Pennsylvania Home Loan Programs for Veterans

The VA home loan benefit is one of the oldest and most popular military benefits–those who serve a minimum amount of time in active service may qualify to apply for a VA mortgage with zero money down, flexible credit guidelines, and the ability to refinance the VA mortgage at a later time.

But the VA mortgage is not the only veteran-friendly home loan option. Depending on the state you live in, you may find a state-operated veteran home loan program that can help you on the road to homeownership.

The Pennsylvania Housing Finance Agency (PHFA) offers help with veteran-friendly home loans and related programs that feature lower fees and rates. PHFA does not lend money but relies on a network of participating lenders who offer need-based help for those who want to get into an affordable home and meet the program requirements.

PHFA offers the following programs:

• The Keystone Government Loan Program (K-Gov)
• HFA Preferred™(Lo MI)
• Keystone Home Loan
• Keystone Advantage Assistance Loan Program

The Keystone Government Loan Program (K-Gov)

The Keystone Government Loan Program (K-Gov) provides first-mortgage financing for loans insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) or Rural Development (RD). Loans are underwritten according to the guidelines of the applicable federal agency, and PHFA does not impose additional underwriting requirements beyond those programs.

There are no PHFA income or purchase price limits under K-Gov, though FHA and VA loan limits and RD income restrictions still apply. Borrowers are not required to be first-time homebuyers. Eligible applicants may also qualify for down payment and closing cost assistance through the Keystone Advantage Assistance Loan.

Borrowers must apply through a PHFA participating lender. Homebuyer counseling is encouraged, and borrowers with a FICO score below 680 are required to complete a counseling course prior to closing. Not all participating lenders offer FHA, VA, or RD loans, and each loan type may carry additional eligibility requirements.

HFA Preferred (Lo MI)

Borrowers who qualify for the HFA Preferred™ (Lo MI) program receive a 30-year fixed-rate conventional mortgage offered through PHFA’s network of participating lenders, with PHFA servicing the loan for its full term. Mortgage insurance is required when the borrower makes less than a 20 percent down payment and is provided through approved private mortgage insurance companies.

This loan may be used to purchase or refinance a primary residence. There is no first-time homebuyer requirement, but household income limits apply and vary by county. Borrowers must contribute at least $1,000 of their own funds toward the transaction.

For home purchases, at least one borrower must complete pre-closing homebuyer education. Borrowers with a FICO score below 680 must complete face-to-face counseling. Eligible borrowers may also qualify for a $500 PHFA grant to assist with down payment and closing costs.

Keystone Home Loan

The Keystone Home Loan program is available to borrowers who are not first-time homebuyers but plan to purchase in a targeted county or area, or who are discharged veterans of the U.S. Armed Forces. First-time homebuyers (defined as those who have not owned a principal residence in the past three years) may also qualify. Household income and purchase price limits apply and vary by county.

All household income from adults who intend to occupy the home within one year of closing must be included, with limited exceptions. Borrowers must demonstrate acceptable credit and the ability to afford the monthly payments, generally using no more than 30 percent of income for housing. Funds are required for standard application, closing costs, and any required down payment.

Minimum down payment requirements depend on the loan type. Conventional loans insured by the Pennsylvania Housing Insurance Fund require a 3% to 5% minimum investment and a minimum credit score of 660. FHA loans require at least 3.5% down. VA and RD loans typically require no down payment in most cases, though RD loans are not available in certain counties. Not all participating lenders offer every loan type.

Keystone Advantage Assistance Loan Program

The Keystone Advantage Assistance Loan Program provides a second mortgage to help cover down payment and closing costs. Qualified borrowers may receive up to 4% of the purchase price or appraised value, or $6,000 (whichever is less). The loan is repaid monthly over a 10-year term at 0% interest.

This assistance may be used in conjunction with the HFA Preferred™ (Lo MI), Keystone Government Loan, or Keystone Home Loan programs. Borrowers must meet the requirements of the applicable first mortgage program.

A minimum credit score of 660 is required, and the minimum assistance loan amount is $500. Liquid assets may not exceed $50,000 after funds needed to close are deducted. The assistance may only be used for required down payment and closing costs and generally cannot be combined with other PHFA assistance programs, except the Access Modification Loan Program.

How To Apply For PHFA Programs

You will need to find a PHFA participating lender and a housing counselor approved by the program to start the mortgage application process. The official site reminds borrowers that any applicant with a credit score lower than 680 is required to complete a counseling program before closing the loan.

---