The program that is best for you will depend on your specific circumstances, such as your credit history and amount of cash savings, as well as your individual preferences. A PHFA approved homebuyer education provider or participating lender can help you decide.
The Pennsylvania Housing Finance agency offers two conventional loan products that are designed specifically for HFAs (Housing Finance Agencies). These products offer a fully amortized 30 year fixed rate term. PHFA offers these programs through a network of approved participating lenders, with PHFA as the servicer. In other words, you will work with a lender up through the loan closing, but will make your monthly payments to PHFA for the life of your loan.
HFA Preferred Risk Sharing™
The HFA Preferred Risk Sharing™ loan does not require mortgage insurance, which is insurance coverage that is commonly required by lenders when the borrower has a downpayment of less than 20 percent of the purchase price. Typically there is a premium added to your monthly mortgage payment to cover the cost of this insurance. Since this additional payment is not required with HFA Preferred Risk Sharing™, the total monthly mortgage payment is typically lower than a loan with mortgage insurance included, even though the interest rate may be slightly higher.
With the HFA Preferred™ loan, mortgage insurance is provided by one of several private mortgage insurance companies when the borrower puts down less than 20 percent towards the purchase of the home. Your lender will help you determine what the premium will cost for your specific situation.
These programs also provide a refinance option for homeowners seeking to lower their current monthly mortgage payment on their primary residence. Cash back is limited to $2,000 or two percent (2 %) of the balance of the new PHFA loan, whichever is less. Borrowers may be eligible for a PHFA Advantage Assistance Loan in conjunction with a refinance, only if they still need help with their closing costs after using any available "cash back" to cover those costs.
Downpayment and Closing Cost Assistance
Downpayment and closing cost assistance loans are available with both HFA programs through the Keystone Advantage Assistance Loan program. PHFA's Access Home Modification program with or without the Access Downpayment and Closing Cost Assistance program is also available with both HFA loan products in the case where a borrower or family member is living with a permanent disability. In addition to the Agency's programs, borrowers may also utilize PHFA-approved local homebuyer assistance programs.
Mortgage Credit Certificate
First-time homebuyers meeting PHFA's income and purchase price limits may qualify for a Mortgage Credit Certificate, which can be combined with the Keystone Advantage Assistance Loan.
The following eligibility requirements are shared by both the HFA Preferred Risk Sharing™ and the HFA Preferred™ loan programs:
- Eligible borrowers must meet the income limits posted in HFA Program Limits. The gross annual household income for all adults that intend to occupy the home within one year from loan closing cannot exceed the limit shown for your county. All sources of income must be included, except for income received by persons under age 18 and income received by dependants enrolled in a full-time undergraduate program.
- The loan must be used towards the purchase or refinance of a primary residence.
- There is no first time homebuyer requirement under these programs. However, the borrower may not have an ownership interest in any other residential dwelling at the time of loan closing.
- Borrowers are required to put down at least $1,000 from their own funds. The remaining funds can be from an acceptable gift or assistance program.
- Pre-closing homebuyer education must be completed for home purchase loans by at least one borrower. Borrowers with a FICO score at or above 680 can complete this requirement at a PHFA-approved counseling agency or online through an approved mortgage insurer. (Homebuyer education not required for refinance loans.)
- Face-to-face homebuyer education must be completed by all borrowers purchasing a home with a FICO score below 680 at a PHFA approved counseling agency.
- Acceptable credit history and the ability to make monthly payments on the home you expect to buy are required. Generally, you should plan to use no more than 30 percent of your income for your monthly mortgage payment. A participating lender or PHFA network counseling agency can help you determine how much of a home you can afford, as well as any credit issues you may need to work on.
- Sufficient funds are necessary to pay standard mortgage application and closing fees. Check with a PHFA participating lender to determine the specific costs. These would commonly include such things as credit reports, appraisals, title fees, transfer taxes, etc.
- Sufficient funds for a downpayment on your prospective home are required. The minimum downpayment is determined by your credit profile, as specified above.
- Mortgage loans for condominiums, manufactured housing, and two-unit properties are not permitted under these programs. Check out the Keystone Government and Keystone Home Loan programs if you are interested in purchasing one of these types of properties.