Loan Programs for Home Improvements & Repairs
ACCESS Home Modification
The ACCESS Home Modification Program provides mortgage loans to assist persons with disabilities or who have a family member(s) living in the household with disabilities who are purchasing a home that needs accessibility modifications. This program provides a deferred payment loan, with no interest, and no monthly payment. The loan becomes due and payable upon sale, transfer, or non-owner occupancy of the property.
Applicants must meet the requirements of the ACCESS Home Modification program which are listed below:
- Applicants must be homebuyers who are persons with a permanent disability or have a family member(s) living in the household with a permanent disability who are purchasing a new or existing home with a loan originated through one of the Agency's homeownership loan programs.
- Applicants may apply for any of the Agency's first mortgage program loans (i.e., Keystone Home Loan, Keystone Government Loan, HFA Preferred™(Lo MI), HFA Preferred Risk Sharing™(No MI)).
- Applicants must meet the underwriting guidelines for the first mortgage program in which they are applying. Refer to Seller's Guide for program guidelines.
Eligible Home Modifications
Home modifications should be designed to meet the needs of the person with the physical disability who will be residing in the home. Eligible modification items may include, but are not limited to the following.
- bathroom modifications
- installation of grab bars and handrails
- kitchen modifications
- lifting devices
- main level bathroom or bedroom addition
- ramp addition or repair
- sidewalk addition or repair
- widening doorways or hallways
Downpayment and/or Closing Cost Assistance
In addition to the ACCESS Modification Program, some applicants may qualify for downpayment and/or closing cost assistance through the HOMEstead Assistance or the ACCESS Downpayment and Closing Cost Assistance loan programs.
If HOMEstead assistance is used in conjunction with the ACCESS Modification Program, the types of modifications will be limited to those that will not disturb any painted surfaces, unless the home was built after January 1, 1978. For homes built prior to 1978 where the modifications may disturb painted surfaces, the borrower cannot use HOMEstead assistance but may use the ACCESS assistance if needed and if eligible.
Rates and Fees
ACCESS mortgage loans are interest free and have no fees.
- Not less than $1,000 and no more than $10,000. Funds will be available on a first-come, first-serve basis.
- ACCESS Home Modification loans are available in addition to any downpayment and/or closing cost assistance or HOMEstead funds for which the applicants may qualify. These additional mortgages will NOT be factored into maximum loan-to-value financing limitations.
- This is a non-interest bearing loan with no monthly payment. The loan becomes due and payable upon sale, transfer, or non-owner occupancy of the property.
Applicants are responsible for determining what accessible modifications are required. Most Local Centers for Independent Living and Area Agencies on Aging can provide technical assistance in making this determination. The applicant is to provide the lender with a proposal completed by a general contractor of choice, detailing the modification improvements that will be needed to make the home accessible.
Upon completion of your application, the lender will perform a preliminary review of the construction proposal submitted by the applicant, which includes the specifications, cost estimates, and drawings of the work to be completed. A contract, signed by the applicant and the contractor, is required before the lender can send the loan package to PHFA for final approval. (NOTE: The contract should include a clause stating that its implementation is contingent upon approval of the mortgage loan).
At closing, PHFA will hold the ACCESS Home Modification funds in an escrow account, pending completion of the modifications. Should there be an increase in costs during the modification/improvement period which takes the cost of the project over the amount approved, the borrower must fund the amount of the increase.
PHFA will disburse the funds to the contractor with the homebuyer's written approval and secure a certificate of completion. The improvements must be completed within 90 days of the closing. All funds disbursed must be used for the accessibility modification improvements. Any unused ACCESS Home Modification Loan funds must be refunded to the Agency.
How to Apply
If you meet the conditions above, contact a PHFA participating lender to start your mortgage application. PHFA also offers homebuyers the opportunity to receive homebuyer counseling and education free of charge through one of its approved counseling agencies. We strongly encourage you to seek the assistance of a counselor before you sign a sales agreement, especially if you are a first-time buyer. Any borrower with a FICO credit score lower than 680 is required to complete a course prior to closing on their loan.
PHFA's Purchase Improvement loan allows buyers who qualify for a Keystone Home Loan to purchase and improve/repair a home within one transaction. Eligible buyers may include between $1,000 and $15,000 for repairs and/or improvements with a conventional PHFA first mortgage, as long as the As Completed appraised value supports the cost of the repairs. This allows the buyer to make needed repairs right away, without having to take out another loan at a higher rate and with a shorter repayment period.
