Updated · Mike Certo, NMLS #260555
Pennsylvania Down Payment Assistance Programs Guide
Pennsylvania's down payment help runs almost entirely through PHFA, and the money comes as a second mortgage layered behind your main loan. Some of it forgives over time. Some of it you pay back. This page digs into the mechanics: the forgiveness math on K-FIT, what triggers repayment, the asset limits, and how each option stacks on top of an FHA, conventional, VA, or USDA first mortgage.
How does PHFA down payment assistance actually work?
The assistance is never a standalone loan. PHFA places it as a second mortgage behind your first, so it fills the down payment and closing-cost gap while your primary loan does the heavy lifting. Two seconds carry most of the volume: K-FIT, which forgives over ten years, and Keystone Advantage, which you repay. You pick one, not both. The first mortgage underneath can be a PHFA Keystone Home Loan or a plain conventional, FHA, VA, or USDA loan.
What does K-FIT give you, and how does the forgiveness work?
K-FIT, the Keystone Forgivable in Ten Years loan, hands you 5% of the lesser of purchase price or appraised value. There is no dollar ceiling, only the 5% math, so a $250,000 home yields $12,500 and a $400,000 home yields $20,000. It carries no monthly payment. PHFA forgives 10% of the balance each year, and after ten years in the home the whole thing is gone. That structure is why Mike usually points first-time buyers to it first.
How is Keystone Advantage different from K-FIT?
Keystone Advantage is repayable, not forgivable. It lends the lesser of 4% or $6,000 as a second mortgage at zero percent, amortized over a ten-year term with a real monthly payment. So it caps lower than K-FIT and it does not melt away. Where it earns its keep is the buyer who does not clear a K-FIT rule, or who wants a smaller, predictable second instead of a large forgivable lien on title.
K-FIT vs Keystone Advantage, side by side
The two seconds solve the same problem in opposite ways. One forgives, one repays. This is the comparison Mike walks through on almost every PHFA call.
| Feature | K-FIT | Keystone Advantage |
|---|---|---|
| Amount | 5% of price/value, no cap | Lesser of 4% or $6,000 |
| Structure | Forgivable second | Repayable second |
| Monthly payment | None | Yes, 0% over 10 yrs |
| Forgiveness | 10% a year over 10 yrs | None; repaid in full |
| Min credit score | 660 | 660 |
| Asset rule | ≤ $50,000 liquid after closing | ≤ $50,000 liquid after closing |
| Pairs with | KHL or conv/FHA/VA/USDA | Keystone Home Loan |
What is the Keystone Home Loan, and what are its county limits?
The Keystone Home Loan is PHFA's first mortgage, the lien the assistance rides behind. It carries a first-time rule (no principal residence owned in the past three years), waived in target areas and for eligible veterans, plus a purchase-price and household-income ceiling that varies by county. The July 2026 tables run from about $499,900 up to $730,600 on price. A few Pennsylvania markets show the spread.
| Area | Price limit | Income (1–2 people) | Income (3+) |
|---|---|---|---|
| Philadelphia (target) | $730,600 | $147,200 | $171,700 |
| Region 1 (Bucks, Chester, Delaware, Montgomery) | $588,800 | $122,700 | $141,100 |
| Allegheny / Pittsburgh | $523,000 | $110,400 | $126,900 |
| Lancaster | $516,500 | $109,200 | $125,500 |
PHFA Sellers Guide Appendix A, effective July 1, 2026. These are volatile; confirm your county's current figure with PHFA before you rely on it.
What is HFA Preferred, and who is it for?
HFA Preferred is PHFA's conventional option, built on Fannie Mae, and its headline feature is that it drops the first-time requirement. A repeat buyer can use it. It reaches up to 97% loan-to-value with reduced private mortgage insurance that cancels once you hit 20% equity, so the carrying cost undercuts a standard 97 loan. It follows PHFA's HFA Preferred income limits, which vary by county, and carries no first-time-buyer requirement. K-FIT can layer on top of it.
Does PHFA still offer a Mortgage Credit Certificate?
