Frequently Asked Questions (FAQ)
Homebuyers
- How do I know if I am eligible for a PHFA Loan?
- Does PHFA offer Homebuyer Workshops for individuals just getting started?
We have a network of approved counseling agencies that provide potential homebuyers with education about the home buying process. With no cost to the prospective PHFA borrower, these workshops will increase your level of confidence when shopping for a home and obtaining a mortgage.
- Does PHFA have their own lenders?
Yes, we have many participating lenders throughout the state. They will guide you through the application and closing of your PHFA home loan.
- Can an application be completed online?
Unfortunately applications cannot be processed online with PHFA. However, you may be able to complete an application online or over the phone with one of our participating lenders.
- Does PHFA offer any special programs for individuals with physical disabilities?
Yes. We offer the Access Home Modification Program in conjunction with any of PHFA's first mortgage programs. The program helps persons with physical disabilities or who have physically disabled family member(s) living in the household make accessibility modifications. This is a deferred payment loan, with no interest or monthly payment. In addition to the Access Modification funds, some applicants may also qualify for the Access Downpayment and Closing Cost Assistance Program.
- Are there purchase price and income limits?
There may be purchase price and income limits depending on the program you are applying for. The Keystone Government Loan program does not have any PHFA-specific income or purchase price limits, however the participating lender would need to comply with the government entity's mortgage limits. The Keystone Home Loan program has income and purchase price limits specific to each county. The HOMEstead Program offers downpayment and closing cost assistance to eligible homebuyers and has different income and purchase price limits.
- How long does it take to get a PHFA loan?
This varies depending on many factors: the condition of the property, the seller’s timeline, the lender, the real estate agent, the documentation you supply to the lender, whether you are building a new home, etc. However, the process should not take any longer simply because you are getting a PHFA loan.
- I currently own a home and would like to purchase another one. Will I be able to get financing through PHFA?
Yes, if the home you intend to purchase is in a Target County or census tract where the first-time homeowner requirement is waived under the Keystone
Home Loan program. With the Keystone Government Loan program, you can be a first-time homebuyer or a non-first-time homebuyer. A first-time homebuyer” is defined as anyone who has not had an ownership interest in their principal residence within the past three years.
- Would PHFA be able to assist me if I do not have the best credit score?
Individuals whose middle FICO score is below 660 are required to attend a pre–closing homebuyer workshop or counseling session from one of our approved counseling agencies. The counseling agency and/or lender can help you determine if you would qualify for PHFA financing.
- Will I be eligible for a loan if I declared bankruptcy in the past?
Bankruptcies need to be fully discharged for at least two years. The counseling agency and/or lender can help you decide if you would be eligible for a PHFA home loan.
- Does PHFA offer Closing Cost Assistance?
Yes, if you meet the eligibility requirements for one of the Keystone Advantage Assistance Loan provides a loan in the form of a second mortgage to help with the costs associated with purchasing a home. Qualified borrowers may be eligible to receive up to two percent (2%) of the home's purchase price, up to $4,000 which is to be repaid monthly over a term of ten years. The Keystone Advantage Assistance Loan may be used to cover downpayment or closing costs in conjunction with a PHFA first mortgage. The Advantage Loan carries the same fixed interest rate as the first mortgage. The minimum assistance amount is $500.
Qualifying homebuyers who participate in the "HOMEstead" program can borrow between $1,000 and $10,000 to help with downpayment and closing costs. The Access Downpayment and Closing Cost Assistance Program is available to qualifying applicants who are also using the Access Modification Program.
- Will I be considered a first–time homebuyer if I own a mobile home?
Yes. As long as your home is not deeded and taxed as real estate. Generally, if the home is permanently attached to land that you own, it is considered real estate.
- I’ve heard that people who get a PHFA home loan have to pay a tax if they ever sell their home. Is that true?
No. While there is a small possibility that you could be subject to a Federal Recapture Tax upon the sale of your home, it only applies when three conditions are met: 1) you sell the home within the first nine years from closing on your loan; 2) your income exceeds the limit established by the federal government; and, 3) you make a profit from the sale of your home. In order to help take the confusion and worry out of the purchase of your home, PHFA agrees to reimburse you if you ever have to pay a Recapture Tax in connection with the sale of your home. This applies to borrowers who make application for a PHFA loan on or after January 1, 2004. The Recapture Tax Notice, which is supplied to and signed by all PHFA borrowers, provides a more detailed explanation. Recapture tax is not applicable on PHFA Keystone Government Loans.
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Homeowners
Homeowners' Emergency Mortgage Assistance Loan Program (HEMAP)
Over 28 years, the Homeowners' Emergency Mortgage Assistance Program, or HEMAP, saved the homes of more than 46,000 Pennsylvania families from foreclosure. With the conclusion of the HEMAP in 2011, changes are being made in the handling of notices by banks for instituting mortgage foreclosures. If you are a homeowner who is delinquent on your mortgage, you may want to review a joint letter by the state Department of Banking and PHFA on this subject.
