The Pennsylvania Housing Finance Agency (PHFA) partners with approved lenders to offer affordable first-mortgage programs and down payment assistance.[1] Below, we break down PHFA loan requirements by program, including credit score minimums, income and purchase price caps, homebuyer education rules, and how assistance like K-FIT works.
How PHFA loans work
PHFA does not lend directly. You apply with a PHFA-approved lender, the loan is underwritten to the program’s rules (FHA/VA/RD or conventional), then PHFA purchases/servicers the loan. Your exact requirements depend on the PHFA program you use.[2]
The partnership gives borrowers several benefits, like down payment or closing cost assistance in the form of grants, forgivable second mortgages, or deferred-payment loans, making the upfront costs of buying a home more achievable.
On top of that, the program offers below-market interest rates and mortgage credit certificates (MCCs), which provide annual tax credits that can save borrowers hundreds or thousands of dollars each year.
HFA Preferred vs. HFA Advantage
As mentioned earlier, HFA Preferred and HFA Advantage loans are the two main types of HFA loans. Understanding the difference between the two can help you choose the right program for your situation.
| Feature | HFA Preferred | HFA Advantage |
|---|---|---|
| Backing agency | Fannie Mae | Freddie Mac |
| Property types | 1–4 unit homes, condos, PUDs, some manufactured homes | 1–4 unit homes, condos, PUDs, manufactured homes |
| Refinance options | Limited cash-out refinance | Doesn’t permit cash-out refinance |
| Co-borrower rules | Flexibility for non-occupant co-borrowers | Permits a non-occupying co-borrower(s) for single-unit properties |
Both programs share core similarities that make them attractive to first-time buyers. The minimum down payment is 3%, though this is often reduced or eliminated entirely through state assistance programs. Both also require a minimum credit score of 620, a maximum debt-to-income ratio of 50%, and both restrict usage to primary residences only.
So, which is better? The choice depends on the lender and the state HFA. If you have a unique property type or are refinancing, then HFA Preferred may be a great option.
Core PHFA loan requirements and qualifications
In most cases, you need to meet the following PHFA loan requirements to qualify.
- Credit score: 660 minimum for PHFA conventional loans insured by PHIF and for assistance programs like K-FIT and Keystone Advantage.[3]
- Homebuyer education: Required for at least one borrower. If middle FICO ≥ 680, you may complete PHFA’s approved online course; if < 680, in-person counseling is required. PHFA pays agency fees (except a credit report fee, if charged).
- Occupancy: Primary residence only (no second homes/investments) for purchase programs.
- Buyer contribution: For conventional (and many FHA) PHFA options, borrowers must contribute the lesser of $1,000 or 1% of loan amount (often satisfied with your EMD plus closing funds).
- Income & purchase price limits: Vary by county and program (see tables). Targeted-area purchases and some programs have different caps.
PHFA programs at a glance
Different programs will suit different buyers. Here’s how the PHFA programs compare to one another.
Keystone Home Loan (KHL): first-time buyers, veterans, and targeted areas
- Who it’s for: First-time buyers (no ownership in last 3 years), veterans, or buyers in targeted areas
- Limits: Income & purchase price limits apply by county; FHA/VA/RD or conventional options available
- Credit: PHIF-insured conventional requires 660+; FHA requires 3.5% minimum borrower investment
- Education: Required (680+ may do online; <680 in person)
Keystone Government Loan (K-Gov): FHA, VA, or USDA with PHFA servicing
- Who it’s for: Buyers using FHA/VA/RD underwriting via PHFA lenders
- Limits: No PHFA-specific income or price caps (federal program limits still apply — FHA/VA loan limits; USDA income/area rules)
- First-time buyer: Not required
- Education: Required; <680 in person
HFA Preferred (Lo MI): conventional with reduced MI
- Who it’s for: Conventional borrowers who meet income limits, but no first-time requirement and no purchase price limit
- Down payment: As low as 3% (standard conventional)
- Education: Required per PHFA rules
Keystone Flex with K-FIT (and Purchase & Improvement)
- Who it’s for: Buyers who want PHFA conventional financing plus assistance; Purchase & Improvement allows up to $30,000 for repairs
- Credit: 660+ required; not restricted to first-time buyers
- Limits: Program-specific income and purchase price caps apply for Keystone Flex
- Education: Required; <680 in person
PHFA assistance programs
PHFA also provides some cash-to-close options for buyers with tight budgets who might not be able to come up with a 20% down payment or who need help paying for closing costs.
