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PHFA: Keystone Forgivable in Ten Years Loan Program (K-fit)

Money floating in a blue skyPennsylvania Housing Finance Agency (PHFA) has launched a new home purchase assistance loan program today. The Keystone Forgivable in Ten Years Loan Program (K-FIT) is a closing cost assistance loan that provides a second mortgage loan to help eligible homebuyers cover their down payment requirement and closing costs associated with purchasing a home.

The loan is worth up to 4% of the purchase price or market value with no maximum dollar value. The loan may be combined with any other PHFA payment assistance program, making homeownership a reality for more Pennsylvanians. Furthermore, the K-FIT loan is forgiven after ten years of residing in the home. This loan program is an excellent opportunity for low-to-moderate-income families needing help getting a foothold in the housing market.

Loan Terms

The K-FIT loan program has some specific loan terms. The maximum amount of assistance available to eligible homebuyers is determined by the lesser of the purchase price or appraised value. K-FIT assistance cannot exceed five percent (5%) of the lesser of the two. The minimum loan amount is $500, and funds must be used to help cover the borrower's minimum down payment requirement and reasonable and customary closing costs typically paid by the buyer.

The K-FIT loan is a forgivable second loan forgiven annually over ten years at a rate of ten percent (10%) per year, provided borrowers utilize maximum PHFA financing.

Any K-FIT funds exceeding the borrower's down payment requirement must be used to cover closing costs. K-FIT funds cannot be used to finance down money more than the applicable minimum required depending on the loan type, VA or RD guaranty fees, or the FHA Upfront Mortgage Insurance Premium since the first mortgage may finance these items. PHFA guidelines and all applicable FHA, VA, or RD guidelines apply, including loan-to-value and down payment requirements.

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

Liquid Asset Limitation 

To be eligible for the K-FIT program, buyers must meet the requirements of the applicable PHFA first mortgage program and the following criteria. The borrower's liquid assets cannot exceed $50,000 after deducting the funds needed to close the loan, including cash and funds in checking and savings accounts, stocks, bonds, certificates of deposit, and similar liquid accounts.

Funds from retirement accounts, such as 401(k)s, IRAs, and pension funds, will only be considered if they can be withdrawn without a penalty due to the borrower meeting the age requirement and being retired.

Homebuyer Education 

Second, all borrowers with middle credit scores below 680 must complete an in-person homebuyer education class or counseling session provided by one of PHFA's approved counseling organizations before closing. Online courses will not be accepted for these borrowers. For loans where all borrowers have a middle credit score of 680 or higher, a homebuyer education class or counseling session must still be completed before closing.

However, it needs to be completed by only one borrower. One of PHFA's approved counseling organizations must provide the education or counseling session, and telephonic and online courses are acceptable for borrowers with a FICO score of 680 or higher. A copy of the counseling certificate(s) must be included in the purchase package to PHFA.

Quick Recap

  1. All borrowers must have a middle credit score of 660 or greater.
  2. No interest on the 2nd loan
  3. The minimum loan amount is $500.
  4. The loan amount is 5% of the sales price or appraised value, whichever is less.
  5. Asset limits


In conclusion, the Keystone Forgivable in Ten Years Loan Program (K-FIT) is an excellent financial assistance option for eligible first-time homebuyers who are looking for a home loan to purchase their first home. The K-FIT program is designed to provide payment and closing cost assistance associated with the Keystone Forgivable Assistance Loan. The loan's repayment period is amortized over a ten-year period, making it highly manageable for homeowners.

The K-FIT program may be an excellent opportunity for first-time homebuyers struggling with closing costs, down payments, or other associated expenses. With this loan program, eligible homebuyers can receive financial assistance through a forgivable loan that they can use for home purchases. This can significantly relieve those struggling to get their foot in the homeownership door.

It's important to note that the assistance loan will be amortized over ten years. This means that homeowners will have ten years to repay their loans in a manageable and affordable manner. This feature of the loan program is highly beneficial for first-time homebuyers who may not have the financial stability to repay a loan in a shorter period.

In summary, the Keystone Forgivable in Ten Years Loan Program (K-FIT) is an ideal option for first-time homebuyers seeking financial assistance with their home purchase. With this loan program, eligible homebuyers can easily manage their associated expenses, repay the loan over ten years, and achieve their dream of homeownership. To learn more about the K-FIT program, visit the PHFA website or speak with one of the PHFA-approved counselors at no cost. Don't miss out on this great opportunity!

PHFA Sellers Guide (page 61)

Recommended Reading
PHFA: Keystone Flex Loan Program
PHFA: Keystone Home Loan Program
PHFA: Keystone Advantage Assistance Loan Program
PHFA: Keystone Government Loan Program