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Best First-Time Home Buyer Programs in Pennsylvania

You're not priced out of the housing market if you can't afford a 20% down payment. Find out about first-time home buyer programs to help buyers in Pennsylvania. Available through the state and federal governments, as well as private lenders, options exist for those with lower credit and just 3% down.
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Owning a home is the dream of many, but it isn’t always easily achievable. A 20% down payment can be a lot of money to try to save while you’re paying rent and trying to make a dent in student loans. Pennsylvania undergrad students graduate with the second-highest student loan debt in the nation. Average rents in Philadelphia, for example, are over $1,500 a month. Saving money with numbers like these is hard.

In addition to a down payment, first time home buyers in Pennsylvania will need to come up with the money for closing costs and homeowner’s insurance. Their mortgage payment could be more than their rent, and then there are utilities and home maintenance costs to factor in.

Luckily for a first-time home buyer in Pennsylvania, there are many helpful programs, grants, and mortgage options that can help you overcome some of these roadblocks. Consider working with a discount realtor, too, to make your first home even more affordable.

Pennsylvania Programs for First-Time Home Buyers

The state offers a first-time home buyer programs offered by the Pennsylvania Housing Finance Agency or PHFA. Lenders throughout the state apply for approval to grant these mortgages.

First-time home buyers who want to take advantage of PHFA loans must meet eligibility requirements. Liquid assets such as checking and savings accounts, investment accounts and retirement accounts (which can sometimes be excluded) cannot amount to more than $50,000 after you’ve paid closing costs.

Monthly mortgage payments can’t exceed 30% of your monthly income, and you must be purchasing your primary residence with the loan. Some programs require a minimum credit score of 600, and if your score is lower than 680, you may be required to take a home buyer education course. Lastly, each county places limits on the purchase price and your household income.

What does the PFHA offer if you meet these requirements? Down payment and closing cost assistance, for one. Possible tax credits and programs for borrowers with a disability. Programs to either take out a 30-year fixed-interest loan or refinance your existing house. They also partner with participating employers to offer employer-assisted housing.

If you want to learn more, check out 10 First-Time Home Buyer Assistance Programs to Look Into.

Federal First-Time Home Buyer Programs

Owning a home is part of the American dream. Homeownership also reduces neighborhood crime rates, improves schools through property taxes, and grows personal wealth more than any other investment. For all of these reasons, the Federal government encourages home-ownership.

Recognizing that it’s hard for first-time homebuyers to enter the market, the government sponsors several first-time home buyer programs to promote home-ownership.

FHA loans. The Federal Housing Administration offers mortgage programs that allow buyers with less-than-stellar credit to put down as little as 3.75% on their new home. The FHA guarantees a portion of the loan, which reduces the risk to the bank. Apply for these mortgages with an approved FHA lender.

HUD First Time Home Buyer Programs. The Department of Housing and Urban Development, or HUD, gives out grants for down payments and closing costs, runs county-level programs for first time home buyers, and has down payment assistance programs. Check out your local county website for information on your area.

Specific programs offered by HUD include the Good Neighbor Next Door program and the HUD Dollar Home Program. The Good Neighbor Next Door program helps teachers, firefighters, and police officers purchase homes at up to a 50% discount with just a $100 down payment.

The HUD dollar program sells foreclosed FHA properties which have been on the market longer than six months to low-income families for the purpose of community revitalization.

U.S.D.A. Loans. No, you don’t have to own a farm to borrow through a U.S. Department of Agriculture program. These loans are for low-to-moderate income borrowers in rural areas. If you qualify, you could get a mortgage for a home with no down payment. Mortgage insurance is also cheaper than that required by FHA loans.

VA Loans. The Veterans Administration helps veterans purchase homes by offering mortgages with no down payment and no mortgage insurance requirements. A Native American Direct Loan falls under the banner of loans for veterans, helping qualified Native American veterans purchase properties on recognized trust land.

These programs vary somewhat by state, so check out The Complete Guide to FHA Loans By State to find out what’s available to you in Pennsylvania. Your local real estate agent will also know about all the options where you live.

Private Lender Programs in Pennsylvania for First-Time Home Buyers

Fannie Mae and Freddie Mac offer private first-time home buyer loan options, too.

Fannie Mae calls their product “HomeReady.” It only requires a 3% down payment and has no geographic restrictions. Your credit score must be above 620, and your household’s income should fall within certain guidelines. “HomeOne Mortgage,” a Freddie Mac product, also will approve qualified borrowers who only have 3% to put down on a house. For both products, you will likely need to purchase PMI.

If the thought of applying for a mortgage intimidates you, check out our list of 7 Easiest Mortgage Lenders for First-Time Home Buyers.

Home Buyer Rebates in Pennsylvania

Another way to save money is if you can get a home buyer rebate. First-time buyers currently evaluating their financing options should connect with a top-rated, local real estate agent for guidance on rebates and more.

A Clever Partner Agent helps you choose a lender and mortgage type, and with the home-buying process at large, all for just a flat fee or discount. Agents can also help you realize cost savings by negotiating, timing the market, and helping you evaluate properties. It’s easier than you’d think to save money when buying a home, for more read about How to Get a Home Buyer Rebate.

Don’t be intimidated at the thought of entering the housing market; there’s more assistance available than you might think. Contact Clever Real Estate today to get in touch with a Partner Agent who can help you find, and buy, your dream home.

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Andrew Schmeerbauch
Andrew Schmeerbauch

Andrew Schmeerbauch is the Director of Marketing at Clever Real Estate, the free online service that connects you top agents to save on commission. His focus is educating home buyers and sellers on navigating the complex world of real estate with confidence and ease. Andrew has worked on projects for the United Nations and USC and has a particular passion for investing and finance. Andrew's writing has been featured in Mashvisor, L&T, Ideal REI, and Rentometer.

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