8 Steps to Buying a House in Pennsylvania

Jamie Ayers

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Jamie Ayers

September 16th, 2022
Updated September 16th, 2022

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8 Steps to Buying a House in Pennsylvania

Save for down payment | Find a real estate agent | Get preapproved for a mortgage | Choose your neighborhood | Go house hunting | Make an offer | Inspections and appraisal | Final walkthrough and closing

Buying a house in Pennsylvania is an exciting milestone, but the process can take some time. Several factors, like your financial situation, market conditions, and the local economy can affect both how long it takes you to find a home and how much it costs you.

For example, homes in Allentown are hitting the market at $359,900 and selling within 36 days — 24 days faster than the state average! — so you'll need to move quickly if you want to beat out the competition.

The more you know about the home buying process and Pennsylvania's current real estate trends, the more prepared you'll be to navigate this complicated process as quickly and smoothly as possible.

No matter where you are in your home buying journey, Clever can connect you with local real estate pros who will help you purchase your Pennsylvania dream home!

The best part? When you buy with a Clever real estate agent, you could earn a cash-back refund worth up to 0.5% of the home price. On a qualifying $300,000 purchase, you'd get $1,500. That's real money back in your pocket!

» START: Buy with a top local agent, save thousands with Clever Cash Back

Step 1: Save for a down payment

🔑 Key takeaway:

Your down payment can be less than 20% of the purchase price — $53,519 for the typical home in Pennsylvania — but you'll have to purchase mortgage insurance and pay more interest over the life of your loan.

Your down payment is the first part of your home's purchase price that you pay at closing. Your mortgage lender will pay the remaining balance.

Typically, mortgage lenders in Pennsylvania want you to contribute 20% of the purchase price as a down payment. That would be $53,519 for a $267,594 home — the typical home value in Pennsylvania.

However, you have options to lower your down payment amount.

Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).

Mortgage type
Minimum down payment (%)
Down payment ($)
VA Loan
0%
$0
FHA Loan
3.5%
$9,366
Conventional
3%
$8,028
Based on typical home values from Zillow (August 2022)

But making a down payment of less than 20% comes with some risks.

First, because you're borrowing more money, you'll have a higher monthly payment and pay more in interest over the life of your loan.

Down payment
Monthly payment
Total interest
Total Cost
5%
$1,448
$267,134
$534,728
20%
$1,220
$224,955
$492,549
Based on home values from Zillow (August 2022) and a 5.53% interest rate for a 30-year loan.

Second, you may have to purchase mortgage insurance.

Conventional loans require private mortgage insurance (PMI) until your loan balance reaches 80% of the purchase price. FHA loans, on the other hand, require a mortgage insurance premium (MIP) for the life of your loans.

Mortgage insurance costs around 1% of your mortgage balance annually. However, rates vary based on your down payment and credit score. Typically, your mortgage insurance payment is added to your mortgage payment each month.

VA loans don't charge mortgage insurance. Instead, you'll pay a VA loan funding fee at closing, which can range from 1.4% to 3.6% of the purchase price.

» READ MORE: Everything you need to know about low-income home loans

Pennsylvania down payment assistance programs

There are numerous down payment assistance (DPA) programs available to first-time and low-income homebuyers in the state of Pennsylvania. If you're eligible, you could receive a grant or a second mortgage that can cover your down payment or closing costs.

Check out these resources and find out which programs you qualify for:

PHFA Keystone Advantage Assistance Loan Program

The Pennsylvania Housing Finance Agency (PHFA) offers up to 4% of the purchase price or up to $6,000 to eligible borrowers through the Keystone Advantage Assistance Loan Program. The financial aid comes as a 10-year, 0% interest second mortgage.

To qualify for this option, the buyer must have a credit score of 660 or above, and their liquid assets cannot exceed $50,000.

PHFA K-FIT Program

The Keystone Forgivable in Ten Years (K-FIT) program offers participants a 10-year second mortgage of up to 5% of the purchase price. The loan is forgiven at a rate of 10% per year.

Eligible borrowers must have a credit score of at least 660, and their liquid assets may not exceed $50,000.

PHFA HOMEstead Program

PHFA's HOMEstead Program can provide homebuyers with up to $10,000 as a 0% interest second mortgage loan. The loan is forgiven by 20% every year for five years as long as the buyer doesn't sell, transfer, or refinance the home.

Household income and purchase limits vary depending on the county the property is located in.

U.S. Department of Housing and Urban Development

Alternative DPA programs in Pennsylvania can be found on the state's HUD page here.

Step 2: Find a great real estate agent in Pennsylvania

🔑 Key takeaway:

Interview multiple agents to find one who knows your target neighborhoods, has experience in your price range, and communicates well.

Your real estate agent will be your main ally during the home buying process. Besides finding and showing you properties, your agent will help you make offers, negotiate contracts, and navigate the closing process. Plus, they can recommend other service providers like title companies and inspectors to help you buy your home in Pennsylvania.

