If you’re new to the world of homeownership, you might be feeling a little overwhelmed. There are many things to consider: monthly mortgage payment, down payment, insurance, repairs and maintenance, and much more.
A first time home buyer in PA may need some help. Fortunately, some programs can help first time homebuyers with the down payment, closing costs, and other expenses. Here’s what you need to know about being a first time home buyer in Pennsylvania:
Qualify As A First Time Home Buyer PA
First, the properties you can afford as a first time home buyer PA will depend on your income and credit score. So let’s start with the latter. According to Fannie Mae, someone who has not owned their primary residence during the past three years would need a minimum credit score of 660 for eligibility requirements for state-sponsored mortgage programs. However, some mortgage lenders may require higher scores based on individual circumstances.
For income limits requirements, most homebuyers must show that they earn at least three times their monthly housing costs (MHC), including principal, interest, and taxes. But some first time homebuyer programs allow four to five times MHC depending on the purchase type. In addition, your maximum debt-to-income ratio should be between 40-50%. However, each program has its own requirement.
Learn How Do First Time Home Buyer Programs In PA Work
First time home buyer PA programs are available to qualified applicants. The homebuyer assistance is provided through a grant, loan, or combination. The assistance is used to help with the down payment and closing cost for purchasing your first home.
It can also be used if you are planning on buying an existing home, but it needs repairs/improvements before you move into it. Also, the home buyer assistance program can help you with the down payment on manufactured homes that are permanently affixed to foundations.
Sometimes, all or part of your monthly mortgage payment may be paid by another party. This includes family members or friends who want to help you with this financial burden. This type of program works differently from state to state, so ensure you read up on how they operate before applying.
First Time Home Buyer Loans In PA
First time homebuyer loans are available to those who have never owned a home. Suppose you are planning to buy your first home. In that case, the participating lenders will require that you meet specific requirements to qualify.
Moreover, first time home buyer PA programs vary from state to state. Some states offer tax credits and other incentives for first time buyers who purchase houses within their state borders.
However, many mortgage lenders provide loans specifically designed for first time buyers regardless of where they live or where they plan on buying their homes. Below are the different first time homebuyer loans in Pennsylvania:
If you’re a veteran and want to get a VA loan, there are two things that you need to know. First, a VA loan is guaranteed by the government. That means if something goes wrong with your loan, the government will pay for any damages or other costs related to your loan.
Second, even though you might be able to get a higher interest rate than different types of loans, Veterans Affairs loans come with a lower down payment than conventional mortgages do. This means that if you don’t have thousands of dollars saved up for your down payment right now, you can still buy a home.
FHA loans are insured by the Federal Housing Administration (FHA), which means they have lower down payment requirements than conventional loans. These loans also require mortgage insurance, but that cost is only around 0.5% of your loan amount each year while you’re paying it off. Suppose you can’t afford a 20% down payment. In that case, an FHA loan may be your best option if you’re looking for a first time homebuyer mortgage in Pennsylvania.
The great news about these loans is that they allow borrowers with lower credit scores to qualify for financing and access low-interest rates. The minimum credit score needed to apply for an FHA loan is 580.
If you’re a first time homebuyer looking for a low-interest loan, then the USDA loan may be right for you. It’s also a rural development loan because it’s only available in some rural regions of Pennsylvania.
The USDA home mortgage programs offer several advantages to first time homebuyers. This includes low down payment, closing costs, and lower interest rates than many conventional mortgages.
And because these loans are insured by the U.S. Department of Agriculture (USDA), qualifying for one can mean that you can purchase your dream home without worrying about paying high-interest rates or needing a large down payment like other types of loans.
Conventional 97 Loans
Conventional 97 Loans is a traditional loan program that allows you to purchase a home with a down payment as low as 3% and no private mortgage insurance. Conventional 97 Loans is also a 97% loan program with credit score requirements of 620 or higher.
In addition, Conventional 97 Loans have an interest rate cap of 15%, which means the maximum interest rate you could pay would be 15%. This makes it possible for many more Pennsylvania residents to qualify for this mortgage and purchase their first home.
Pennsylvania Housing Finance Agency Loans
First time homebuyers in Pennsylvania should also consider the PHFA loan program. These loans are developed to help low-to-moderate income families purchase their first home and provide down payment assistance if needed.
To qualify for a Pennsylvania Housing Finance Agency loan, you must have a low credit score. Still, as long as your monthly household income limits set by PA Housing Finance Agency are met, you can get approved for this loan program.
Also, keep in mind that these loans require a down payment above 5% of the purchase price of your home, and it must be made out of pocket with cash or other sources of funds (such as gifts from family members).
There are no closing fees associated with this type of mortgage since the expenses related to buying property are paid by the seller directly at settlement time instead of through closing costs which would otherwise come out before settlement day.
