Pennsylvania Housing Finance Agency (PHFA)

The Pennsylvania Housing Finance Agency (PHFA) is your state's solution for affordable homeownership. PHFA loans give you access to 30-year fixed-rate mortgages combined with down payment and closing cost assistance programs that can lower your upfront costs significantly. Whether saving for a down payment is your biggest challenge or you need help with repairs, PHFA has programs designed for your situation.

What Is the Pennsylvania Housing Finance Agency?

PHFA is a state-affiliated agency established in 1972 to provide affordable housing options and financing solutions for Pennsylvania residents. The agency focuses on helping low- and moderate-income families, seniors, and individuals with special needs achieve homeownership and stable housing. PHFA offers mortgage loans, homebuyer education classes, and financial assistance for down payments and closing costs. The agency also funds and preserves affordable rental housing across the state through tax credit programs and other initiatives.

Why Choose PHFA Loans?

PHFA loans stand out because they pair competitive mortgage rates with robust assistance programs. You get several key advantages that traditional mortgages do not offer:

Lower private mortgage insurance (PMI) rates for down payments below 20%
Second mortgage programs that provide down payment and closing cost assistance
Programs for borrowers who are not first-time buyers
Flexible options tailored to your financial situation and goals
Free homebuyer education resources to guide you through the process

PHFA First Mortgage Loan Programs

PHFA offers several first mortgage options. You can choose the program that best matches your financial situation and down payment capacity.

Program Name	Best For	Key Advantage
HFA Preferred (Lo MI)	Buyers with a small down payment	Lower-cost mortgage insurance, can pair with a $500 grant that needs no repayment
Keystone Home Loan	First-time buyers or veterans in target areas	Standard affordable loan with income and purchase price limits specific to your county
Keystone Government Loan (K-Gov)	Buyers using FHA, VA, or USDA loans	PHFA financing for government-backed loans with no first-time buyer requirement
Keystone Flex with K-FIT	Buyers needing flexibility and home repairs	Combines first mortgage with down payment help and rehabilitation funds

Each program offers fixed-rate mortgages over 30 years, giving you predictable monthly payments and long-term financial stability.

Down Payment and Closing Cost Assistance Programs

The real advantage of PHFA loans is access to second mortgage programs that help with your upfront costs. These assistance programs can be combined with any of the first mortgage options above.

Program Name	Maximum Amount	Interest Rate	Repayment Terms	Key Benefit
Keystone Advantage Assistance Loan	$6,000 or 4% of purchase price	0%	10 years; no monthly payments if you stay	Bridges gap between savings and down payment
K-FIT (Keystone Forgivable in Ten Years)	Up to 5% of purchase price; no maximum	0%	Forgives 10% annually; fully forgiven after 10 years	Loan forgiveness for long-term homeowners
HOMEstead Program	Up to $10,000	0%	Completely forgiven after 5 years	Fastest forgiveness (limited availability)
HFA Preferred Grant	$500	N/A	No repayment required	Free money with no strings
PENNVEST Septic and Sewer Program	Up to $25,000	1.75%	Separate from primary mortgage	Low-rate financing for septic/sewer work
ACCESS Program for Persons with Disabilities	$15,000 down payment + $10,000 modifications	Varies	Depends on assistance type	Accessibility modifications and down payment help
PHARE Program for Lower-Income Buyers	Varies by location	N/A	No repayment required	Grants for households at or below 50% AMI

Keystone Advantage Assistance Loan

This program provides up to $6,000 or 4% of your purchase price (whichever is less) with 0% interest. You repay the loan over 10 years with no monthly payments required if you keep the home. The minimum credit score needed is 660. This loan bridges the financial gap between what you have saved and what you need for down payment and closing costs.

K-FIT (Keystone Forgivable in Ten Years)

K-FIT offers up to 5% of your home's purchase price with no maximum dollar limit. The key benefit is loan forgiveness. The loan forgives 10% per year, and the entire balance disappears after 10 years if you stay in the home. If you sell or refinance within 10 years, you must repay the remaining balance. This program is excellent if you plan to keep your home long-term.

HOMEstead Program

This program provides up to $10,000 as a 0% interest loan that is completely forgiven after 5 years of homeownership. Funds are limited, so availability varies by location. Act quickly if you qualify, as this program fills up fast.

PHFA Grant

HFA Preferred borrowers can receive a simple $500 grant. This is free money with no repayment obligation. You do not have to pay it back under any circumstances.

Specialized Assistance Programs for Specific Situations

PHFA recognizes that homebuyers have unique needs. Several programs target specific circumstances and provide tailored support.

PENNVEST Septic and Sewer Program

If your new home needs septic or sewer work, you can get a separate loan up to $25,000 at an incredibly low interest rate of 1.75%. This program helps you address critical home systems without depleting your cash reserves. The loan is structured separately from your primary mortgage, so it does not impact your debt-to-income ratio as heavily.

ACCESS Program for Persons with Disabilities

Buyers with disabilities or living with someone who has a disability can access specialized assistance. The program provides up to $15,000 in down payment help and up to $10,000 for home modifications. Eligible modifications include ramps, widened doorways, accessible bathrooms, and other changes that improve accessibility and independence.