Don't rush into choosing an agent. Instead, take the time to research and interview multiple real estate agents who have experience in the neighborhoods you're interested in. You should pay attention to a realtor's:

  • Years of experience
  • Number of transactions in the last year (the more the better!)
  • Experience in your price range
  • Overall review score
  • Individual reviews and complaints

Top Local Agents Hand-Picked for You!

Clever matches you with multiple agents in your area so you can interview, compare, and choose the best one to help you buy your next home.

Step 3: Get preapproved for a mortgage

🔑 Key takeaway:

Once you're preapproved for a mortgage, it's imperative that your financial situation doesn't change. If your credit drops, it can derail the process and keep you from closing on your house.

Here are some easy ways to ensure your credit doesn't change after you receive your preapproval letter:

  • Avoid opening new credit accounts
  • Don't close any accounts that have been open for a long time
  • Make all of your credit card payments on time

» LEARN MORE: What factors do mortgage lenders consider?

A mortgage preapproval letter is an offer to lend you up to a certain amount of money to purchase a home. It shows sellers that you are a serious buyer who is financially qualified to make an offer on a home.

Most sellers in Pennsylvania will require preapproval before showing you their home.

You don't have to decide on one lender right now. In fact, you should compare interest rates and preapproval amounts from several lenders to make sure you're getting the absolute best terms when you buy your Pennsylvania home.

Get Pre-approved Today!

Get matched with a lender who can tell you how much house you can afford. To get started, where do you plan on buying?

Step 4: Choose the right location

🔑 Key takeaway:

Search for neighborhoods where:

  • Home prices are within your price range
  • Home values are on the rise
  • The local amenities support your lifestyle

Currently, the typical home value in Pennsylvania is $267,594, but don't worry if that doesn't perfectly match your budget. Home prices vary dramatically from city to city and even from neighborhood to neighborhood!

Also, look at past home value trends. This will give you an idea of how much your home's value could go up over the next few years.

To give you an idea of how appreciation could impact what your house is worth in the future, consider these examples from three neighborhoods in Philadelphia:

Home value appreciation in Philadelphia

Neighborhood
2015
Current
Appreciation
Oxford Circle
$127,302
$234,585
45.7%
Olney
$83,910
$169,271
50.4%
Mayfair
$122,949
$252,906
51.4%

Step 5: Start house hunting in Pennsylvania

🔑 Key takeaway:

While there is no shortage of listings in Pennsylvania, options on the market may be slim depending on your area. If you’re bent on buying, you may need to review your priorities and keep an open mind, but you shouldn't have issues finding a home in your price range. Your realtor can help you find great listings — and while what they show may not check all of your boxes in one go, they'll likely find you a deal that’s worth your time and money.

Searching for homes in Pennsylvania is the fun part of the home buying process! You'll get to look at a variety of homes and discover what you really want in a home.

Make a list of everything you want in a home and prioritize them. At the top of the list should be the items that are most important to you. This will help you separate your "must-haves" from your "nice-to-haves."

Your agent can help you understand if your wants are realistic for your budget and favorite neighborhoods or if you need to rethink what you're looking for.

Look at current housing inventory

The timing of your house hunt in Pennsylvania can have a big impact on your number of options. For example, in Pennsylvania, June has historically seen the most homes for sale. Searching in this season could give you more options and a greater likelihood of finding your dream home.

On the other hand, December gives you the fewest choices in Pennsylvania. Historically, there are 53.2% fewer homes for sale than during Pennsylvania's peak season.

Housing inventory in Pennsylvania by season

Season
New listings per month
Spring
15,773
Summer
16,591
Fall
14,029
Winter
10,338
Based on data from Realtor.com (August 2022)

Step 6: Make an offer

🔑 Key takeaway:

Market trends in Pennsylvania vary throughout the state, and some towns in desirable areas may have more active markets than those in more suburban or rural settings. Have your agent help you out with writing your offer, as their experience will help you decide how strong to go. Set your expectations properly with them, however, so that you don’t pitch a number that will push your budget.

Once you find a Pennsylvania house you love, it's time to make an offer. Your real estate agent will help you write a compelling offer that gives you the best shot of convincing the homeowner to sell to you.

Currently, in Pennsylvania, homes stay on the market for 75 days before going under contract. However, every market goes through seasonal changes. During busier months, homes get snatched up more quickly than others.

Historically, Pennsylvania homes sell fastest in July, where the average property is only on the market for 59 days. If your home search falls around this time, you should be prepared to move quickly and potentially make offers on several homes before yours is accepted.

On the other hand, if you buy in February, you have a bit more time to search. Homes typically stay on the market 24 days longer than Pennsylvania's annual average.

Average time homes spend on market in Pennsylvania

Annual average
75 days
January
95 days
February
94 days
March
75 days
April
63 days
May
60 days
June
58 days
July
59 days
August
63 days
September
69 days
October
71 days
November
75 days
December
85 days
Based on data from Realtor.com (August 2022)

» LEARN MORE: What should an offer include?

