Montgomery County's First Time Home Buyer Loan
The Montgomery County Home Buyer's Program was created to help low, moderate, and median-income families purchase their first home in Montgomery County, Pennsylvania.
The homebuyer's program is a down payment and closing cost assistance loan. The program can provide as much as 10% of the sales price (not to exceed $10,000).
The loan is paid back only when the house is sold or transferred during the first 8 years. The total assistance is dependent on the selling price, closing costs, mortgage amount, and other required costs to purchase the house.
And here’s the best part, the loan has a 0% interest rate! The loan remains in effect for 8 years, and repayment is only required if:
- The house is sold, granted, conveyed, or transferred to another person;
- Is changed into an investment property;
- The house is vacated or abandoned as a primary residence within 15-years from the settlement date.
You are required to live in the home as your primary residence.
You must qualify for a first mortgage loan at the current interest rate.
Montgomery county residency or employment
At application and up to closing, you must reside and/or be employed full time within Montgomery County.
Home buyer education
Prior to executing any contract of sale for the purchase of a home, you are required to complete a home-buyer counseling program and meet with a counselor for a one-on-one counseling session.
The home buying counselor will discuss the importance of establishing a budget, maintaining a good credit rating, mortgage financing and home ownership responsibilities. The counseling session can last a few hours.
Assets for down payment & closing costs
The program requires that you have at least $3,000 in your checking, savings or investment account(s) at application (liquid and must be of your own funds).
You must provide at least 3% of the purchase price for the down payment. You must also have at least 2 months’ worth of mortgage payments in the bank along with the 3% down payment.
Applicants have to make use of their own assets and may obtain a matching gift from a relative up to 3% prior to receiving the home buyer funds. The assistance loan is not available to applicants who have 10% or more of the purchase price to put towards the purchase (retirement accounts like 401K's and IRAs are not considered in the 10% limitation).
All assets have to be completely disclosed at application, if not, the application will be declined.
The applicant must immediately notify the first-time Home Buyer's Program if the applicant's financial information changes prior to closing.
Eligible participants may receive closing costs assistance up to 8% of the purchase price if your household income is 80% of the median income for Montgomery County or less; if the household income is under 80% of the median income, the county will chip in an additional 2% towards the down payment for a total assistance of 10% of the sales price.
Maximum sales price
The maximum sales price is based on the applicant's earnings, monthly obligation, etc.
No seller assist!
Attention Realtors® and mortgage lenders: No seller closing cost assistance (seller paid closing costs) is allowed with this program.
Home warranty & home inspection
The Department of Housing & Community Development mandates a home inspection and home warranty. Home inspectors are required to complete a housing quality standards form. This form will be provided to the applicant at the counseling program.
Existing or recently built single-family home situated in Montgomery County which:
- Have an agreed upon sales price that does not exceed the Program's established affordability.
- Meet local codes, Housing Quality Standards, and lead-based paint standards.
- Are acceptable to the insurer of the property and mortgage lender.
Eligible mortgage programs
Conventional (Fannie Mae & Freddie Mac) | FHA | USDA
This closing-cost assistance program can be used in conjunction with the Pennsylvania Housing Finance Agency (PHFA 1st mortgage).
Grant application procedure
The grant money is available to all eligible applicants on a first come, first serve basis. Applicants must be income and loan-eligible prior to entering into an agreement of sale (or putting a deposit on a property). There is a $25 non-refundable fee payable at the time of application.
Be aware, you must make application and receive counseling before you sign a sales contract!
Income Eligibility: You must be a first-time homebuyer or not owned a home within the previous 3 years. You must meet Montgomery County household income limits.
Pennsylvania Housing Finance Agency (PHFA)
The Montgomery County Home Buyer's Program can be used along with the first-time home buyer programs through the State of Pennsylvania.
The PHFA loan programs are available for first-time home buyers and non-first-time home buyers. The PHFA programs provide below market interest rates. Read more.