Building generational wealth with PA Housing Finance Agency
One of the most challenging parts of buying a home is saving money for a down payment and closing costs. Potential homeowners may have excellent credit and a stable income but may not have thousands of dollars to use for this considerable expense. If you live in Pennsylvania, you may be in luck! The Pennsylvania Housing Finance Agency (PHFA) offers down payment assistance through low-interest-rate loan programs. PHFA authorizes lenders like Mortgage Equity Partners to provide access to these generous programs possible.
In most cases, to be eligible for a DPA, you need to be a first-time homebuyer. While that may seem straightforward, it is not as limiting as you think! According to The US Department of Housing and Urban Development (HUD), a first-time homebuyer is anyone who meets the following criteria:
- A single parent who has only owned with a former spouse while married.
- An individual who is a displaced homemaker and has only owned with a spouse.
- An individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations.
An individual who has had no ownership in a principal residence during the three years ending on the date of purchase of the property. This includes a spouse (if they meet the above test, they are considered first-time homebuyers).
So, with that in mind, let’s look at some of the PHFA’s most popular down payment assistance programs for moderate-income homebuyers and first-time buyers:
Keystone Advantage Assistance Loan Program
This program offers a second mortgage loan to cover up to 4% of the purchase price or $6,000 (whichever is less) for down payment and closing costs. The loan is repaid over ten years at 0% interest.
Keystone Forgivable in Ten Years Loan Program (K-FIT)
This program provides a second mortgage loan of 5% of the purchase price or appraised value with no maximum dollar amount. The loan is forgiven over ten years at a rate of 10% per year.
All these programs are considered subordinate loans. If you have more than one mortgage on your property, each loan has a lien position. If you default on your loan, the liens are paid in order of importance.
Whether it is a grant or subordinate loan, repayable or forgivable, down payment assistance is an umbrella term used to describe programs offered by federal, state, county, and local governments. These programs are often partnered with affordable first mortgages to support homeownership for eligible potential homeowners.
“The programs through PHFA are great for first-time homebuyers. It is gratifying to help families who have been renting start building generational wealth by using down payment assistance programs to get into their first home,” said Pat Brunner, Branch Manager at Mortgage Equity Partners.
The PHFA programs are designed to make homeownership more accessible for Pennsylvania residents by reducing the financial burden of down payments and closing costs. If you have any specific questions or need help deciding which program might be best for you, contact our approved loan officers!
