If you haven't purchased a home before or it's been a few years, be prepared to put your entire financial life in front of a lender. The process of getting a mortgage loan approval is a bit more arduous than it was years ago: now, every detail requires documentation. This page will give you insight into what it takes to get a mortgage in Pennsylvania and where you can get more information about how to finance a home in Pennsylvania.
How to Compare Mortgage Rates in Pennsylvania
Mortgage rates fluctuate because of a variety of market factors including the state of the global economy. The rates that buyers in Pennsylvania are quoted vary according to individual buyers' credit qualifications and the type of property they want to buy. Lenders also base rates on the likelihood of a default and local market conditions, so in areas of the state where home prices are depressed or falling, interest rates are likely to be higher than in locations where home prices are rising. Pennsylvania is a judicial foreclosure state, which means that lenders must go to court to execute a foreclosure. Generally that means mortgage rates will be slightly higher to help lenders pay for a lengthier foreclosure period.
First-Time Buyer Assistance in Pennsylvania
First-time homebuyers often need extra help understanding the process of buying a home. Buyers in Pennsylvania will find a variety of programs designed to help renters become homeowners, including down payment assistance, closing cost assistance, low-cost loans and tax credits to make homeownership more affordable. Homebuyers in Pennsylvania can also take advantage of housing counseling and homeownership education classes.
"Since 1982, the Pennsylvania Housing Finance Agency has provided mortgage programs for low- and moderate-income homebuyers who are ready for the responsibilities of homeownership," says Brian Hudson, executive director and CEO of the PHFA. "The agency's Mortgage Credit Certificate Program is extremely popular because it offers an annual income tax credit that can save buyers as much as $2,000 annually over the term of their home loan. Recognizing that down payment and closing costs are major hurdles for new homebuyers, the agency offers assistance for buyers who qualify.
Financing also is available for adapting a home to make it accessible for family members with mobility issues or a disability. During the past few years, PHFA has broadened its home loan programs to help meet additional needs, such as buyers looking to finance their next home, borrowers wanting to refinance, and homeowners who want to make repairs or improvements to their home."
Hudson says that research has shown that buyers who are educated on the homebuying process and personal financial management are less likely to face foreclosure once they are into their homes.
First-Time Buyer Financial Assistance in Pennsylvania
Financial aid such as down payment assistance, low-interest loans and closing cost assistance, available from numerous state and local government agencies and nonprofit agencies, can be found on the following list.
Find a Housing Counselor in Pennsylvania
What Influences Home Affordability in Pennsylvania?
Home affordability is based on a comparison of income and assets versus home prices and mortgage rates. Every individual homebuyer needs to determine their own comfort level with a housing payment in the context of their other expenses and other goals, such as saving for a college education or retirement.
Your monthly housing payment, which includes principal and interest on your mortgage, property taxes, homeowner's insurance and possibly a homeowner association fee, will depend on current mortgage rates at the time of your loan. If you choose a fixed-rate loan, the principal and interest payments remain the same for the life of the loan. If you choose an adjustable rate mortgage, your payments will change in accordance with your loan terms.
Your loan terms won't change if your home value rises or falls, since you are financing just the value of your home at the time you buy it.
How Pennsylvania Mortgage Rates and Home Prices Affect Monthly Payments
|Metro Area||Estimated Monthly Mortgage Payment*||Q3 2019 (Change from Previous Year)||2018 Median Home Price||2017||2016|
|New York-Newark-Jersey City, NY-NJ-PA||$1,616||$440,200 (+2.8%)||$410,000||$404,300||$388,500|
|Philadelphia-Camden-Wilmington, PA-NJ-DE||$941||$256,200 (+6.5%)||$229,000||$230,000||$225,400|
|Youngstown-Warren-Boardman, OH-PA||$392||$106,800 (+9.4%)||$94,000||$86,100||$84,400|
Source: National Association of Realtors Q3 2019 Metropolitan Median Area Prices and Affordability report. NAR does not report data for Pittsburgh.
*Estimated Monthly Mortgage Payment is based on median home prices for the metro area in Q3 2019, a 20 percent down payment and a 30-year fixed mortgage at 3.68 percent. Figure reflects only principal and interest, not insurance and property taxes.
Find Out How Much You Can Borrow in Pennsylvania
The majority of mortgage loans today are backed by the federal government, which sets loan limits by county throughout the U.S. If you must borrow an amount higher than the loan limit, you will need a jumbo loan from a private lender, often requiring a higher credit score and sometimes a bigger down payment of 20 to 25 percent or more.
Loan limits are higher in areas with more expensive housing. Conventional loan limits are $510,400 for most of the state in 2020, with Pike County on the New Jersey border capped at $765,600. Find out loan limits in each county on the following list.
Expert Advice About Buying a Home in Pennsylvania
Nela Richardson is former chief economist at Redfin, a national real estate brokerage with headquarters in Seattle.
Tom Yargo is manager of the Coldwell Banker Real Estate Services North Hills office in Pittsburgh.
