Why Down Payment Assistance Matters
For many first-time buyers, saving for a down payment is the single biggest obstacle to homeownership. In Philadelphia, where the median home price hovers around $240,000, a traditional 20% down payment would require $48,000 in savings — plus closing costs that can add another $10,000–$15,000. Pennsylvania's assistance programs can dramatically reduce this barrier.
PHFA Keystone Home Loan Program
The Pennsylvania Housing Finance Agency (PHFA) Keystone Home Loan is the foundation of the state's homebuyer assistance infrastructure. Key features include:
- Eligible loan types: FHA, VA, USDA, and conventional (with private mortgage insurance)
- Income limits: Vary by county. For Philadelphia County, the 2025 household income limit is approximately $105,000 for a family of 4.
- Purchase price limits: Up to $349,525 in most areas, higher in some counties.
- Minimum credit score: 620 for FHA; 660 for conventional
- First-time buyer requirement: Yes (unless purchasing in a targeted area or being a discharged veteran)
PHFA loans come with below-market interest rates, making them particularly attractive in the current rate environment.
PHFA HOMEstead Down Payment and Closing Cost Assistance
The HOMEstead program provides a second mortgage of up to $10,000 to cover down payment and closing costs. Important details:
- The assistance is in the form of a no-interest second mortgage.
- Forgiveness: The loan is forgiven at a rate of 20% per year. After 5 years of living in the home as your primary residence, the entire $10,000 is forgiven.
- If you sell or refinance before 5 years, you must repay the unforgivable portion.
- Available in combination with the Keystone Home Loan.
Philadelphia HOME Program
Funded through the federal HOME Investment Partnerships Program, Philadelphia's local initiative offers:
- Forgivable loans of up to $10,000 for down payment and closing cost assistance.
- Income limits: Generally 80% of Area Median Income (AMI). For 2025, that's approximately $71,000 for a family of 4 in Philadelphia.
- The property must be the buyer's primary residence and must be owner-occupied.
- Certain properties in targeted Reinvestment Areas may qualify for higher amounts.
Philadelphia Turn the Key Program
Turn the Key is a newer initiative specifically designed to encourage homeownership in neighborhoods with high rental rates. Features include:
- Subsidies up to $20,000 for income-qualified buyers in specific Philadelphia zip codes.
- Targeted at zip codes including 19120, 19121, 19122, 19132, 19133, 19134, and others.
- Works in conjunction with PHFA financing.
- Properties must meet minimum habitability standards.
FHA Loans: Still the Go-To for Many Buyers
While not specific to Pennsylvania, FHA loans remain essential for buyers with lower credit scores or limited savings:
- Down payment: As low as 3.5% with a 580+ credit score
- Down payment: 10% with a 500–579 credit score
- Mortgage insurance premium (MIP) is required for the life of the loan unless you put 10% down
- FHA allows gift funds from family members for the down payment
How to Apply for Pennsylvania Assistance Programs
- Complete a HUD-approved homebuyer education course (required for most PHFA programs). Cost: $75–$125. Several are available online.
- Get pre-approved with a PHFA-approved lender. Giraldo Real Estate Group can connect you with our trusted lending partners.
- Find a home within the eligible purchase price limits.
- Your lender will submit the PHFA application on your behalf.
Can You Stack Multiple Programs?
Yes! Many buyers successfully combine PHFA Keystone + HOMEstead + Philadelphia HOME for maximum assistance. A buyer qualifying for all three could potentially receive up to $20,000 in down payment/closing cost assistance. This can make the difference between renting and owning.
Giraldo Real Estate Group works with PHFA-approved lenders and can help you navigate these programs. Contact us to connect with a lending specialist who understands all available assistance options.