At this time, PHFA's Homeowners' Emergency Mortgage Assistance Program (HEMAP) is no longer accepting applications. However, the agency is exploring other ways we may be able to help Pennsylvania families struggling to avoid foreclosure. Individuals can learn about other foreclosure prevention programs on our Additional Foreclosure Prevention Information page. Any new developments will be posted on our Web site, so please check back regularly.
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Homeownership Professionals
Originations
- How do I know if my buyer is eligible for a PHFA loan?
The Eligibility criteria can help you determine if your buyer is eligible for a PHFA–financed home loan.
- Would my buyer meet the ‘first–time buyer’ definition even if he/she owned a principal residence within the past three years, but hasn’t been living there during that time (for example, he/she was going through a divorce)?
Yes. If the buyer can provide documentation showing he/she has neither resided in the home, nor taken the respective tax deductions. Usually, copies of the past three years of federal tax returns are sufficient to document both conditions.
- Is my buyer still considered a first–time buyer if he/she currently owns a mobile home?
Yes. As long as the home is NOT deeded as real estate. Generally, if the home is permanently attached to land that the buyer owns, it is considered real estate.
- Will PHFA finance manufactured homes?
Yes. See Chapter 8 of the Sellers Guide for details and specifications.
- Does PHFA have any special requirements for Condo’s or PUD’s?
See Sellers Guide for details. PHFA does require proof of insurance for contents coverage (HO6), even though it is not included in the escrow amount (unless there is additional dwelling coverage in excess of $10,000). The lender should follow the guidelines and requirements of the respective insurer/guarantor, if applicable. For loans with 20 percent down, PHFA only requires proof of the development’s insurance.
- How do I lock in a rate?
Participating lenders may lock in a rate by reserving the loan using PHFA Pipeline Plus. Each lender has an administrator of the system that can set up lender employees with their own user name and password.
- Can a reservation (e.g., rate lock) be extended?
- What is the charge for an extension?
Extension fees are subject to change at any time at the discretion of the Agency. Please see Chapter 2 of the Sellers Guide for more information on extension periods and fees.
- Will my borrower lose his/her rate if the reservation expires before the loan is approved?
Expired loans will be subject to a worse-case relock.
- Should I cancel the reservation with PHFA if the borrower must choose another property?
The Agency's rate guarantee is made on the basis of a loan application and specific property. If a change of property occurs, the subsequent application would be treated as a new loan for application and rate lock purposes. Therefore, it would be subject to current market rates and applicable new lock periods.
- What happens to my borrower’s rate if the reservation expires right after closing, and PHFA has not purchased it yet?
Nothing happens to the rate but there will be a late fee deducted from the lender’s proceeds when PHFA purchases the loan.
- Can a lender cancel or change a loan reservation?
Yes. To cancel or change a reservation, please e-mail seco...@phfa.org with an explanation of the change (e.g., loan amount change, program change) or cancellation. Cancellations and changes cannot be done using the online system. NOTE: Depending on the information being changed, the lock may be subject to current market rates and applicable new lock periods.
- Do buyers have to escrow for taxes and insurance?
- How am I notified when a lock is confirmed, about to expire, and/or cancelled?
The notifications and reports are available online via PHFA Pipeline Plus. The reports will be shown under your Reports and Notices option. You can also see which notices you are set up to receive by accessing the My Account page.
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Underwriting
- How is income calculated for income limit purposes?
The current annual household income of all persons intending or expected to reside in the home may not exceed the income limit established by PHFA for the County in which the home is located. Current Annual Household income is defined as the gross income of the borrower(s) and any other person(s) over the age of 18 who is not a dependant child that is a full time student, expected to live in the residence, projected one year forward (it is NOT simply the borrower(s) previous calendar year income). Income such as overtime, bonus, and commissions can be averaged using year–to–date and past year’s earnings divided by the number of months provided the employer can break out this income separately. See Chapters 3, 4, and 6 of the Sellers Guide for more details.
- How is income calculated for qualifying purposes?
For conventional loans, PHFA generally follows standard Fannie Mae and Freddie Mac guidelines. For government insured/guaranteed loans, the lender should follow the guidelines of the respective agency (FHA, VA, or USDA).
- Can the lender use an automated underwriting system such as Desktop Underwriter (DU) or Loan Prospector (LP)?
Yes. In order to streamline the underwriting and approval process, findings of ‘Accept’ or ‘Approve’ are eligible for PHFA financing, as long as the buyer and property meet the PHFA compliance issues. However, the lender must still submit a full appraisal (FNMA form 1004), thorough income information on all adult household occupants (two years of W2’s, paystub showing year–to–date, VOE, and any other income sources), and a VOD or three months of bank statements. Files with a Refer, Caution, or Expanded Approval finding must be manually underwritten, and PHFA will accept the loan as long as there are sufficient compensating factors and evidence of mortgage insurance/guaranty if the downpayment is less than 20 percent. For conventional loans that require insurance, the buyer must be eligible for the ‘A’ paper premium. A minus (A–) premiums are not acceptable.