PHARE Program for Lower-Income Buyers

If your household income is at or below 50% of the area median income, you may qualify for grants through PHARE, administered by local partners such as the Urban League. These grants do not require repayment and can significantly reduce your out-of-pocket costs.

General Qualification Requirements for PHFA Programs

Credit Score: Generally 660 or higher for most assistance programs. Some programs may allow lower scores with compensating factors.
Homebuyer Education: Required if your credit score is below 680. Recommended for all borrowers to ensure you understand mortgages and homeownership responsibilities.
Income and Purchase Price Limits: Vary by county and program. Keystone Home Loan has both limits. HFA Preferred has income limits only, making it more flexible for higher-priced homes in your area.
Down Payment Requirement: You must contribute at least $1,000 of your own funds from savings, gifts, or grants. This shows lenders you have financial commitment to the purchase.
Debt-to-Income Ratio: Most programs require your total monthly debt payments to stay below 43% to 50% of gross monthly income, depending on the program.

Income and purchase price limits are specific to your county and household size. These limits change annually and vary widely across Pennsylvania. Contact a PHFA-participating lender to confirm the limits for your area.

How to Apply for a PHFA Loan

Find a PHFA-participating lender in your area. PHFA maintains a list of approved lenders on its website.
Complete the mortgage application with your lender. Provide income documentation, bank statements, and other required financial information.
Get preapproved and receive a preapproval letter stating the loan amount you qualify for.
Find a home within the program limits for your county.
Finalize the mortgage and any assistance programs you qualify for.
Close on your home. After closing, you will pay PHFA directly for the loan, not the lender.

If your credit score is below 680, you will be required to complete homebuyer education before closing. Even if not required, taking a homebuyer education class is highly recommended. These classes teach you about mortgage responsibilities, budgeting, home maintenance, and building long-term financial stability.

Understanding Loan Terms and Forgiveness Conditions

K-FIT Program: If you sell or refinance within 10 years, you must repay the remaining loan balance. For example, if you take a $20,000 K-FIT loan and sell after 5 years, you would owe $10,000 (the 50% that has not yet been forgiven). Plan ahead if you think you may move or refinance before 10 years.

HOMEstead Program: Similarly, if you sell or refinance within 5 years, you must repay the remaining balance. After 5 years, the loan is completely forgiven and you owe nothing.

Keystone Advantage Assistance Loan: This is a true loan that must be repaid over 10 years. There are no monthly payments if you keep the home, but the loan remains on title. If you sell, you repay the remaining balance from proceeds.

Frequently Asked Questions About PHFA Loans

Do I have to be a first-time homebuyer to qualify for PHFA programs?

No. While some programs like Keystone Home Loan are designed for first-time buyers, HFA Preferred and Keystone Government Loan have no first-time buyer requirement. You can use PHFA programs even if you owned a home previously, as long as you meet other eligibility criteria.

Can I combine multiple PHFA assistance programs?

Yes. You can pair a first mortgage (like HFA Preferred) with one or more assistance programs (like K-FIT or Keystone Advantage). Many borrowers layer programs to maximize their down payment help and minimize upfront costs. Your lender can explain which combinations work for your situation.

What happens if I need to sell my home before the loan is forgiven?

If you have a forgivable loan program (K-FIT or HOMEstead) and sell before the full forgiveness period, you must repay the remaining balance from your home sale proceeds. Plan accordingly if you think you might move within 5 to 10 years.

How do I know the income and purchase price limits for my county?

Limits are specific to each Pennsylvania county and change annually. Your PHFA-participating lender has access to current limits and can tell you exactly what applies to your county and household size. You can also contact PHFA directly or visit the agency website for published limits.

Is homebuyer education required?

Homebuyer education is required if your credit score is below 680. If your score is 680 or higher, education is not required but is strongly recommended. PHFA partners with HUD-approved counselors and nonprofit organizations to provide affordable or free homebuyer education classes.

Your Next Steps to Homeownership

PHFA loans remove major barriers to homeownership by offering competitive rates paired with real assistance for down payments and closing costs. The programs are designed for borrowers at different financial stages, from first-time buyers to repeat homebuyers with special circumstances.

Start by connecting with a PHFA-participating lender in your area. Let them know your income, credit score, and the county where you want to buy. They will look up your specific limits, explain which programs you qualify for, and guide you through the next steps. Pennsylvania's affordable housing programs exist to help you build equity and achieve stable homeownership. Take advantage of them.

Five Key Takeaways About PHFA Loans

PHFA offers first mortgage loans with lower mortgage insurance costs and flexible down payment options starting at 3% for HFA Preferred borrowers.
Down payment assistance programs like K-FIT, HOMEstead, and Keystone Advantage can provide thousands in help with minimal or zero interest.
Specialized programs support home repairs (PENNVEST), disabled borrowers (ACCESS), and lower-income households (PHARE).
You do not have to be a first-time homebuyer to qualify, and many programs allow you to combine assistance for maximum benefit.
Contact a PHFA-participating lender to learn your county's specific income and purchase price limits and start the application process.