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PHFA: Keystone Government Loan Program

No first-time home buyer requirement. No country-specific income or purchase price limits apply to the Keystone Government Program.

Nice two story houseThe Pennsylvania Housing Finance Agency (PHFA) is a government agency that provides access to various loan programs for homebuyers and homeowners looking for financial assistance. The Keystone Government Loan Program is one such program offered by PHFA. This loan program provides low-interest mortgages without down payment or private mortgage insurance requirements. The Keystone Government Loan Program also offers numerous benefits, including reduced closing costs, flexible terms and conditions, and no origination fees.

Overview of the Keystone Government Loan Program (Page 37)

First, mortgage financing is available for loans that are FHA-insured or have USDA, VA, or Keystone Government Loan Program guarantees. The rules of the specific government agency providing the insurance or guarantee are followed while underwriting loans. Except as stated in this section, PHFA does not enforce any further rules.

Eligibility Requirements

Borrower Eligibility

The policies of the relevant government agency govern borrower eligibility. No country-specific income or purchase price limits apply to the Keystone Government Program. The highest loan amount, however, is $647,200. There is no requirement for first-time homebuyers, as well.

Before closing, borrowers with an average or low credit score of less than 680 must complete a homebuyer education course offered by one of the PHFA-approved counseling organizations.

Non-occupying Co-borrowers

On Keystone Government Loans with FHA insurance, non-occupying co-borrowers are allowed under the following restrictions:

For loans with an Approve or Accept finding, the ratios with the co-borrower who does not live there cannot be higher than 40/45. The percentages of the occupying borrower alone cannot be more than 45/50.
For manually underwritten loans, the occupied borrower's ratios cannot be higher than 31/43.
The non-occupying borrower must sign a declaration acknowledging that they share equal responsibility with the principal borrower for the monthly mortgage payments and that missing a payment deadline would harm both parties' credit histories.

Property Eligibility

Properties must comply with the requirements for the particular loan type. In addition, as outlined in Chapter 8 and Appendix I of this Sellers' Guide, properties must adhere to PHFA requirements (e.g., Wood Destroying Insect Certifications, Well Certifications, etc.). Eligibility includes one or two units that are owner-occupied.
Borrower Eligibility

Borrowers' eligibility is decided by the rules established by the relevant government agencies. No income or purchase price limits are particular to PHFA imposed by the counties. The highest amount that may be borrowed is 647,200 dollars. Additionally, the buyer does not need to be a first-time purchaser.

Borrowers whose credit scores are below 680 must attend a homebuyer education class before the closing of their loan. These classes are taught by one of the counseling organizations that the PHFA has recognized.

Borrowers participating in the Keystone Advantage Assistance Loan program may be eligible for assistance with their down payment and closing costs.

Keystone Advantage Assistance Loan Program

Buyers who fulfill the criteria for a PHFA first mortgage via the Keystone Home Loan or Keystone Government Loan programs, as well as the HFA Preferred mortgage program, and who have a minimum middle FICO score of 660, are eligible for the Advantage assistance loan. (For further information on the initial mortgage scheme, see Chapter 3).

In order to purchase a property using the Advantage, qualified homebuyers may borrow a portion of the money necessary to satisfy their down payment requirement (other than their minimum required contribution) and closing expenses.

The maximum assistance available to qualifying buyers will be determined by the lower of the purchase price or the property's assessed value. The most that may be benefited from help is 4% of the loan amount, or $6,000.

The smallest loan is for $500. The funds must be used to cover the borrower's closing expenses and minimal required down payment (reasonable and customary costs that the buyer typically pays). An individual is qualified for a $6,000 credit if they purchase a brand-new, vacant house.

The Advantage loan has no interest, but the principle is repaid over 10 years. There are no fees associated with early Advantage loan repayment.

Liquid Asset Limitation

After subtracting the amount required to repay the loan, the borrower's liquid assets cannot exceed $50,000. Cash, money in savings and checking accounts, stock and bond investments, CD holdings, and other liquid assets are all examples of this. Retirement assets from 401(k), IRA, and pension plans will only be taken into consideration if the borrower has achieved retirement age and the assets may be withdrawn without incurring penalties.

Homebuyer Education

Before closing, all applicants with middle credit scores below 680 must attend an in-person homebuyer education class or counseling session from one of PHFA's recognized counseling organizations. These debtors will not be permitted to enroll in online courses.
A homebuyer education class or counseling session must still be completed before closing for loans in which all borrowers have a middle credit score of 680 or better; however, only one borrower is required to complete it. Education or counseling must be delivered by one of the PHFA-approved counseling groups.

Eligible Mortgage Programs

FHA Loan Program

The FHA Loan is a government-backed loan program managed by the Federal Housing Administration. The FHA Loan program is available to all borrowers who meet the minimum eligibility requirements, which include having a valid Social Security number, being a U.S. Citizen or permanent resident, and having a steady income.

Borrowers must also have a good credit history and a minimum credit score of 620 to qualify for a PHFA FHA Loan. The FHA Loan program offers many benefits to borrowers, including low down payment options, flexible credit requirements, and competitive interest rates.

Borrowers who take out an FHA Loan can also enjoy the peace of mind of knowing the government backs their loan. If you think an FHA Loan might be right for you, contact your local PHFA-approved lender today to get started.

USDA loan

The Rural Development loan, commonly referred to as the USDA loan, is a mortgage loan program designed for prospective home buyers who may be unable to secure financing from other sources. The program is administered by the Pennsylvania Housing Finance Agency (PHFA). With this program, eligible individuals can obtain low-interest loans and additional access assistance that can help them purchase their first home.

 Through the USDA loan program, applicants can access various features and benefits that make buying a home more affordable. These include favorable interest rates, down payment options, and flexible credit requirements. Additionally, multiple types of mortgages are available through PHFA's Keystone Government Loan Program so buyers can find the best option.

The USDA loan has enabled many Pennsylvanians to become homeowners who otherwise might not have been able to without such assistance.

VA Loan Program

Military personnel, veterans, and qualifying surviving spouses may apply for VA loans. Benefits include no down payment and no private mortgage insurance (PMI). The program's lenient credit standards let veterans buy homes.

The Pennsylvania Housing Finance Agency (PHFA) provides the Keystone Home Loan Program, a VA Loan variant. This program provides low-interest loans to veterans, and it helps with closing fees and down payments.

The PHFA Keystone Home Loan Program goes beyond affordable veteran housing, and the initiative provides personalized homebuying assistance to veterans. Approved military family counselors may help veterans.

Quick Recap

1 - 2 units
620 minimum credit score allowed
FHA or USDA guidelines
Seller assistance up to 6%
Eligible for Keystone Advantage Assistance
Maximum loan limit of $647,200


In conclusion, the PHFA Keystone Government Loan Program is an excellent opportunity for individuals and families looking to purchase a new home. With its low-interest rates, down payment assistance, and flexible eligibility requirements, the program provides potential homeowners with an accessible option for achieving their dreams of owning a home. Moreover, the program's mission to create affordable housing in Pennsylvania is commendable and should be supported.

PHFA Sellers Guide

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