Pennsylvania’s first-time buyer landscape is anchored by the Pennsylvania Housing Finance Agency (PHFA), which administers one of the most comprehensive Down Payment Assistance program suites in the Mid-Atlantic region. From the HOMEstead forgivable loan to the K-FIT program to the Pittsburgh Urban Redevelopment Authority’s remarkable up to $90,000 for eligible city buyers, Pennsylvania offers meaningful assistance at both the state and local level.
The Bookspan Baker Team at Keepsake Loans is an approved PHFA participating lender with experience helping Pennsylvania buyers identify, stack, and use every available program.
Before applying for DPA, buyers must qualify for a PHFA first mortgage. Pennsylvania’s three main options:
Keystone Home Loan: Available to first-time buyers, discharged veterans, and buyers in targeted Pennsylvania counties. Has income and purchase price limits that vary by county.
Keystone Government Loan (K-Gov): Available to any buyer regardless of first-time buyer status. Pairs with FHA, VA, or USDA loans. No income limits and no purchase price limits.
HFA Preferred (Lo MI): A conventional loan with reduced private mortgage insurance through PHFA. No first-time buyer requirement. Income limits apply but no purchase price limits. Automatically includes a $500 PHFA Grant.
$1,000–$10,000
Zero-interest second mortgage; no monthly payments
Forgiven 20% per year over 5 years — fully forgiven after 5 years of owner-occupancy
If you sell, refinance, or move before 5 years, the remaining balance is due
Must be used with a PHFA Keystone Home Loan
NOT available in all counties or cities — major cities and certain counties are excluded (Philadelphia, Pittsburgh, and several others receive their own federal allocation)
Due to federal lead paint regulations, most homes built before 1978 are not eligible — a significant limitation given Pennsylvania’s older housing stock
Apply and vary by county
The Keystone Forgivable in Ten Years Loan (K-FIT) provides up to 5% of the purchase price (or appraised value, whichever is lower) with no dollar cap, forgiven after 10 years.
Up to 5% of purchase price — no hard dollar maximum
Zero-interest second mortgage; no monthly payments
Fully forgiven after 10 years of owner-occupancy
If you sell, refinance, or move before 10 years, the balance is due
Must contribute the lesser of $1,000 or 1% of the loan amount (conventional and FHA only)
660
On a $250,000 purchase, K-FIT can provide $12,500 — more than enough to cover FHA’s 3.5% down payment.
Lesser of 4% of purchase price or $6,000
Zero-interest second mortgage; repaid in equal payments over 10 years (not forgiven)
PHFA HFA Preferred, Keystone Home Loan, and K-Gov first mortgages
Conventional, FHA, VA, or USDA
Borrower cannot have liquid assets exceeding $50,000 after closing
660
Access Downpayment and Closing Cost Assistance: Up to $15,000
For buyers with disabilities or living with a disabled household member — up to $15,000 as a zero-interest second mortgage for down payment and closing costs.
PHFA’s Mortgage Credit Certificate provides qualifying first-time buyers and veterans with a federal income tax credit of up to $2,000 per year on mortgage interest paid — potentially for the full life of the loan. This is a credit, not a deduction — it reduces federal taxes owed dollar for dollar.
All buyers using the PHFA HFA Preferred (Lo MI) first mortgage automatically receive a $500 grant that does not need to be repaid.
Philadelphia — Philly First Home: The City of Philadelphia provides a grant of up to $10,000 toward down payment and closing costs for income-eligible first-time homebuyers purchasing within Philadelphia city limits. Structured as a grant — no repayment required as long as the buyer maintains ownership for the required period. Note that Philadelphia is excluded from the HOMEstead program.
Pittsburgh — Urban Redevelopment Authority (URA): Pittsburgh’s URA administers one of the most substantial local DPA programs in Pennsylvania, providing up to $90,000 in down payment and closing cost assistance for income-eligible first-time buyers purchasing within Pittsburgh city limits. Structured as a low-interest deferred loan forgiven progressively with owner-occupancy. Income limits are strict (typically 80% AMI and below). Can be stacked with PHFA programs for maximum benefit.
Montgomery County First Time Homebuyers Program: Offers down payment and closing cost assistance for low-, moderate-, and median-income first-time buyers purchasing in Montgomery County.
FHA + K-Gov + HOMEstead: For first-time buyers who don’t meet Keystone Home Loan income/price limits — pair FHA through K-Gov with HOMEstead DPA where available.
Conventional + HFA Preferred + Keystone Advantage: Strong credit buyers (660+) can use a conventional HFA Preferred loan with the $500 grant and Keystone Advantage ($6,000) for a zero-interest additional layer.
VA + K-Gov: VA Loans require no down payment. For eligible first-time veteran buyers, the Keystone Advantage or HOMEstead can offset closing costs.
HOMEstead provides up to $10,000 as a zero-interest second mortgage for down payment and closing costs, forgiven 20% per year over 5 years. Requires a PHFA Keystone Home Loan first mortgage. Most pre-1978 homes are excluded due to lead paint regulations. Not available in all Pennsylvania counties and cities.
K-FIT (Keystone Forgivable in Ten Years Loan) provides up to 5% of the purchase price with no hard dollar cap, fully forgiven after 10 years. Requires a PHFA Keystone Flex first mortgage and a minimum $1,000 buyer contribution. Minimum 660 credit score.
Pittsburgh’s Urban Redevelopment Authority offers up to $90,000 for income-eligible first-time buyers purchasing within city limits — one of the largest municipal DPA programs in Pennsylvania. Income limits are strict (typically 80% AMI or below).
Yes. The Philly First Home program provides grants up to $10,000 for income-eligible first-time buyers within Philadelphia city limits. Note that Philadelphia is excluded from the HOMEstead program.
Some PHFA programs can be stacked; others cannot. HOMEstead cannot be combined with Keystone Advantage. The Bookspan Baker Team will identify which combinations maximize your total assistance.
