordinate loans with monthly payments.

The combination of flexible credit requirements (660 minimum FICO) and forgivable assistance makes Keystone Flex with K-FIT an attractive option for creditworthy borrowers who lack sufficient liquid assets for traditional down payments.

Property Eligibility for Keystone Flex Loans

The property must be a primary residence for the borrower. Investment properties, rental homes, and second homes do not qualify. The property must meet PHFA's general property standards and specific overlay requirements.

Properties must comply with property standards set by the federal agency providing the insurance or guaranty on the loan. FHA loans follow FHA property standards. VA loans must meet VA property requirements. Conventional loans follow conventional property guidelines.

Appraisals must be conducted by an approved appraiser and submitted through PHFA's appraisal management system. The property cannot have excessive acreage beyond what is reasonable for a residential dwelling.

Qualifying Income and Debt-to-Income Limits

The program uses qualifying income that must not exceed the income limits set for the borrower's area. Qualifying income includes documented wage income, self-employment income, bonus income, and other verifiable sources.

PHFA applies specific debt-to-income ratio requirements that vary by loan type. Borrowers must have sufficient qualifying income relative to their total debt obligations to meet the program's debt-to-income maximum.

The K-FIT forgivable loan structure helps borrowers qualify by not counting as a monthly payment obligation, improving their debt-to-income ratio compared to programs using subordinate loans.

Frequently Asked Questions about Keystone Flex with K-FIT

Can K-FIT funds be combined with other PHFA assistance programs? No. K-FIT may not be combined with any other PHFA assistance programs, with the exception of the Access Modification Loan Program, which serves persons with disabilities.

What happens to K-FIT funds if I sell my home within 10 years? Any unforgiven K-FIT balance would need to be paid off if you refinance or pay off the loan early. The forgivable portion only applies if you maintain ownership for the full 10-year period.

Can K-FIT funds be used to pay VA or RD guarantee fees? No. K-FIT funds may not be used to finance VA or RD guarantee fees or the FHA Upfront Mortgage Insurance Premium, as these items can be financed through the first mortgage.

What credit score do I need for Keystone Flex with K-FIT? You must have a middle FICO score of at least 660 to qualify for Keystone Flex with K-FIT financing.

Is homebuyer education required if I have a higher credit score? Yes, homebuyer education is required for all K-FIT borrowers before closing. Borrowers with a FICO of 680 or higher have more course options, including online and telephonic classes.

Can I use Keystone Flex with K-FIT to refinance my home? The K-Flex refinance option is available, but K-FIT is only available on purchase transactions. Refinance borrowers do not receive K-FIT assistance.

What is the maximum amount of K-FIT assistance available? K-FIT assistance is limited to 5 percent of the lesser of the purchase price or appraised value, with no maximum dollar amount. The minimum loan amount is $500.

Do I need to make a down payment from my own funds? Yes. You must contribute the lesser of $1,000 or 1 percent of the purchase price from your own funds. The K-FIT loan covers the remainder of your down payment requirement.

Getting Started with Keystone Flex with K-FIT

The first step is to find a participating PHFA lender. Not all lenders offer these programs, so confirm that your lender participates before applying. Your lender will guide you through the application process and verify your eligibility.

You will need to provide documentation of your income, employment, assets, and debts. The lender will also order an appraisal of the property you intend to purchase. Homebuyer education should be scheduled early in the process to meet program requirements.

Your lender will submit your application to PHFA for underwriting and approval. Once approved, you will move toward closing on your home purchase. The K-FIT assistance loan will be structured as a second mortgage that is subordinate to your primary Keystone Flex loan.

Why Choose Keystone Flex with K-FIT?

Keystone Flex with K-FIT removes major barriers to homeownership for qualified Pennsylvania buyers. The forgivable down payment assistance means you do not make monthly payments on funds used for your down payment. Over 10 years, 100 percent of the assistance is forgiven simply by maintaining ownership and making your regular mortgage payments.

The program's flexible requirements make it accessible to repeat homebuyers and those with modest credit scores. You do not need to be a first-time buyer, and the 660 minimum FICO is more lenient than many conventional programs.

The combination of low financing rates, down payment assistance, and forgivable loan structure helps Pennsylvania homebuyers afford quality housing. By reducing upfront costs and monthly obligations, Keystone Flex with K-FIT makes the dream of homeownership more achievable throughout the Commonwealth.

Summary

The PHFA Keystone Flex with K-FIT program combines flexible first-mortgage financing with forgivable down payment assistance. Borrowers receive up to 5 percent down payment help that is forgiven at 10 percent annually over 10 years. With minimum FICO requirements of 660 and no first-time buyer limitation, this program serves a wide range of Pennsylvania homebuyers. By working with a participating PHFA lender, you can determine whether Keystone Flex with K-FIT is the right fit for your home purchase goals.