The purchase price plus the cost of the repairs (referred to as the total acquisition cost) cannot exceed PHFA's applicable purchase price limit. (Visit the page on the Keystone Home Loan Program for purchase price limits.) The loan amount will be based on the lesser of the total acquisition cost or the as completed appraised value.
This program may be combined with PHFA's Keystone Advantage Assistance Loan, as applicable. Two-unit properties are not eligible for this program.
Common repairs include:
- Renovation of plumbing or electric systems
- Installation of improved heating or air conditioning systems
- Addition of living space
- Renovation of a kitchen or bath area
- Replacement of a roof
- Energy conservation and solar energy improvements
A maximum of three inspection fees of up to $75 each may be included in the repair costs. Recreational or entertainment items such as swimming pools, tennis courts, hot tubs, saunas, etc., may not be included.
All repairs must be completed by a qualified and licensed contractor. If the local government (city or municipality) does not require contractors to be licensed, proof of their liability insurance must be supplied and included with the contract. Borrowers may not act as their own contractors, unless that is their profession.
The contract must contain the following items:
- A description of the specific work to be completed. This must be supported by specifications, drawings, photos, etc.;
- A statement of the actual maximum amount that can be charged (not estimated amount);
- A release of lien clause to maintain clear title;
- The contractors agreement to complete the work in compliance with all applicable building codes and zoning restrictions and to obtain the necessary permits and a certificate of completion within 90 days of the closing date;
- The borrowers and the contractors signatures and date.
It is up to the buyer to provide the lender with a written request detailing the required improvements/repairs to be completed, along with the estimates, specs, contracts, etc., from a qualified and licensed contractor(s). The buyer must sign Purchase/Improvement Program Acknowledgment at the time of application. The borrower must fund any amount in excess of $15,000 and/or any amount that exceeds the as complete appraised value. If this amount is financed, it must not impact the buyers ability to pay the mortgage (debt to income ratios).
The lender is responsible for reviewing the borrowers written request and specs, contracts, etc., to determine the credibility and legitimacy of the proposed repairs and/or improvements, and to ensure the contract contains all the necessary items as listed above under the section titled The Contract. Also, the lender will ensure that the funding of any additional costs do not jeopardize the buyers debt to income ratios or PHFA's lien position, nor do they cause the purchase price limit to be exceeded.
The lender will submit a signed Purchase/Improvement Program Acknowledgment with specs, contract(s), etc., to PHFA when they submit the pre-closing package. The lender should write Purchase Improvement Program on the top of the 51 Compliance Package Checklist - PURCHASE, the credit/pre-compliance package checklist. The lender must provide the appraiser with the contract and supporting documentation so the as completed value of the property can be determined.
At closing, the lender will escrow the repair funds and will thereafter monitor the completion of the repairs and issue draws, if applicable, using 49 Request for Payments and Completion Certification. An initial draw in an amount up to 50 percent of the total repair cost may be issued at closing. The checks for each draw must be signed by both the borrower and the contractor. A maximum of two inspections with a charge not to exceed $75 each may be ordered by the lender. The lender will secure the completion certificate (50 Requirements and Guidance for PHFA Home Improvement Loans) from the original appraiser within 90 days of closing. Please note that the borrower must still occupy the home within 60 days, so repairs in the final month must not affect livability of the home. PHFA will purchase the loan according to the normal schedule, which will usually be prior to the completion of the repairs.
This program is also covered in Chapter 3 of the Seller's Guide.
Homeowners Energy Efficiency Loan Program (HEELP)
The Homeowners Energy Efficiency Loan Program (HEELP) offers loans between $1,000 and $10,000 for specific energy efficiency repairs at a fixed-rate of one percent (1%) for ten years with no prepayment penalties.
HEELP loans are more affordable than you may think: $44 per month for a $5,000 loan or $88 per month for a $10,000 loan. With such affordable payments, now you can make those much needed energy efficiency repairs.
The specific uses for the HEELP funds are:
- Air sealing, insulation and ductwork
- Energy efficient windows and doors
- Energy efficient heating or cooling system repairs or replacements
- Roof replacements
The HEELP income limits are listed in the chart below.
|Persons||80% of AMI*|
∗ The Agency may make exceptions to these limits. These limits may be increased up to 150% Area Median Income (AMI) based upon individual circumstances. Please contact PHFA at 1.855.827.3466 for more information.
Download the Borrower Application. PHFA will underwrite your application and let you know if you are approved. If we have a local HEELP Loan Provider in your area we will refer you there. Otherwise, we will walk you through how to get the work that you need to have done approved.
