Overview
Pennsylvania is one of the more affordable large states for first-time buyers, with a statewide median home price near $260,000 and a flat income tax of just 3.07% — among the lowest in the nation — that leaves more room in the budget for a mortgage. Housing costs vary widely, from competitive markets around Philadelphia to far cheaper homes across central and western Pennsylvania. The Pennsylvania Housing Finance Agency (PHFA) is the hub for state assistance, and it's unusually flexible in how it lets buyers combine programs.
PHFA's signature down payment help is the Keystone Advantage Assistance Loan, which provides up to $6,000 as a 0%-interest second mortgage repaid over ten years — a small monthly add-on rather than a lump sum due at sale. For larger assistance, PHFA's HFA Preferred (K-FIT) program offers 5% of the purchase price with no maximum dollar cap, structured as a forgivable second that's written down 10% a year over ten years, so after a decade in the home the entire balance is forgiven. Both require a qualifying PHFA first mortgage, homebuyer education, and household income within PHFA's limits.
State Programs
Keystone Advantage Assistance Loan
Down payment and closing cost assistanceHFA Preferred (K-FIT) Program
Forgivable down payment assistanceMortgage Credit Certificate (MCC)
Federal tax creditFederal Programs Available in Pennsylvania
These nationwide programs can be combined with Pennsylvania state assistance for maximum benefit.
FHA Loan Program
Low down payment mortgageVA Home Loan
Zero down payment mortgageUSDA Rural Development Loan
Zero down payment mortgageTips for First-Time Buyers in Pennsylvania
Pennsylvania's programs are designed to stack. In Philadelphia, the Philly First Home grant adds up to $10,000 (or 6% of the purchase price, whichever is less) toward down payment and closing costs, and it can be layered on top of PHFA's K-FIT assistance — a combination that can exceed $20,000 in help on a typical city home. PHFA also offers a Mortgage Credit Certificate that converts part of your annual mortgage interest into a federal income tax credit, year after year, for as long as you keep the loan. Because these benefits combine, it's worth asking a PHFA-approved lender to model the full package rather than choosing a single program in isolation.
Pennsylvania's tax structure is friendly to homeowners. The flat 3.07% income tax is one of the lowest state rates in the country, and unlike graduated-tax states it doesn't take a bigger bite as your income rises. Property taxes are the larger line item, averaging about 1.53% of home value, with rates set locally — school district taxes drive much of the bill, so two similar homes in different districts can carry very different annual costs. Check the specific millage rate for any property you're serious about, and ask whether the county offers a homestead or farmstead exclusion that lowers the assessed value of a primary residence.
Beyond Philadelphia, buyers in Pittsburgh, Allentown, and other cities can find local down payment programs through county and nonprofit housing agencies, and rural buyers across much of the state may qualify for zero-down USDA loans. A HUD-approved housing counselor or PHFA-participating lender can confirm which county and city programs stack with state assistance for your situation. Since every PHFA program requires the same homebuyer education course, completing it early keeps the full menu of options available when you find the right home.
Frequently Asked Questions
For educational purposes only -- not financial or tax advice. Program details, eligibility requirements, and benefit amounts are subject to change. Verify all information directly with the administering agency before applying. Last verified: June 15, 2026.