- Who underwrites the file—the lender, or PHFA?
The lender is responsible for underwriting the file before it is submitted to PHFA for approval.
- When is the file submitted to PHFA for approval?
The underwriting and compliance package must be submitted to PHFA for approval prior to loan closing. For lenders who have Delegated Underwriting Authority, they may approve the loan on behalf of PHFA, thereby eliminating the need to submit a package prior to closing. For further details, please see Chapter 7 of the Sellers Guide.
- How long does it take for PHFA to approve a loan once the lender has submitted it?
The most it should take is five business days, in times of peak activity. However, the normal turnaround time is one to two business days, as long as the package is complete.
- What documents are required in the underwriting package that is submitted to PHFA prior to closing?
- How am I notified when a loan is approved, suspended or denied?
The notifications and reports are available online via PHFA Pipeline Plus. The reports will be shown under your Reports and Notices option. You can also see which notices you are set up to receive by accessing the My Account page.
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Purchasing
- Are there instructions for compiling the purchase package that gets shipped to PHFA after a loan closes?
Yes. They are listed in Form 58, the Purchase Submission Checklist. This checklist provides instructions for compiling the package and specifies what documents are essential for the loan to be purchased. Please note that the servicing documents also be included with the purchase submission. These items are listed on Page 4 of Form 58.
- How do I know the deadline for the purchase of the loan?
A complete loan package eligible for purchase by the Agency must be received by the lock expiration date. Late fees will begin to accrue seven calendar days from the expiration date on any loan not received and purchased within this time line. For additional information, refer to Chapter 10 of the Sellers Guide.
Please see Chapter 2 of the Sellers Guide for more information on lock periods.
- Can a loan be purchased without the original Title Policy?
No. The original Title Policy or a copy stamped “True and Correct” with an original signature by an officer of the Title Company is needed in order for the loan to be purchased.
- If Mortgage indicates that the legal description or any type of Rider is included as a part of the document, will the loan be purchased if that item is missing?
No. The loan will remain ineligible until one of the following is provided: a copy of the recorded mortgage showing that indicated attachment was recorded with the mortgage; or, a mortgage modification agreement signed and notarized by the borrower to add the missing item(s) to the recorded mortgage. The late fee will continue to accrue until the loan is purchased.
- The Recapture Tax Form was not signed. Will PHFA purchase the loan?
No. PHFA requires a signed copy of this form in order to purchase the loan. However, if a signed form was previously submitted and a correction is needed, we will accept a copy of the corrected form with a copy of the letter showing that the borrower was provided the corrected information.
- When a file has a combination of ineligible and post purchase conditions, do all of the conditions need to be cleared for the loan to be purchased?
No. Clearance of the ineligible conditions allows us to purchase the loan. Additional time is available to clear the post purchase conditions. However, the timeliness of clearing the post purchase items effects the second portion of the SRP payment.
- Does PHFA have an assignment form that they encourage the lenders to use?
Yes. Form 20 of the Sellers Guide.
- What do I need to do to be sure that I receive the Servicing Release Premium without any deductions?
All Post Closing issues must be cleared within 60 days or less from the date of purchase. Refer to Chapter 1 of the Sellers Guide for the payment schedule and the percentage of payments.
- Does PHFA have a guideline on what items can and can't be included as exceptions in the Title Policy on Schedule B?
Yes. Please refer to Chapter 12 of the Sellers Guide for further details on this topic.
- Is it important to review Schedule A of the Title Policy to verify that it lists the complete and accurate account information?
Yes. PHFA reviews this information to be sure it is accurate. If corrections are needed, an endorsement will be requested.
- How do I deliver the mail to clear exceptions on post closing items?
Items for purchase-related conditions should be emailed to sfpu...@phfa.org and final document related items can be sent to sffi...@phfa.org. The notice or report will indicate the type of exception.
- If MERS is referenced on the Mortgage, how is the loan assigned to PHFA since they are not a member of MERS?
Our Form 20 of the Sellers Guide is used to assign the mortgage to PHFA. The assignee must be listed as MERS as a Nominee for the appropriate lending institution. In all three (3) areas of the assignment that lists the lender's name, the full name as stated above should appear in all sections.
- Does PHFA accept copies of the recorded documents?
Yes. The copies must be legible and include all of the pertinent recording information.
- How am I notified when a loan is purchased or if there are outstanding purchase or final documents conditions?
The notifications and reports are available online via PHFA Pipeline Plus. The reports will be shown under your Reports and Notices option. You can also see which notices you are set up to receive by accessing the My Account page.
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Rental Housing Professionals
- How can resident services be integrated into affordable rental housing?
There are three basic Developing a Supportive Services Program by which resident services can be integrated into affordable rental housing: contracting for services; providing services in–house; or, co–location of services. Determining which model is most appropriate starts with an evaluation of the community, the services needed, and the capacity of management to deliver services.
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