Now that the housing market is finally calming down after the pandemic, buyers are facing a new challenge: Soaring mortgage rates.
In Pennsylvania, the average 30-year fixed mortgage rate is 5.53% — up from 2021's historic lows. This raises the average monthly mortgage payment to $1,226 (assuming a 20% down payment at the median home value).
But buying a home in Pennsylvania is still possible, even for first-time home buyers. Many markets are seeing frequent price drops and fewer offers, giving motivated buyers the upper hand in negotiating for the best price.
In this guide, you’ll learn how to buy a house in Pennsylvania with confidence no matter what the market brings. Learn why you can trust our advice.
Whether you're actively house hunting or just starting to browse homes on Zillow, it's never too early to find a great local realtor to guide you on your search. An experienced agent can help you navigate a tricky housing market, explore your financial options, and negotiate the best deal possible.
Best of all, hiring a real estate agent comes at no extra cost to you — since the seller typically pays both their listing agent and your buyer's agent.
Ready to find a great local realtor, but not sure where to start? The best (and easiest!) option is to try a free agent matching service like Clever Real Estate. Answer a few simple questions about your home buying goals, and Clever will match you with hand-picked agents from Keller Williams, RE/MAX, and other top brokerages in your area. Find a top local agent and make your home buying dreams a reality today!
Step 1: Save for a down payment
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 $53,797 for a $268,984 home — the typical home value in Pennsylvania.
However, you have options to lower your down payment amount.
Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).
Minimum down payment (%)
Down payment ($)
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.
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.
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
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
Step 3: Get preapproved for a mortgage
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.
Step 4: Choose the right location
Currently, the typical home value in Pennsylvania is $268,984, 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
Step 5: Start house hunting in Pennsylvania
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 51.6% fewer homes for sale than during Pennsylvania's peak season.
Housing inventory in Pennsylvania by season
New listings per month
Based on data from Realtor.com (October 2022)
Step 6: Make an offer
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
Based on data from Realtor.com (October 2022)
» LEARN MORE: What should an offer include?
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.
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:
- Electrical system
- HVAC system
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.
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 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.
Step 8: Close on your new home!
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 $269,000 home — the typical home value in Pennsylvania — that's between $8,070 and $13,450!
Frequently asked questions
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.
- Save for down payment
- Get pre-approved for a mortgage
- Choose your preferred Pennsylvania neighborhoods
- Partner with the right real estate agent in Pennsylvania
- Go house hunting
- Make a strong offer
- Inspections and appraisals
- 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.
Federal Reserve. "Housing Market Tightness During COVID-19: Increased Demand or Reduced Supply?." Accessed October 11, 2022. Updated July 08, 2021.
Consumer Protection Financial Bureau. "The Fed is raising interest rates. What does that mean for borrowers and savers?." Accessed October 11, 2022. Updated March 17, 2022.