Pennsylvania first-time home buyer programs: who qualifies

The main Pennsylvania first time home buyer program is run by the Pennsylvania Housing Finance Agency (PHFA), the state's housing finance agency, but you don't apply to PHFA. Start with a free counselor from one of its approved agencies, then a participating lender. The lender makes your loan and can add down payment help, usually a second loan that is forgiven over ten years or repaid when you sell, refinance or pay off your mortgage.

How do PHFA loans work?

PHFA says it doesn't take mortgage applications itself. A lender in its network makes your mortgage, the loan you take to buy the home. PHFA buys the loan right after closing, the day you sign the final papers and the home becomes yours, and you make your monthly payments to PHFA.

PHFA has four main loans. They can be conventional loans, which no government agency backs. Or they can be loans backed by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA) or USDA Rural Development, part of the U.S. Department of Agriculture.

For PHFA, a first-time buyer is someone who hasn't owned the home they lived in during the past three years, and the rule covers every adult who will live in the new home. PHFA says USDA loans aren't available in Philadelphia, Delaware County or other major cities.

What down payment help does PHFA offer?

Except for a $500 grant, PHFA's down payment help is a second loan: a smaller loan on top of your mortgage. Some amounts depend on the appraised value, what an appraiser says the home is worth.

Forgiven means you no longer owe that part. To refinance means to replace your mortgage with a new one. PHFA's rules for Keystone Advantage, K-FIT and K-DATE:

• Every buyer needs a credit score of at least 660.
• The money can pay only your minimum down payment and closing costs.
• You can use only one of them, though the $500 grant can be added to Keystone Advantage.
• After closing, you can't have more than $50,000 in cash, bank accounts, stocks and similar savings. Retirement accounts count only if you could take the money out without a penalty.

How does K-FIT forgiveness work?

PHFA forgives 10% of a K-FIT loan each year for ten years. Say you buy a $250,000 home that appraises at $250,000, with a Keystone Home mortgage, and your down payment and closing costs are at least $12,500. K-FIT can give you 5%, or $12,500. Each year, $1,250 is forgiven, so after four years $5,000 has been forgiven and you still owe $7,500. On the same home, a K-DATE loan of 5% is also $12,500. None of it is forgiven: you repay all of it when you sell, refinance or pay off your mortgage.

Before you choose, ask your lender: "If I sell or refinance before ten years, do I repay the part of my K-FIT loan that hasn't been forgiven yet?"

What are the income and price limits?

For the Keystone Home loan, PHFA's limits count the income of every adult who will live in the home. They apply to loans reserved on or after July 1, 2026. An income limit is the most your household can earn and still get the loan.

A targeted area is a part of the state where federal tax rules give buyers easier terms on PHFA's loans. It is a census tract, a small area the Census Bureau maps, where at least 70% of families earn 80% or less of the state's median family income. It can also be an area of long-term economic distress that the state names and the federal government approves.

PHFA treats some whole counties as targeted, marked in the table below, and some neighborhoods in other counties. In a targeted county or neighborhood, the limits are higher and you don't have to be a first-time buyer. Targeted neighborhoods in other counties are listed by census tract at the end of PHFA's limits sheet; ask your lender to check the home's address.

HFA Preferred uses one income limit per county, whatever your household size. For loans locked on or after June 13, 2026, it is $98,160 in Philadelphia and the four counties around it, $87,120 in Allegheny and $87,360 in Lancaster.

Do you need a homebuyer class?

Often, yes. PHFA requires anyone with a credit score below 680 to take a course in person before closing. HFA Preferred also requires a class for at least one buyer; if everyone's score is 680 or more, it can be online. Keystone Flex requires a class for every buyer.

The counseling is free through PHFA's approved agencies, and PHFA urges you to see a counselor before you sign a sales agreement. With HFA Preferred, finishing in-person counseling before you sign the agreement of sale, the contract to buy the home, can also earn you a $300 credit toward closing costs. Find a counselor with the counselor search of the U.S. Department of Housing and Urban Development (HUD), the federal housing department.

What other help is there in Pennsylvania?

• Philadelphia. The city's Philly First Home grant gives first-time buyers up to $10,000 or 6% of the price, whichever is lower, for a house or duplex in the city. You must finish free one-on-one counseling with a city-funded agency before you sign an agreement of sale, and your income must be under its limit.
• Community land trusts. A community land trust sells homes below market price and keeps the land under them, so the home stays affordable for the next buyer. City of Bridges in Pittsburgh and the State College Community Land Trust sell homes to households under set incomes.

How do you apply, step by step?

1. Meet a PHFA-approved counselor before you sign a sales agreement, and take the class you need.
2. Contact a participating lender and ask which loan and which down payment help fit your county, income, credit score and savings.
3. Check your county's limits and whether the home is in a targeted area.
4. Keep records of your savings, because the assistance loans limit what you can have left after closing.
5. Get every term in writing before you sign: the amount, how it is repaid or forgiven, and the interest rate.

Never pay anyone who calls you about a "government grant" for a home. The Federal Trade Commission says the government doesn't contact you out of the blue about grants or ask for a fee. Apply for a PHFA loan only through a lender on PHFA's participating lender list.

What should you do next?

Use our qualify check to see which open homes for sale fit your household's income, and see open listings on our Pennsylvania page and in our open listings. Our guides to FHA loan requirements and first-time buyer grants explain the federal loan and the grants you may hear about.