Unsure if you should apply for HEELP? Complete the Self Pre-Screening Form to see for yourself if HEELP may be an option for you.
HEELP Approved Contractors
Locate an approved HEELP contractor in your area. If you do not see your contractor on the list, have the company apply to become an approved contractor.
To locate a contractor in your area, please choose a county from the menu below.
Questions or concerns regarding this list should be directed to the Homeownership Programs Department.
Are you a contractor interested in doing HEELP work?
All contractors working with HEELP borrowers must be approved. Download the Contractor Application.
Renovate & Repair
A R&R loan can be used to pay for repairs and improvements that increase the basic livability of the home, including additions and construction, that makes the home safer, more energy efficient, or more accessible to people with disabilities or people who are elderly. R&R loans can also be used to remove or fix code violations, hook up to municipal water and sewer systems, and improve or install code-compliant septic or well systems. In addition, R&R loans can be a source of payment for emergency repairs to critical life–safety systems in the homes, as long as the loan application is made to the Local Program Administrator within 30 days of the repair.
The purpose of the Keystone Renovate & Repair Loan Program (R&R loan) is to help:
- Prevent homeowners from becoming victims of unscrupulous lending practices (i.e., high interest rates and costs, more money borrowed than needed, pre-payment penalties, etc.).
- Homeowners prioritize their home repair spending so that the work that they get done is what their home really needs.
- Improve Pennsylvania's aging housing stock for its current residents and future generations.
This program is designed to help households with a combined household income no greater than approximately 150 percent of the statewide median income (adjusted upwards in high-cost areas) rehabilitate and/or improve their homes. Not only does the R&R loan provide an attractive interest rate, but it also provides the homeowner with help determining the repairs and/or improvements to be done. In this regard, the program provides much more than a loan–it provides peace of mind in knowing that the right home repairs are done and were completed in a timely manner with quality workmanship. Luxury and purely cosmetic items such as hot tubs, pools, gazebos, etc., are not permissible under the program.
Frequently Asked Questions
Where do I start?
Interested homeowners need to have:
- Household income within limits. (R&R Income Limits/R&R Rate Sheet).
- Satisfactory credit (typically credit scores above 620).
- An interest in repairing or improving their permanent, primary residence, which must be located in Pennsylvania.
- Currently own the home or be in the process of purchasing it.
- Adequate income to support a monthly loan payment.
- Additional qualifications will be described by the Local Program Administrator (LPA) at the time of application.
- If no LPA is listed in the area you live in, the R&R Loan is not available in your area. Please use the R&R Alternatives resource list to find funding sources that may be available to you. You may call PHFA for assistance in finding and using these alternative resources.
If you would like to learn more about the R&R program, contact PHFA at 1.800.822.1174 to get a referral to the LPA in your area.
We at PHFA strive to help borrowers find programs that fit their needs; however, some borrower's needs may be better met through other programs. Our R&R Alternatives has information about additional grant and loan programs that may be able to help you fix your home or make it accessible.
The R&R Loan Program also has funds available to homeowners who wish to convert a multi-unit home back into a singlefamily residence. The Conversion Initiative allows homebuyers, homeowners, or landlords to finance the cost of converting a multi-unit property, consisting of any number of units, back to a singlefamily residence for which it was originally intended. Properties can be those that were initially built as a singlefamily residence but were converted into apartments or offices. It could also include mixed-use properties where the level(s) above the storefront are being converted back to a single family home. To find out more about this program and the availability, contact PHFA at 1.800.822.1174.
Why choose R&R?
There are many benefits in choosing the R&R loan over a traditional home equity loan. Some of these benefits include:
- Often lower rates than traditional home equity loans.
- Low fees.
- Borrow up to a maximum of $35,000 or 120 percent of the home's value for approved home repairs or renovations (minimum of $2,500).
- 10, 15, or 20-year fixed rate loan.
- No pre-payment penalty.
- Help determining what repairs should be made and how much they should cost, as well as help with selecting qualified and reputable contractors.
- Most traditional home equity loans only allow homeowners to borrow up to 90 percent of their home's value.
How do I apply?
To apply for a loan you should contact a Local Program Administrator in your area. When you first contact your LPA, they can tell you if what you want to do to your home is allowed with R&R funds and they will ask you some pre-screening questions to see if you might qualify for a loan.
How much money do I have to pay to participate in this loan program?
Currently, all borrowers need to have cash on hand to pay for the cost of obtaining their three credit reports with scores. This will typically cost $75 or less and the money will be collected by the Local Program Administrator or the Lender when the borrower is underwritten for the loan.
