Not everyone can be born and raised in West Philadelphia, but many Americans are trying to get there as fast as they can! It’s a great time to purchase a home in Pennsylvania. Whether you find yourself in the academic haven of Philadelphia, the industrial hub of Pittsburgh, or the sweet rural township of Wampum, there is a home and a community in this great state that is perfect for everyone.

As Pennsylvania sits in the unique location of stretching from the East Coast to the Midwest, the housing prices vary throughout the state, giving first-time homebuyers plenty of options to choose from.

We’re here to walk you through all of the payment assistance options available to you as a first-time buyer in Pennsylvania so that you can pick the best type of loan for your current financial needs.

Types of Mortgage Loans Available in Pennsylvania

Those who live in Pennsylvania can qualify for many different types of loans as first-time homebuyers. We want to make sure that you totally understand both your state and federal loan options so that you can truly choose the one that’s going to make buying a home for the very first time the easiest experience for you.

Federal Loans Available in Pennsylvania

People who live in Pennsylvania have long taken advantage of the many federal loan options available to them. First time homebuyers in the state are also particularly savvy because these loans are easy to understand and access, so Pennsylvanians can easily use them in any of the markets across the state .

Here are the federal loans that people who live in Pennsylvanians like to use the most:

Conventional Loans

When you buy a home for the first time in Pennsylvania, if you have a good credit score and a steady income, then you are likely better off applying for a conventional loan. In Pennsylvania, these loans always have great, competitive interest rates. They sometimes also feature interest rates that are as low as just 3% of the total sales price of the house!

But there is one catch: if you want to qualify for these great rates, then you also need to be able to qualify for loans from programs like Fannie Mae and Freddie Mac. This is because these lenders are often the ones sponsoring these loans.

You might be reading this and thinking, “Okay, but I thought we were supposed to have a 20% down payment ready to go. That’s what I saved…” That’s great! If you can come up with the traditional 20% down payment and you have a credit score above 700, then things are looking great for you! You’ll even be putting enough down on the loan that you won’t even need to take out private mortgage insurance, which can actually save you heaps of money in the long run.

FHA Loans

FHA is an abbreviation for the Federal Housing Authority. The FHA is a part of the United States Department of Housing and Urban Development. Sometimes, those in the real estate industry call this the HUD. As you can see, the federal housing assistance programs really like abbreviations. Congress created the FHA program in the middle of the Great Depression because too many Americans could not afford to own their homes and were made to be renters instead.

You are a great candidate for a FHA loan in the state of Pennsylvania if you have a non-traditional credit history or you have a steady monthly income, but it’s not high enough to support a traditional mortgage.

These loans are a great fit for potential homeowners who perhaps got a late start building their credit, or maybe even made some missteps in their early years, but are now working hard to make up for it.

This means that if you can produce a down payment of up to 20% of the balance of the home, then you can actually purchase a home with a credit score that is as low as 500 with an FHA loan. Lenders usually look for scores in the 700s, so this is a great deal!

These FHA loans also sometimes have payment and closing cost assistance.

VA Loans

If you or your spouse were active duty United Stated military at any point, then you are eligible to receive home financing from the VA, which the United States Department of Veterans Affairs. These VA loans usually have great interest rates and terms and should usually be a first financing option for anyone who served in the military because of this.

Qualified borrowers in Pennsylvania that apply for one of these loan can also find options with no minimum credit score, down payment, or even mortgage insurance requirement. It’s hard to find other lenders who are willing to give you terms this lenient, even if zero interest isn’t an option.

USDA Loans

While Pennsylvania has excellent city living, there are also plenty of places within the state that the USDA (the United States Department of Agriculture, again with the abbreviations) class as rural. Because of this, you can use a loan from the USDA to purchase your first home.

Home loan programs like that of the USDA are great even if you don’t have a traditional credit history. This is because if you can show current rent payments or proof of income, then you can still qualify.

State Loans in Pennsylvania

Pennsylvania also has plenty of state-specific loan programs. Here are some of the best ones to choose from if you live in the Keystone State:

PHFA First-Time Home Buyer Programs

The Pennsylvania Housing Finance Agency (PHFA) is an agency that offers down payment and closing cost assistance to first-time homebuyers. The PHFA also helps out with mortgage loan programs, refinancing, and home improvement loans.

Keystone Government Loan Program

If you want to get a loan from the government and you live in the great state of Pennsylvania, then you have a couple of options that you can choose from. The PHFA mortgages are all sponsored by the Federal Housing Administration, the Rural Development Program of the USDA, and the Department of Veterans Affairs – of course, we mentioned all of these loan programs.

However, on a state level, there may be fewer rules about who can qualify for the program. Be sure to check in about the specifics with your lender.

Keystone Advantage Assistance Loan Program

If you participate in this program, you are taking out a second mortgage loan that helps with the down payment and closing costs associated with purchasing a home. If you are a qualified borrower, you can take up to 4% of the purchase price of the home, or $6,000 – whichever is less. Then, over the next 10 years you can pay back this assistance with no interest!

Best Places To Live in Pennsylvania

No matter where you live in Pennsylvania, you are bound to find a home that’s a perfect fit for you. As mentioned, cities in the Eastern half of the state like Philadelphia have an East Coast, academic vibe, while cities in the West, like Pittsburgh, pulse with the true grit of Midwest determination.

The prices for homes vary greatly based on the proximity to the urban areas. So, whatever your budget or location preference, it’s possible to find the most perfect home for you.