PHFA — Pennsylvania First-Time Buyers
Pennsylvania has one of the most under-used first-time homebuyer programs in the country. It is worth real money — here is how to get it.
The Pennsylvania Housing Finance Agency (PHFA) pairs a below-market 30-year fixed-rate mortgage with layered down payment and closing cost assistance. K-FIT alone can deliver up to 5% of the purchase price as forgivable assistance. Keystone Advantage stacks on top with additional closing-cost help. We walk PA buyers through every PHFA program, from Keystone Home Loan to HFA Preferred and Access Modification. Not buying in PA? See our New Jersey NJHMFA guide instead.
What PHFA actually is
PHFA is an independent state agency that finances below-market mortgages for Pennsylvania homebuyers by issuing tax-exempt mortgage revenue bonds. You do not apply directly to PHFA; you apply through an approved participating lender. The loan is underwritten to standard FHA, VA, USDA, or conventional (Fannie Mae HFA Preferred) guidelines, with PHFA's rate advantage and any applicable assistance layered in.
For a typical first-time buyer purchasing in Bucks, Montgomery, Chester, Delaware, Lehigh, or Philadelphia counties, the PHFA rate advantage alone can save $60 to $150 per month versus market rates. Layer in K-FIT at up to 5% of the purchase price as forgivable assistance, and you are often looking at $10,000 to $15,000 in help toward down payment and closing costs on a typical starter home — in addition to the monthly rate savings.
Every PHFA program, explained
PHFA runs a family of programs that can be layered together. Most first-time buyers use the Keystone Home Loan as the first mortgage and K-FIT or Keystone Advantage for assistance. Here is how each one works.
Keystone Home Loan
PHFA's flagship first-time buyer program. A 30-year fixed-rate mortgage at a below-market rate, originated as FHA, VA, USDA, or conventional. Requires first-time buyer status (no ownership of a principal residence in the past three years) except in designated target areas or for veterans. Income and purchase price limits apply and vary by county.
HFA Preferred (Fannie Mae conventional through PHFA)
A conventional alternative to the FHA-backed Keystone Home Loan. HFA Preferred uses Fannie Mae's HFA Preferred program, which offers lower mortgage insurance premiums than standard conventional and often lower than FHA MIP for strong credit borrowers. Frequently the smart pick for borrowers with 680+ credit who would otherwise be nudged into FHA for the lower down payment.
K-FIT (Keystone Forgivable in Ten Years Loan Program)
The most valuable down payment assistance in PHFA's lineup. K-FIT provides up to 5% of the lesser of the purchase price or appraised value as a forgivable second mortgage. Forgiven in 10% increments each year; fully forgiven after 10 years of occupancy. Can be used for down payment, closing costs, or both. Works with Keystone Home Loan or HFA Preferred as the first mortgage.
Real example: $285,000 home in Bucks County — K-FIT delivers up to $14,250 in forgivable assistance. After 10 years of occupancy, you owe nothing.
Keystone Advantage Assistance Loan
The older cousin of K-FIT. Keystone Advantage provides up to $6,000 in closing cost and down payment help as a 0% interest 10-year second mortgage. Unlike K-FIT, it is not forgivable — you repay it in equal monthly installments over 10 years. Still useful for buyers who want to preserve savings for reserves; still a 0% rate; still adds no interest cost.
Keystone Flex with K-FIT
For buyers who earn just above the Keystone Home Loan income limit, Keystone Flex offers a competitive PHFA rate with higher income ceilings. Can still pair with K-FIT for forgivable down payment assistance. A strong middle-ground option for dual-income households in the Philadelphia metro who miss the flagship program by a small margin.
Access Modification Loan
A PHFA program that helps buyers or current homeowners finance accessibility modifications — ramps, grab bars, accessible bathrooms, chair lifts. Can be layered with a Keystone Home Loan at closing or added later. Especially valuable for buyers with a household member who has a disability, or for aging-in-place modifications.
HOMEstead Second Mortgage
A targeted program in participating municipalities that provides additional closing cost and down payment help — often as a second forgivable or deferred loan on top of Keystone. Availability depends on municipal participation. We check whether the town you are targeting participates.
Who qualifies for PHFA
PHFA eligibility runs on four main axes: first-time buyer status, income, purchase price, and homebuyer education. Requirements vary by program — Keystone Home Loan is stricter, HFA Preferred and Keystone Flex are looser on income.
First-time buyer status
PHFA uses the same federal definition as NJHMFA: no ownership of a principal residence in the past three years. If you owned a home more than three years ago but have rented since, you still qualify. Veterans are exempt from the first-time buyer rule. Buyers purchasing in federally designated target areas — which cover significant portions of Philadelphia, Reading, Allentown, and other PA communities — are also exempt.
Household income limits
PHFA publishes income limits by county and household size. Limits are higher in the Philadelphia metro (Bucks, Chester, Delaware, Montgomery, Philadelphia) and in the Lehigh Valley than in rural counties. Keystone Flex offers higher limits than Keystone Home Loan for buyers who earn too much for the flagship program but still want a PHFA rate. We pull current tables specific to your target county.
Purchase price limits
PHFA also publishes maximum purchase prices by county. Limits track regional housing costs — higher caps in the Philadelphia suburbs and Lehigh Valley, lower in rural counties. Target area purchases often have elevated purchase price caps. We confirm that the home you are targeting is within the cap before you make an offer.
Homebuyer education
Required for all PHFA buyers using K-FIT or Keystone Advantage. PHFA maintains its own online homebuyer education program alongside a network of HUD-approved in-person counselors across the state. Online format runs 4 to 6 hours at a cost of around $75 to $100.
