Understanding PHFA – A First-Time Buyer’s Guide to Affordable Homeownership in Pennsylvania
Let’s be honest — buying your first home can feel exciting and terrifying at the same time.
If you’re like many of my first-time buyer clients in Montgomery County and Philadelphia, you might be wondering:
💭 “How on earth am I supposed to come up with enough money for both the down payment AND the closing costs?”
That’s where the Pennsylvania Housing Finance Agency (PHFA) comes in.
This isn’t some pie-in-the-sky grant you’ll never qualify for — it’s a real program that has helped thousands of Pennsylvanians purchase their first home with less cash upfront.
And if you use it the right way, it can be the bridge between “someday” and “we got the keys!”
What Is PHFA?
PHFA stands for the Pennsylvania Housing Finance Agency, a state agency that provides affordable home financing options for first-time buyers and certain repeat buyers in targeted areas.
They offer:
Low-interest loans
Closing cost and down payment assistance
Educational resources so you know exactly what you’re signing up for
Who Qualifies for PHFA?
PHFA programs are not just for people with low income — in fact, many middle-income first-time buyers qualify.
Generally, you can qualify if:
You’re a first-time buyer (no home ownership in the past 3 years) — or buying in a designated “targeted area”
Your income falls under PHFA limits (varies by county and household size)
You’re purchasing a home that’s under the PHFA purchase price limit for your county
You meet credit score requirements (typically 620+, though higher scores may get better terms)
How PHFA Helps with Closing Costs
Here’s where things get interesting — PHFA can help cover your closing costs through their Keystone Advantage Assistance Loan program.
You can borrow up to $6,000 for down payment and/or closing costs.
This is a 0% interest loan that you pay back monthly over 10 years.
No early repayment penalty.
That extra $6,000 can mean the difference between draining your savings or keeping a comfortable cushion when you move in.
PHFA Mortgage Programs You Should Know
1. Keystone Home Loan Program
Offers competitive interest rates.
Can be combined with assistance programs.
2. Keystone Government Loan Program
For FHA, VA, and USDA loans.
Ideal for buyers who need a lower down payment.
3. HFA Preferred™ (Lo MI)
Conventional loan with reduced mortgage insurance costs.
Works well for buyers with good credit but limited cash.
The Education Requirement (It’s Worth It, I Promise)
PHFA requires you to complete a homebuyer education course — either online or in person.
Some buyers roll their eyes at this step, but I’ve had clients tell me they felt more confident walking into closing because they understood:
How their mortgage works
What to budget for after moving in
How to avoid common first-year homeowner mistakes
How to Apply for PHFA
Work with a PHFA-approved lender (I have trusted local lenders I can connect you with).
Complete your loan application and PHFA paperwork together.
Provide your documentation — income, credit, bank statements, etc.
Complete the education course.
Close on your home with the PHFA assistance applied.
Real-Life Example
One of my recent Montgomery County clients, Sarah, was a first-time buyer earning a modest income. She found her dream home in Lansdale but was worried about covering $9,000 in closing costs.
With PHFA, she:
Used the Keystone Advantage program to borrow $6,000 at 0% interest.
Covered the rest with her own savings.
Moved in with a small emergency fund still in place.
Now, instead of being “house poor,” she has peace of mind and a comfortable monthly payment.
Why Work with an Agent Who Understands PHFA
Not every agent is familiar with PHFA — and that can be a costly mistake.
You want someone who:
Knows the program inside and out.
Can connect you with lenders experienced in PHFA loans.
Understands how to structure your offer so sellers take it seriously (some don’t realize PHFA loans are just as strong as other financing).
The Seller Side Bonus
If you’re a seller, understanding PHFA is also powerful — because you can position your property as “PHFA eligible” to attract more qualified first-time buyers and potentially get more offers.
Final Thoughts
If you’re ready to buy your first home in Pennsylvania but the thought of closing costs makes you want to put your head under the covers, PHFA could be your ticket to affordable homeownership.
And when you have the right agent guiding you (hi 👋), the process is a lot less intimidating than you might think.
📅 Let’s talk about your PHFA options today: Schedule Here
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