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Keystone Home Loan Program (Page 39)

Unlocking Homeownership: Keystone Home Loan Program

Couple looking at their new home after financing the house with a Keystone Home LoanIf you're a prospective homebuyer in Pennsylvania, the Keystone Home Loan Program (KHL) from the Pennsylvania Housing Finance Agency (PHFA) could be your key to realizing your homeownership dreams. Tailored as a first-time homebuyer assistance initiative for individuals and families with low to moderate incomes, KHL offers a variety of financing options, making affordable homeownership within reach for many Pennsylvanians.

One of the standout features of the Keystone Home Lending Program is its provision for qualified borrowers to secure a loan with as little as a 3% down payment. This is particularly advantageous for first-time homebuyers, who may find accumulating a substantial down payment challenging. Moreover, the program offers a 30-year fixed-rate mortgage with no prepayment fees, enabling borrowers to expedite their loan payoff and save on interest.

To qualify for the Keystone Home Loan Program, borrowers need to meet specific income and purchase price requirements, which vary depending on the county where the property is located. While there's no minimum credit score requirement, borrowers with better credit may access reduced interest rates. Those with credit scores of 660 or above are required to maintain no more than 50% debt-to-income ratios, while those below 660 must adhere to a 45% ratio.

Another substantial benefit is the potential to receive up to $6,000 in down payment and closing cost assistance through a low-interest second mortgage. This financial aid can alleviate the upfront expenses associated with home buying, covering costs like the down payment, closing fees, and pre-paid expenses such as homeowners insurance and property taxes.

To participate in the Keystone Home Loan Program, borrowers must apply through a PHFA-approved lender. This lender will guide them through the application process and assist them in selecting the financing option that aligns with their unique circumstances. The application process typically involves submitting financial information and paperwork, including tax returns, pay stubs, and bank statements.

The Keystone Home Loan Program is an excellent choice for people and families with low to moderate incomes who aspire to purchase their first home. By offering reasonable interest rates, flexible financing options, and down payment and closing cost assistance, this program strives to make homeownership more accessible and affordable for Pennsylvanians.

Eligibility Checklist

  • All borrowers must intend to occupy the property as their primary residence within 60 days of closing.
  • The borrower and all other adults intending to live in the home within 12 months of closing must be first-time homebuyers.
  • Veterans (and their spouses) are exempt from the first-time homebuyer requirement in non-target areas.
  • Income Limit: The gross annual income of all adults intending to occupy the home within one year must not exceed the Keystone Home Loan Program income limit.
  • Purchase Price Limit: The purchase price of the prospective home, including all acquisition costs, cannot exceed the Keystone Home Loan Program limit.
  • Recapture Tax: Borrowers may be subject to federal "recapture" tax if the home is sold within nine years of purchase.
  • Private Mortgage Insurance (PMI): PMI is required if the down payment is less than 20%, and a middle credit score of 660 is needed to obtain PMI insurance.
  • Refinance Loans: Refinances are not available with the Keystone Home Loan Program.

In Conclusion

The Keystone Home Loan Program (KHL) presents a viable lending solution for those looking to buy or refinance a home in Pennsylvania. With minimal closing fees, competitive financing rates, and assistance with down payments, KHL offers flexible terms, no prepayment fees, and a user-friendly online application process. It's an excellent choice for those who may not qualify for conventional financing, making homeownership a feasible reality through KHL.

PHFA Sellers Guide (Page 39)

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