PHFA First Time Home Buyer Programs In PA
Pennsylvania Housing Finance Agency (PHFA) offers several first time home buyer programs in PA. These first time homebuyer programs are designed to put you into your own home and help you achieve the American dream of homeownership.
Each program is different, so it’s essential to research them thoroughly before deciding which one is right for you. Some of these programs require a family member to live with you after it’s purchased. Below are the PHFA first time homebuyer programs in PA:
HFA Preferred Loan
The HFA Preferred Loan is a 30-year fixed-rate loan with low down payment requirements. Borrowers with higher credit scores may also qualify for lower rates and/or use their savings or cash reserves to pay down their mortgage principal faster.
The PHFA First Time Home Buyer Program gives homebuyers access to affordable mortgages with low monthly payments and reduces the amount paid out in closing costs.
Keystone Home Loan Program
If you are a first time homebuyer in Pennsylvania, the Keystone Home Loan Program may be an option. This is a PHFA First Time Home Buyer Program in Pennsylvania that offers zero to 5% down payment to help you achieve your dream of purchasing a home.
Keystone Home Loan Programs is also a competitive interest rates program that can include conventional, FHA, VA, or USDA home loans. Furthermore, the program has been around for over 30 years. It is an excellent alternative to other options such as FHA 203(b) or 203K loans in Pennsylvania.
Keystone Government Loan
Keystone Government Loan is one of PHFA’s first time homebuyer programs in Pennsylvania. It offers government-backed FHA, VA, or USDA Rural Development (RD) loans to eligible buyers who have not owned a property in the last three years.
The PHFA Keystone Government Loan program allows applicants with credit scores less than 680 to use the 3% down payment assistance. You must have a credit score of at least 580 to apply for this program. However, you’ll need to take a homeownership education course if your credit score is below 680.
PHFA First Time Home Buyer Grant PA
PHFA’s first time home buyer grant PA is the most popular program because of the amount of money saved by having a low income. The PHFA first time home buyer grant program provides up to $6,000 for the down payment and closing cost. This is an excellent way to purchase a house without any down payment or financial help from family members. Below are the PHFA first time home buyer grants in PA:
Keystone Forgivable in Ten Years Loan Program
The Keystone Forgivable in 10 Years Loan Program is a PHFA First Time Home Buyer loan with payment grant programs that is forgivable if you stay in the home for ten years. With this program, you can borrow up to 5% of the house’s market or appraised price, whichever is smaller. Each year, 10% of the loan is forgiven.
If you move after the first year, you must pay back 90% of the borrowed sum. This is if it’s less than $10k due to being on time with monthly payments and following other requirements such as not getting another mortgage within five years.
And suppose after the tenth year, your permanent residence remains unchanged, and there are no changes in your employment status. In that case, all remaining principal becomes due and payable upon expiration.
Keystone Advantage Assistance Loan Program
The Keystone Advantage Assistance Loan Program is a Pennsylvania program designed to help first time homebuyers and others who may have trouble qualifying for a mortgage. This assistance program allows you to receive an interest-free second mortgage loan up to 4% of your home’s purchase price or appraised value, whichever is less. The loan has a minimum term of 10 years and must be paid back in full.
The maximum amount you can borrow through Keystone Advantage Assistance Loan Program is $6,000. So it’s best suited for smaller purchases or those made with cash down payments less than 20% of the purchase price or appraised value of the property purchased.
HOMEstead Downpayment And Closing Cost Assistance Loan
The HOMEstead Downpayment & Closing Cost Assistance Loan is a no-interest, second mortgage loan that lets a first-time home buyer PA $10,000 grant as a down payment or even closing cost assistance. The interest rate on this second mortgage loan is zero for the first year and then increases by one percent each year until it reaches a maximum of six percent.
The value of your HOMEstead program loan will begin dropping by 20% every year as soon as you purchase your home (even though you don’t make any payments). Therefore, your $15,000 remaining on your $20K HOMEstead loan after five years in the house will automatically be forgiven.
First Front Door Grant Program
The First Front Door Grant Program (FFD) could help you purchase your next home if you are a first time home buyer. The FFD Program is designed to assist qualified buyers with closing cost assistance and down payment assistance when purchasing their first primary residence.
The FFD Program helps you achieve your homeownership goals. This program will provide up to $5,000 in funds for down payment assistance programs to assist with closing costs or moving expenses related to purchasing your new home.
As a first time home buyer in Pennsylvania, you have many resources at your disposal. You can utilize first time homebuyer programs and grants to help you purchase your first home. By doing so, you can afford a better quality of life through lower down payments, closing costs, and housing costs, allowing you to save more money for the future.
Finally, if you want to buy or sell a home, HOMES by ARDOR is here to help. We have a team of experts who know the local areas inside and out and can show you around to get the best deal possible.