Credit score
PHFA minimum credit scores vary by loan type. FHA-backed Keystone loans accept scores as low as 660 under most programs (some lenders have overlays down to 640). HFA Preferred typically requires 680+. VA-backed Keystone follows VA guidelines. Strong credit unlocks HFA Preferred's lower mortgage insurance.
Property eligibility
Single-family homes, condos on approved lists (including FHA or VA approved condo project lists where applicable), and 2-to-4-unit properties where you occupy one unit. Property must be located in Pennsylvania. Manufactured homes on permanent foundations are eligible under certain program variants.
How the PHFA process actually works
The PHFA process runs through a participating lender — us, or one of a handful of others — not through PHFA directly. Here is what to expect.
Eligibility review
We run your income, household size, first-time status, target county, and credit profile against current PHFA tables. You find out whether Keystone Home Loan, HFA Preferred, or Keystone Flex is the right fit — and whether K-FIT or Keystone Advantage delivers more value for your purchase.
Pre-approval with PHFA layered in
We underwrite you on the underlying loan type (FHA, VA, USDA, or HFA Preferred conventional) with PHFA's rate and assistance locked in. Your pre-approval looks standard to sellers and realtors — no flags or caveats that weaken offers.
Complete homebuyer education
PHFA's online course or an approved in-person counseling session. Do this early so there is no closing delay. Certificate valid for one year.
Shop and go under contract
House-hunt within the county purchase price cap. PA is a title company closing state — no attorney required — which tends to move transactions faster and keeps closing costs lower than comparable NJ purchases.
Close at 30 to 45 days
Standard PA timeline. At closing, K-FIT or Keystone Advantage funds apply directly to your down payment and/or closing costs. You sign the first mortgage note and the second lien note (K-FIT or Advantage), but only make payments on the first mortgage — the K-FIT second has no monthly payment.
Common PHFA scenarios
Solid fit for Keystone Home Loan paired with K-FIT. K-FIT at 5% of $320,000 is $16,000 in forgivable assistance — covering most or all of a conventional 5% down payment. The PHFA rate likely saves you $80 to $140 per month versus market. Over five years you are ahead by roughly $20,000 to $25,000 in combined savings and forgiven assistance.
Likely above the Keystone Home Loan income ceiling but within Keystone Flex limits. You still access a PHFA rate plus K-FIT for forgivable assistance. We model Flex vs. standard conventional to show the real monthly difference.
Almost always HFA Preferred. At 740+ credit, HFA Preferred's mortgage insurance is materially cheaper than FHA MIP — and FHA MIP stays for the life of the loan unless you put 10%+ down. HFA Preferred's PMI drops off when you reach 22% equity. We run both side by side so you see the exact monthly and lifetime cost difference.
Several things: the first-time buyer requirement is waived, purchase price caps are often higher, and income limits may be more generous. Plus you may qualify for additional local assistance programs that layer on top of PHFA. Significant portions of Philadelphia are designated target areas.
Yes. A VA-backed Keystone Home Loan gives you 0% down from VA plus the PHFA below-market rate plus K-FIT for closing costs. The stack is often unbeatable for veteran buyers in PA. See our VA loans page for the full VA picture.
Likely yes. PHFA's first-time buyer rule is based on ownership of a principal residence. A rental you never occupied generally does not disqualify you. We confirm with the PHFA compliance team on case-specific situations before locking you into a program.
Frequently asked questions
Up to 5% of the purchase price or appraised value (whichever is lower) through K-FIT as forgivable assistance, or up to $6,000 through Keystone Advantage as a 0% interest 10-year second mortgage. K-FIT is generally the more valuable option because it is fully forgiven after 10 years.
Technically a loan — a forgivable second mortgage at 0% interest with no monthly payment. K-FIT is forgiven in 10% annual increments and fully forgiven after 10 years of occupancy as a primary residence.
Anyone who has not owned a principal residence in the past three years. Veterans are exempt from the first-time buyer rule. Buyers in federally designated target areas — including significant parts of Philadelphia, Reading, and Allentown — are also exempt.
Minimums vary by program. FHA-backed Keystone loans typically require 660+. HFA Preferred (conventional) typically requires 680+. VA-backed Keystone follows VA guidelines. Some lenders have overlays accepting scores as low as 640 on FHA.
Limits vary by county and household size. The Philadelphia metro counties (Bucks, Chester, Delaware, Montgomery, Philadelphia) and Lehigh Valley have higher limits than rural counties. Keystone Flex raises the income ceiling for buyers who exceed standard Keystone Home Loan limits.
Yes. A VA-backed Keystone Home Loan stacks with K-FIT in many cases. You get 0% down through VA, no PMI, a below-market PHFA rate, and forgivable K-FIT assistance for closing costs — one of the strongest stacks available to any PA buyer.
K-FIT is forgivable; Keystone Advantage is repayable. K-FIT offers more — up to 5% of purchase price — and is forgiven over 10 years. Keystone Advantage caps at $6,000 and is repaid in 10 equal annual installments at 0% interest. K-FIT is almost always the better choice when both are available.
The unforgiven portion is repaid from sale proceeds. For example, if you sell at year 5, half the K-FIT balance has been forgiven and half is repaid. There is no penalty, no interest, and no effect on your credit.
Yes for buyers using K-FIT or Keystone Advantage. PHFA runs its own online course, and HUD-approved in-person counseling is also accepted. Online format takes 4 to 6 hours and costs around $75 to $100.
Ready to see what PHFA can do for your purchase?
We will confirm which PHFA programs you qualify for, model Keystone Home Loan versus HFA Preferred, and show you exactly what K-FIT saves on your target purchase price.
Tell us your situation — we will pull current PHFA limits for your county.
45 minutes, no obligation. We walk through every PHFA program that fits.
Ready to start? Begin your secure application with PHFA layered in.