Yes, and this one gets miscategorized often. The PHFA MCC is active. It returns 20 to 50 percent of your annual mortgage interest as a federal income-tax credit, capped at $2,000 a year for the life of the loan. It pairs with HFA Preferred, Keystone Government, or Keystone Advantage, but it cannot combine with the Keystone Home Loan. Pages that call it discontinued are describing Delaware's MCC, which ended in August 2025.
How does PHFA assistance layer with FHA, conventional, VA, and USDA?
The assistance second sits on top; the first mortgage decides most of the terms. FHA is the usual base for thinner credit or a slim down payment, with a 2026 Pennsylvania floor of $541,287 on a single-family home. Conventional and HFA Preferred fit once your score clears the mid-600s because the mortgage insurance cancels at 20% equity. VA is zero down for eligible veterans. A large share of the state qualifies for zero-down USDA.
What triggers repayment, and what are the asset limits?
Three events settle a PHFA second: selling the home, refinancing the first mortgage, or paying the loan off. With K-FIT, only the unforgiven slice comes due, so year four leaves 60% owed and year ten leaves nothing. Keystone Advantage carries a monthly payment from day one, so its remaining balance is what settles. Both seconds run the same asset test: your liquid assets cannot exceed $50,000 after closing. K-FIT also sets a $500 minimum loan.
Which PHFA option fits which buyer?
If you plan to stay put and want the largest help, K-FIT wins because it scales with price and forgives to zero. If you would rather take a small, defined second with a set monthly payment than a forgiveness clock, Keystone Advantage is the cleaner fit. Both hold to the same $50,000 liquid-asset limit, so Advantage is not a way around that cap. Repeat buyers who cannot use a first-time program lean on HFA Preferred. A buyer with steady income and a long horizon can add the MCC for a yearly tax credit on top of the first mortgage.
Related Pennsylvania guides
- Pennsylvania first-time home buyer guide
- Pennsylvania transfer tax and closing costs
- All Pennsylvania loan programs
- Talk to Mike about your scenario
Pennsylvania down payment assistance FAQ
Is K-FIT a grant you never repay?
Not exactly. K-FIT is a forgivable second mortgage, not an outright grant. It forgives 10% of the balance each year, so after ten years in the home you owe nothing. Stay the full decade and it costs you zero. Sell or refinance in year four and you repay the 60% that has not yet been forgiven.
How is Keystone Advantage different from K-FIT?
Keystone Advantage is repayable, K-FIT is forgivable. Advantage lends the lesser of 4% or $6,000 as a second mortgage at zero percent, amortized over a ten-year term with a monthly payment. K-FIT has no dollar cap and no payment, and it forgives over ten years. Both require a 660 middle score. Mike usually points first-time buyers to K-FIT for the forgiveness.
What credit score does PHFA down payment assistance require?
660. That middle-score floor applies to both K-FIT and the Keystone Advantage second, and older pages showing 620 or 640 are out of date. FHA on its own can go lower, but layering PHFA assistance pulls the requirement up to 660. If your score sits just below, ask Mike what moves it over the line before you apply.
Can you use more than one PHFA assistance program at once?
One assistance second per purchase. You cannot stack K-FIT on top of Keystone Advantage, since both fill the same down payment slot. The Mortgage Credit Certificate is the exception worth knowing: it is a tax credit, not a second mortgage, so it can ride alongside HFA Preferred or Keystone Advantage, though not with the Keystone Home Loan.
Does PHFA still offer a Mortgage Credit Certificate?
Yes. The PHFA MCC is active and returns 20 to 50 percent of your mortgage interest as a federal tax credit, capped at $2,000 a year. It pairs with HFA Preferred, Keystone Government, or Keystone Advantage, but not the Keystone Home Loan. Aggregator pages that call it discontinued are confusing it with Delaware's MCC, which ended in August 2025.
What triggers repayment of a PHFA assistance loan?
Selling the home, refinancing the first mortgage, or paying the loan off in full. For K-FIT, any balance not yet forgiven comes due at that point. For Keystone Advantage, you make a monthly payment from the start, so the remaining balance is what settles. Neither charges interest. Staying in the home ten years wipes K-FIT out completely.