Buying a house in Pennsylvania can be both an exciting and confusing process, especially for first-time home buyers. Our guide breaks down how to buy a house in Pennsylvania in eight steps, with practical tips to help you navigate Pennsylvania's real estate market.
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Key steps to buying a house in Pennsylvannia
Step 1: Save for down payment. » Wait until you have saved a down payment of 20% to avoid private mortgage insurance and save money over the life of your loan. Or check out loan programs from the Pennsylvania Housing Finance Agency that can help cover (or reduce) the down payment cost.
Step 2: Find an agent. » Interview a few experienced local agents. Pick someone familiar with the Pennsylvania housing market and the neighborhoods you're considering.
Step 3: Get pre-approved for a mortgage loan. » Pre-approval can give you an advantage over other competing offers by showing Pennsylvania homeowners that you're a serious buyer.
Step 4: Find a location. » Look for neighborhoods with home prices in your range, access to amenities that fit your lifestyle, and rising home values.
Step 5: Go house hunting. » Work with your real estate agent to find listings for homes that meet your requirements and budget.
Step 6: Make an offer. » Consult with your agent to write a strong offer that gets a seller’s attention and fits your budget.
Step 7: Get an inspection and appraisal. » Coordinate with a licensed professional to find potential issues with the property. Your lender will get an appraiser to determine its worth and finalize the loan amount.
Step 8: Close. » Complete a final walk-through of the Pennsylvania property to ensure it’s in the expected condition. Then review and sign necessary paperwork and pay your closing costs.
Step 1: Save for a down payment
🔑 Key takeaway:
Your down payment can be less than 20% of the purchase price — $51,114 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 $51,114 for a $255,570 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). Check out the Pennsylvania Housing Finance Agency website for a comprehensive breakdown of your mortgage loan options
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.
Second, you may have to purchase mortgage insurance.
Conventional mortgage loans require private mortgage insurance (PMI) until your loan balance reaches 80% of the purchase price. However, FHA loans require a mortgage insurance premium (MIP) for the life of your loans.
Mortgage loan insurance costs around 1% of your mortgage balance annually, but 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
Down payment assistance programs exist to help people just like you! In Pennsylvania, there are several programs available for first-time and low-income buyers. Eligibility requirements vary, so make sure to review the criteria before filling out an application.
To help you get started, here are a few good resources to check out:
IHDA Access Forgivable
The Pennsylvania Housing Development Authority (IHDA) has three DPA programs available for borrowers with an IHDA first mortgage. The Access Forgivable program is provided as a 30-year fixed mortgage that offers 4% of the purchase price (or up to $6,000) as a second loan.
The Access Forgivable program is available to first-time and repeat homebuyers. Eligible borrowers must have a credit score of at least 640 and contribute $1,000 or 1% of the purchase price towards the down payment. Income limits and home price limits can be found here.
IDHA Access Deferred
The IDHA Access Deferred program offers 5% of the purchase price (up to $7,500) as a deferred loan. It's a 30-year, 0% interest second mortgage loan to be paid at maturity or when the house is sold or refinanced.
The payment assistance program is available to both first-time and repeat homebuyers who have credit scores of 640 or higher. Borrowers must contribute $1,000 or 1% of the sale price towards the down payment. Income limits and home price limits can be found here.
IDHA Access Repayable
The IDHA Access Repayable program offers 10% of the purchase price or up to $10,000 as a second loan. It's a 10-year 0% interest second mortgage that's to be paid monthly, and it's available for first-time or repeat homebuyers.
Eligible participants must have credit scores of 640 or above and contribute $1,000 or 1% of the purchase price towards the down payment. Income limits and home price limits also apply, which can be found here.
U.S. Department of Housing and Urban Development
HUD has a list of additional Pennsylvania homebuyer programs 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
Finding a great real estate agent shouldn't be complicated. Let Clever Real Estate do the hard part and match you with experienced local realtors who are experts in your market.