👋 Next Steps: Talk to an expert!

If you're weighing your options for buying or selling a house, Clever can help!

Our fully-licensed concierge team is standing by to answer questions and provide free, objective advice on getting the best outcome with your sale or purchase.

Ready to get started?

Give us a call at 1-833-2-CLEVER or enter your info below. Our concierge team will be in touch shortly to help.

Remember, this service is 100% free and there’s never any obligation.

Step 7: Inspections and appraisals

Inspections and appraisals are an opportunity for you to better evaluate the home's condition and value before officially purchasing it. You may have an opportunity after this step to renegotiate the terms of your contract with the seller if something unexpected pops up.

🔑 Key takeaway:

  • Inspections: A licensed professional checks the house for any unseen, unexpected, or potential issues.
  • Appraisals: An appraiser hired by your lender examines the house to determine how much it's worth.

Home inspections in Pennsylvania

Having your Pennsylvania home inspected by a licensed inspector gives you peace of mind about the condition of the property before you commit thousands of dollars to purchase it.

Your inspector should check out the following parts of the property:

  • Roof
  • Foundation
  • Electrical system
  • HVAC system
  • Plumbing

If the home has a septic system, you should also pay for a septic inspection to make sure it doesn't have any problems that wouldn't be covered in a typical home inspection.

Pennsylvania-specific inspections

Disclosure laws in Pennsylvania aren't as strict as other states, so it’s best for homebuyers to conduct additional tests to supplement the general home inspection.

To ensure that a property is safe, it's highly recommended to have these tests done before closing:

  • Radon testing: Pennsylvania is prone to high levels of radon, which can cause long-lasting health problems. If the seller hasn't done a radon test within the past year, think about ordering a free radon test kit from the Pennsylvania Department of Environmental Protection here.
  • Termite inspection: Termites and other pests can invade a home and cause structural damage long before a seller notices their presence. Although not all lenders require borrowers to complete a pest inspection, all buyers should consider this test to prevent and treat any infestations as soon as possible.

Appraisals

Appraisals determine the value of the property. If you're using a mortgage to buy your new home, your lender will order an appraisal to make sure the home is worth the money that it's loaning you.

» LEARN: 3 options for buyers after a low appraisal

Step 8: Close on your new home!

🔑 Key takeaway:

Before you close on your new home, you and your agent will do a final walkthrough of the property to ensure that it's still in the expected condition.

On closing day, you'll meet at the title company to complete the purchase of your Pennsylvania home. Prepare to spend a few hours going through the necessary paperwork and settling your closing costs.

You'll be asked to review and sign several important legal documents to finalize the title transfer, including:

  • Your final loan application
  • The deed
  • The mortgage promissory note
  • The disclosure statements

Take your time to make sure all the information is correct. If any of the documentation is filled out improperly, it could cause issues with the transfer or your loan. Consult with your escrow agent if you have any questions or concerns.

Once you’ve finished the paperwork, you'll have to pay your closing costs. You can pay the total sum to your title company, and then they'll take care of distributing the funds to the right recipients.

Homebuyers can generally sort their closing costs into the four following categories:

  • Lender fees: Fees paid to your lender for originating and underwriting your loan. Lender fees may also cover additional costs related to your mortgage, such as appraisal and survey fees.
  • Title and escrow charges: Fees paid to the title company for facilitating the closing process and conducting the title searches. Buyers and sellers often split this cost.
  • Prepaid costs: Recurring costs of homeownership that are paid in advance. Lenders frequently require new homeowners to pay some fees up front, such as property taxes and homeowners insurance.
  • Other closing costs: Miscellaneous expenses that differ for every buyer. Common costs may include natural disaster certification fees, pest inspection fees, or real estate attorney fees.

Buyers in Pennsylvania typically pay 3–5% of the purchase price in closing costs. For a $267,600 home — the typical home value in Pennsylvania — that's between $8,028 and $13,380!

» LEARN MORE: Closing costs for buyers in Pennsylvania

Should you hire a real estate attorney?

Pennsylvania does not require you to hire a real estate attorney to buy a home. However, depending on your circumstances, you might consider hiring one anyways. If you do, treat the process similarly to hiring an agent. Interview multiple attorneys and proceed with the one that best meets your needs.

Frequently asked questions

  1. Save for down payment
  2. Get pre-approved for a mortgage
  3. Choose your preferred Pennsylvania neighborhoods
  4. Partner with the right real estate agent in Pennsylvania
  5. Go house hunting
  6. Make a strong offer
  7. Inspections and appraisals
  8. Do a final walkthrough and close

Yes, the Pennsylvania Housing Finance Agency offers its Keystone Home Loan to first-time buyers, veterans, and buyers in target areas. The loan can be offered as a conventional mortgage, FHA loan, VA loan, or RD loan.

Down payment requirements vary based on which loan you select. Household income and purchase price limits apply and vary by county.

» READ: What are the top first-time homebuyer programs?

Related links

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