[Just so you know – Borrowers are "underwritten" when a bank or other lender determines how much money it is willing to lend to you. Underwriting does NOT tell you how much you should borrow. How much debt you can handle is something you have to figure out for yourself by looking at the money that you earn compared to what you already owe and your living expenses. Don't forget to also budget for the unexpected and emergencies, too!]
PHFA will pay the following costs on behalf of borrowers who are at or below 50 percent of the county's allowable income for the Program.
- Title/lien search.
- Appraisal or PHFA–approved valuation determination.
- Flood determination.
- Recording fee.
- Program participation fee.
- Document preparation fee.
- Assignment fee.
Borrowers above 50 percent of the county's allowable income for the Program will be responsible for paying the following fees:
- Title/lien search.
- Appraisal or PHFA–approved valuation determination.
- Flood determination.
- Recording fee.
These may cost approximately $425, depending on where you live, and can be financed into the loan.
How does the R&R Loan Program work?
The short answer is that you will make contact with your Local Program Administrator and that organization will be your primary contact through getting the loan, deciding what to get done to your home, and making sure that all paperwork has its "i's dotted and t's crossed." The LPA may refer you to their Local Program Partners such as a Lender or a Housing Counseling Agency or another housing organization.
It really is important to understand all of the details when you are getting a loan. Here is some more information about how these steps will unfold.
When you first contact your LPA, they can tell you if what you want to do to your home is allowed with R&R funds, and they will ask you some pre-screening questions to see if you might qualify for a loan. The next step is underwriting, which is done by either the LPA or a Lender, to determine whether you qualify for an R&R loan and, if so, how much can be lent to you.
Underwriting involves documenting and analyzing the key indicators of your ability to pay for an R&R loan. The LPA or Lender will work with you to verify your income and debts, review your credit reports, order an appraisal of your home or otherwise estimate its market value, verify that your taxes are paid or you have been in a repayment plan for at least one year, check that you have property insurance, and if appropriate flood insurance. Two key R&R determinations are that, even with an R&R loan, your total monthly debts may not be more than 45 percent of your total monthly gross income and the total debt secured by your home may not exceed its market value by more than 120 percent.
Once you are approved for a loan and the maximum that you can borrow has been established, the LPA will send staff to your home to do a home evaluation. The goal of the home evaluation is to help you prioritize your spending between "wants" and home maintenance "needs" and to give you a sense of what it may cost to get the work you are considering done. This is a great time to learn about home maintenance, so ask questions if you have any. And as long as you are physically able, join the home evaluator as they go through your home. The information they give can keep a simple repair from becoming a costly replacement and can help you make your home safer and more comfortable.
The next step is getting a contractor to bid on the work you want to, and can afford to, have done. The LPA won't assign you a contractor, nor can they guarantee the contractor's work. They will give you help in finding one by making referrals to contractors that they have worked with before and providing you with information about "best practices" in hiring a contractor.
Once you have a contract with a building professional and you have your loan closing, where all the loan and legal documents get signed, then the repairs and improvements to your home can actually begin. In most cases, contracts must specify that work will be completed within 90 days of the loan closing.
What is an LPA?
An LPA is a Local Program Administrator. They are the primary contact organization in each county or community for the R&R Program.
In some parts of the state, LPAs may have partnered with lenders, housing counselors, or other organizations to form a Local Program Partnership to administer the R&R Loan Program.
The LPA or the Lender will see if the borrowers can afford the R&R loan and, if so, how much of a loan, help them prioritize spending of these borrowed funds (the "home evaluation"), and assist in finding a contractor.
Does my credit matter for this loan?
Yes. The borrower's middle FICO score must be at least 620.
There are three credit reporting bureaus in the United States: Experian, TransUnion, and Equifax. They collect information about your debts and then use FICO scores to help other companies determine how risky it is to lend you money or sell you a product or service that you pay for over time.
Your FICO scores are calculated using a method developed by the Fair Isaac Company (FICO) to provide standardized comparisons between people and their debt management skills regardless of where they live or how much they earn. Companies such as banks, car dealers, cell phone companies, and many others are very likely to be concerned about your FICO score and look at your credit reports and scores.
One way to know what your credit scores are before you apply for an R&R loan is to go to www.annualcreditreport.com and order your three credit reports with scores. If you haven't already done so this year, your credit reports will be free and the three credit scorers will cost between $5 to $7 per report…so about $20 total. If you want to learn more about credit and money management, check out www.moneysbestfriend.com, Pennsylvania's financial education Web site.