K-FIT: Keystone Forgivable in Ten Years Loan
As the name indicates, this loan will be fully forgiven after 10 years if the buyer meets certain conditions.
- What it is: A second mortgage equal to 5% of the lesser of purchase price or appraised value; forgiven 10% per year over 10 years; 0% interest
- Key requirements: 660+ FICO, PHFA first mortgage, maximum financing, homebuyer education. Not combinable with other PHFA assistance (except ACCESS Home Modification). Some communications also note liquid assets ≤ $50,000 after funds to close.
- Use of funds: Down payment and/or closing costs. No dollar cap listed on PHFA page.
Keystone Advantage Assistance Loan
This is a repayable assistance loan, and the terms and conditions of repayment vary according to the lender.
- What it is: A second mortgage to help with down payment and/or closing costs (minimum $500).
- Key requirements: 660+ FICO for all borrowers; must pair with a PHFA first mortgage.
How to qualify for a PHFA loan
Applying for an HFA loan follows many of the same steps as getting a conventional mortgage, but with additional state-level requirements.
- Check your program fit: Decide between KHL, K-Gov, HFA Preferred, or Keystone Flex with K-FIT based on first-time status, income/price caps, and desired assistance.
- Verify county limits: Confirm income and purchase price caps for your county (and whether your census tract is targeted).
- Confirm credit & contribution: Aim for 660+ to unlock the broadest options and plan to contribute the lesser of $1,000 or 1% (conventional/FHA).
- Complete education: Take PHFA-approved counseling/education (online if ≥680, in-person if <680).
- Apply with a PHFA-approved lender: They’ll underwrite to program rules (FHA/VA/RD or conventional) and register the loan with PHFA.
- Add assistance: If eligible, layer K-FIT (5% forgivable) or Keystone Advantage for down payment/closing costs.
The bottom line
PHFA loans offer an affordable path to homeownership. Since requirements differ throughout the state, always check with your local lender for specific requirements. Then compare PHFA loans against other programs to see which fits your financial situation best.
If you’re ready to start your home buying journey, connect with a local agent who understands these programs. Clever can introduce you to top agents in your area, with no obligations or fees.
FAQ
What credit score do I need for a PHFA loan?
Typically 660+ for PHIF-insured conventional and assistance programs (K-FIT, Keystone Advantage). Federal programs (FHA/VA/RD) follow their own credit rules, but PHFA education rules still apply.
Do PHFA loans have income or purchase price limits?
Yes, KHL and Keystone Flex do (by county). HFA Preferred has income limits but no purchase price cap; K-Gov has no PHFA-specific caps. Check the county PDFs (updated June 2025).
Is homebuyer education required?
Yes. At least one borrower must complete PHFA-approved education. Borrowers with credit scores ≥680 can complete online; <680 must attend in person. Using K-FIT or Keystone Advantage also requires education.
What is K-FIT, and how do I qualify?
K-FIT is a forgivable second mortgage equal to 5% of price/appraised value (lesser), 0% interest, forgiven over 10 years. To qualify, a 660+ FICO score and PHFA first mortgage are required; K-FIT is generally not combinable with other PHFA assistance, with the exception of the ACCESS Home Loan Modification Program.[4]
Can I use PHFA with FHA/VA/USDA?
Yes, via the Keystone Government program. Federal program limits still apply, and there is no first-time buyer requirement.