Holly Mack-Ward is an agent with Coldwell Banker Preferred in Philadelphia.
What was the housing market like in Pennsylvania before and during the housing crisis?
The housing crisis hit some parts of Pennsylvania hard, especially working class neighborhoods that already experienced job losses in the manufacturing sector. Today, the housing market in Philadelphia is recovering. Pittsburgh' s homes have seen modest but steady price growth since bottoming out.
While some specific pockets within the city and suburban markets were affected negatively by the housing crisis, the Greater Pittsburgh area was overall insulated from a devastated market.
Since Philadelphia's peak wasn't as high as many other markets, the fallout wasn't as severe. There were certainly plenty of foreclosures, but the lasting legacy was years of underwater homeowners who wanted to sell but had to ride out the market adjustment — often as reluctant landlords.
What can first-time buyers expect to find today in the state in terms of affordable homes to buy?
Buyers are finding Philadelphia an attractive city given its relative affordability compared to other East Coast cities like New York, Boston and Washington, D.C. Likewise, Pittsburgh is experiencing a modest tech boom; Apple and Google have opened offices here. Young buyers from across the country are drawn by job prospects and low cost of living. Many first-time buyers grew up in Pittsburgh, lived elsewhere for a while and are moving back to put down roots.
Potential buyers new to the area are often incredibly pleased by the amount and quality of home they can afford in the Pittsburgh area. The first-time home buyer's market, up to about $300,000, continues to be active.
There are plenty of newly renovated homes in Philadelphia with nice finishes priced within reach for most first-time buyers — even "starter homes" come with the bells and whistles buyers love to see (central air, stainless steel appliances and often even a master suite).
What is the housing market like in some of the areas of the state that attract first-time buyers?
In Philadelphia's hot downtown neighborhoods, like Graduate Hospital and Northern Liberties, well-priced homes sell quickly and get multiple offers. Multiple offers are less common in Pittsburgh - though not unheard of.
First-time buyers looking in both downtown Pittsburgh and suburban areas have been experiencing a multiple-offer situation as homes in these popular areas are in great demand.
Philadelphia is a great place to be a first-time buyer—prices are affordable, it's bike-friendly, has good public transportation. Most buyers can find a nice place for around what they currently pay in rent in one of our many walkable neighborhoods.
Closing Costs You Need to Pay in Pennsylvania
While most homebuyers naturally focus on accumulating down payment funds and saving up cash reserves for homeownership, closing costs are also part of buyers' costs when purchasing a home. Closing costs in Pennsylvania average $1,733 for a $200,000 home with a 20 percent down payment, slightly lower than the national average of $1,847. Keep in mind your costs will be a lot higher if you buy a more expensive home or lower if you buy a less costly home.
Unlike some states, Pennsylvania law doesn' t require you to use an attorney to buy a home.
Transfer taxes and recording fees are charged by the state and by the municipality and the school district in Pennsylvania, so they vary from a total of two percent to as high as five percent in the City of Reading. In Philadelphia and Pittsburgh the fees are four percent of the total sales price.
Average Closing Costs in Pennsylvania
Source: Bankrate's 2015 survey of closing costs.
Refinancing a Mortgage in Pennsylvania
Home refinancing in Pennsylvania has been strongest in areas of the state where home values have risen since the housing crisis. Refinancing options always depend on both the qualifications of the borrower and the value of the property, so homeowners with plenty of equity and good credit are more likely to qualify than homeowners with little or no home equity.
"Pennsylvania has its fair share of people with minimal, zero or negative equity in their properties, which is holding back some from being able to refinance," says Dougherty. "At the same time, it 'feels' like we're in much better shape compared to other parts of the country."
The Home Affordable Refinance Program may make it possible even for those homeowners with little or no home equity to refinance. The HARP program is slated to end Sept. 30, 2017. Visit the Pennsylvania HARP program site for loan limits for each county and other information.
Additional Resources for Pennsylvania Homebuyers
Pennsylvania has a healthy array of homebuyer and homeowner assistance programs. Information about these 11 different programs is available primarily through the Pennsylvania Housing Finance Agency as well as county and city websites.
newly redesigned website at makes it easy to find the information consumers need about FA's mortgage and housing counseling programs.
PHFA homebuyers start here for general information:http://www.phfa.org/homebuyers/
For more information about PHFA home purchase loans:http://www.phfa.org/programs/homepurchase.aspx
Information about how to qualify for PHFA purchase assistance loan programs can be found herehttp://www.phfa.org/programs/assistance.aspx
Information about homebuyer classes and homebuyer counseling through the PHFA can be found herehttp://www.phfa.org/counseling/hce.aspx
Homeowners and buyers of distressed homes can learn more about PHFA home improvement and repair programs herehttp://www.phfa.org/programs/repairs.aspx
PHFA program brochures are linked at this sitehttp://www.phfa.org/brochures/
has a portal with links to local Pennsylvania homeownership programs by city and by county.