Are condominiums and townhomes eligible for the R&R Program?
Yes, but only the portion of real estate owned by the applicant is eligible to be repaired/improved.
Am I allowed to perform the renovations or repairs myself?
Any borrower can perform non-skilled labor such as painting. Borrowers who are qualified and licensed, if applicable, to work as a contractor or in a skilled trade may perform work for which they are qualified. Borrowers doing their own work will only be loaned money to pay for the cost of materials, not labor.
What programs are available to help make my home more energy efficient?
For very low income households, there are Weatherization grants. Qualifying households have incomes at or below 125 percent of Federal Poverty Guidelines which is typically a little lower than 50 percent of Area Median Income (AMI) in most of Pennsylvania. The limit is based on family size with a family of four not being able to earn more than $26,500. Often these grants have very limited purposes; furnace repair or replacement, insulation, windows, and sometimes roofs. A local administrator can be found on the PA DCED web site. The local administrator will also be able to determine if you qualify for this assistance.
There is another option for families with incomes above the Weatherization limit. The Pennsylvania Treasury Department and PHFA have partnered their two programs, Keystone HELP and the Renovate & Repair Loan Program (R&R), to provide assistance to households regardless of income. The administrator of this program is AFC/First Bank and they can be reached on the Keystone HELP web site.
The HELP loan is an unsecured loan (i.e., no lien is placed against the property) providing up to $10,000 for energy efficiency purposes. There is no income limit for participation in HELP. The PHFA Renovate & Repair loan offers secured loans up to $35,000 for energy efficiency work, regardless of income.
The Renovate & Repair loan can be used for more than energy efficiency as well.
For families and individuals not seeking public financial assistance, there is a federal tax credit in 2007 for making energy efficiency improvements to their home. Check with a tax professional to find out more about the credit and to learn if it will be available in 2008 and beyond. To learn more about the credit and how it helps make energy efficiency more affordable go to the Energy Star web site and then select the link "Tax Credits Under the Energy Bill" at the bottom of the page.
PENNVEST Homeowner Septic Program
The Pennsylvania Infrastructure Investment Authority (PENNVEST) has teamed with the Pennsylvania Housing Finance Agency (PHFA) and the Pennsylvania Department of Environmental Protection (DEP) to offer this special funding program. Assistance is available to eligible homeowners who need to repair or replace their individual on-lot septic system OR to connect for the first time to a public sewer system. Program highlights are summarized below.
Benefits to You
- Receive an attractive rate for this vital home improvement.
- No prepayment penalty if the loan is paid off early.
- Eliminate worries about your septic system when you sell your home.
- Improve the environmental health of your property.
- Avoid or respond to citations from your municipality.
- Interest rate of 1.75%, as of 1/1/2016.
- Terms up to 20 years (up to 15 years for manufactured homes).
- Maximum loan amount is $25,000.
- Loan origination charges apply.
- Loans will be secured by a mortgage on the borrower's home.
- Lien Position: the PENNVEST loan must be in first or second lien position unless the loan amount is less than $7,500 OR the existing first and second liens were originated at purchase for the purpose of buying the home. Third lien position is permitted in these circumstances.
- Loans may be assumable by or simultaneously originated for qualified borrowers receiving a PHFA purchase money mortgage, with PHFA's pre-approval.
- No restrictions on household income as of 1/20/2016.
- Borrowers will be underwritten to determine ability to repay the loan.
- Borrowers must be PA residents seeking to improve their primary residence which meets program requirements.
- Project Location: for on-lot septic repair, all areas of PA are eligible unless a public wastewater collection and treatment system is either in place or will be constructed in the next five years. For first-time sewer connections, any area of PA is eligible.
- Allowable Project Types: rehabilitation, improvement, repair, or replacement of an existing septic system or a first-time connection to a public sewer.
- Financeable Project Costs: system design charges, construction fees and costs, inspection, and permit fees, connection fees (also known as "tap-in fees"), and most loan origination fees.
- Two unit dwellings deeded as one property are eligible unless the residence is a manufactured home, then one unit only.
- Documentation: applicants must gather and provide for lender and PHFA review, all income and credit information, applicable permits, project specifications, connection fees for sewer connections, or, if you are replacing or repairing an on-lot septic system, verification from your local municipality that a wastewater disposal system neither exists nor is planned in the next five years. Additional information supporting the loan application may also be requested.
How to Apply
For More Information: Contact your local Sewage Enforcement Officer, township or borough official, or PHFA at 1.855.U.Are.Home (827.3466).