Enter your zip code below to compare top agents from trusted brands like Keller Williams, Berkshire Hathaway, and Coldwell Banker, then choose the best fit for you. It's 100% free, and there's no obligation.
Step 3: Get pre-approved for a mortgage
🔑 Key takeaway:
Once you're pre-approved 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 pre-approval 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 pre-approval 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 pre-approval before showing you their home.
Pre-approval vs. pre-qualification
Pre-approval is a more in-depth analysis of your finances than pre-qualification and serves as a more formal commitment from a lender. It usually requires a hard credit check and supporting documentation, such as paycheck stubs and W-2s.
Pre-qualification gives you a basic idea of what you might be able to borrow based on a quick look at your finances.
Does pre-approval hurt my credit score?
Pre-approval typically results in a hard credit inquiry, which may reduce your credit score by up to 5 points — that's a minimal effect.
✍️ Tip: If you get pre-approved with multiple lenders within a 45-day window, it will only count as one credit inquiry, minimizing the impact on your score.
The savings you'll gain from shopping around for a mortgage pre-approval will likely far outweigh any minor, short-term impacts to your credit.
What do mortgage lenders review?
To figure out if they can pre-approve you for a mortgage loan, mortgage companies usually check your:
Credit report
Credit score
Payment history
Monthly income
Debt-to-income ratio
Employment
(Note: These are the same factors that determine the loan's interest rate.)
You're evaluating lenders, too.
Consider each lender's quoted mortgage rate, estimated closing costs and fees, reputation and online reviews, customer service quality, and responsiveness to your questions.
Although you don't have to decide on a lender now, you should compare interest rates and pre-approval amounts from several lenders to make sure you're getting the absolute best rate and terms when you buy your Pennsylvania home.
A local lender:
- Might provide you with more market-specific information, such as typical home values in your desired area
- Likely has a better understanding of lending regulations in the state
- Can connect with you other real estate professionals (realtors, contractors, inspectors, etc.)
You don't have to decide on one lender right now. In fact, you should compare interest rates and pre-approval 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
🔑 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 $255,570, 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 | $236,459 | 46.2% |
| Olney | $83,910 | $172,492 | 51.4% |
| Mayfair | $122,949 | $254,074 | 51.6% |
Step 5: Start house hunting in Pennsylvania
📊 Key local data
- Median mortgage interest rate: 6.93%
- Median home value: $255,570
- Best month for house hunting (highest inventory): June
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."
Consider the full costs of owning a home, not just the mortgage payment. Other potential costs of owning the home include maintenance and repairs, property taxes, homeowner's insurance, and HOA fees.
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.
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 house you love in Pennsylvania, 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.
» LEARN MORE: What should an offer include?
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
Step 7: Inspections, appraisals, and financing
Once the seller accepts your initial offer, you have to do due diligence before officially purchasing the home. Inspections let you better evaluate the home's condition, and lenders use appraisals to determine value and decide how much your final loan amount will be.
If something unexpected pops up or if the home's appraised comes in below the purchase price, you could have an opportunity to renegotiate the terms of your contract.
Underwriting
This is also the period that your lender will verify that you can afford your mortgage. They may ask for proof of income, pay stubs, and letters of explanation for income that doesn't come from wages, and other loan statements (like for student debt).
Delays could lead to postponed closing, so start collecting this information early so that you can be ready to submit documents when your lender asks.
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 $255,600 home — the typical home value in Pennsylvania — that's between $7,668 and $12,780!
Ready to make your home-buying dreams a reality? The first step is to find a top local realtor who's an expert negotiator with proven experience in your market.
Enter your zip code below to compare the best agents from trusted brands like Keller Williams, Berkshire Hathaway, and Coldwell Banker, then choose the best fit for you. It's 100% free and there's no obligation.
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Frequently asked questions
Do I need a real estate attorney in Pennsylvania?
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.
Does Pennsylvania have a first time home buyer program?
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.
