The Keystone Home Loan Program is a PHFA-backed loan program aimed at first-time homebuyers. If you live in Pennsylvania, you may be eligible to receive a Keystone loan with a lower interest rate and down payment requirements.
To qualify for a Keystone Loan, you must be a veteran or first-time homebuyer and meet the PHFA’s credit score requirements. You can also receive a Keystone loan if you buy a home in a targeted area.
In addition to the Keystone Loan Program, you may be eligible for a Keystone Advantage Assistance loan, which can help cover your down payment and closing costs. Combining these two mortgages can help buyers reduce costs and get their foot in the market.
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How the Keystone Home Loan Program works
The Keystone Home Loan Program is managed by the Pennsylvania Housing Finance Agency (PHFA) and offers low-cost traditional 30-year mortgages to qualifying homebuyers. The PHFA itself does not issue loans but works with private lenders who opt into the program.
Through the PHFA, you can acquire several types of 30-year home loans, including conventional, FHA, VA, and USDA loans. However, not all participating lenders offer all loan types, so you should shop around for different deals.
When you apply for a Keystone Loan, you should meet with a PHFA counselor who can discuss your options and determine whether you meet the program income and purchase price limits. From there, you can submit your mortgage application to a participating lender.
Once you are approved, you’ll make payments directly to the PHFA, which services the loan.
What makes it different?
- Competitive interest rates. PHFA-serviced loans offer lower interest rates than typical conventional 30-year fixed mortgages.
- Consistent servicing. The PHFA doesn’t issue home loans but instead buys and services them from private lenders.
- Low down payment requirements. Down payment requirements for PHFA loans can range from 0% to 5%, depending on the specific loan you receive.
- Additional assistance programs are available. The PHFA also has secondary mortgage programs to help homeowners manage closing costs and down payments.
- More lenient qualification requirements. Credit and debt-to-income requirements for PHFA loans are typically lower than those for traditional loans.
- Tailored to first-time homebuyers. Keystone loans are aimed at first-time homebuyers who are trying to establish themselves in the housing market.
Eligibility and qualifications
There are three primary Keystone Home Loan requirements:
- You and everyone else who will live in the house are first-time home buyers.
- You are a discharged veteran of the US Armed Forces.
- You are buying a home in a targeted county or neighborhood.
You must also meet the Keystone Home Loan income limits and purchase price limits. Specific income limits depend on the purchase price of the home and the number of people in your household.
The purchase price of the home is the total cost of acquisition, including loan servicing and closing costs.
To be eligible, your household's combined income must not exceed the income limit for a specific purchase price. The relevant purchase limit is based on the specific county where the house is located.
For example, a 2-member household looking to buy a home worth $571,200 in Bucks County cannot make more than $119,400 annually. Below is a table with the purchase price limits and income limits for some specific counties in Pennsylvania as of 2025:
| County | Purchase Price Limit | Income Limits (1–2 Household Members) | Income Limits (3+ Household Members) |
|---|---|---|---|
| Chester | $571,200 | $119,400 | $137,300 |
| Monroe | $491,100 | $104,400 | $120,000 |
| Fayette | $631,000 | $128,700 | $150,200 |
| Philadelphia | $709,300 | $143,200 | $167,100 |
| Perry | $618,500 | $126,400 | $147,500 |
You can find a full list of the 2025 Keystone Home Loan program income limits and purchase price limits by county here on the PHFA’s website.
Lastly, borrowers must demonstrate their ability to manage mortgage payments and other housing expenses (e.g., closing costs). Typically, borrowers must not allocate more than 30% of their income to housing costs, though specific thresholds depend on the participating lender.
If your down payment is under a certain amount (typically 20%), you may also have to purchase private mortgage insurance (PMI) to qualify.
Types of loans offered
Borrowers can obtain several types of loans under the Keystone program. All loans must adhere to guidelines set by the PHFA, but individual lenders can have different borrower requirements:
- Conventional loans. These are loans offered by private lenders or government-sponsored enterprises like Fannie Mae/Freddie Mac.
- FHA loans. FHA loans are mortgages offered through the Federal Housing Administration and are aimed at low-income and first-time buyers.
- VA loans. VA loans are backed by the Department of Veterans Affairs and are meant to help qualifying veterans and their spouses purchase homes.
- RD (USDA) loans. These are loans backed by the Department of Agriculture to purchase and improve rural land.
The table below shows down payment requirements for different types of loans.
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Keystone Advantage Assistance Loan Program
In addition to the above, the PHFA also offers its Keystone Advantage Assistance Loan Program. This is a second mortgage that homeowners can acquire to help cover additional housing costs.
With a Keystone Advantage Loan, borrowers can receive the lesser of up to 4% of the home’s sale price or $6,000 to make their down payment or pay for closing costs. Advantage loans are for a 10-year term and offer 0% interest, so you only have to repay the principal.
To qualify, borrowers must have a minimum credit score of 660 and no more than $50,000 in liquid assets (e.g., cash, checking accounts, stocks, etc.). The minimum loan amount is $500, and borrowers can only use the funds to cover their down payment and closing costs.
What are the benefits of the PHFA Keystone Home Loan Program?
The Keystone Home Loan Program helps home buyers keep costs down by offering:
- Several loan providers so you can shop for the best savings.
- Competitive interest rates and limited loan fees compared with normal lenders.
- Down payment and closing cost assistance through the Keystone Advantage Assistance Loan Program.
As an added perk, the PHFA will service your loan for life. That means your loan won't be sold off to another servicer.
How to apply for the Keystone Home Loan Program
This step-by-step guide will walk you through applying for the Keystone Home Loan Program.
1. Contact a PHFA counselor
Although not necessary, the PHFA highly recommends that you meet with a PHFA counselor before applying.
A counselor can walk you through the process and assess your finances to see if you meet eligibility and income requirements. Counseling is free and offered on the PHFA’s website.[1]
If your credit score is below 680, you may be required to attend in-person counseling in your area. You must complete this counseling before you close your loan.
2. Choose a participating lender
Once you understand your qualification chances, you can find a participating organization using the PHFA’s lender lookup tool.[2] You can search for lenders by county and also browse the top lenders and mortgage originators.
3. Apply, qualify, and close
When applying, you must provide information about your finances, including your credit score, debt-to-income ratio, employment, cash reserves, and any other details an underwriter might need.
You can expect to hear back on your application after 30 to 60 days, though decisions may take longer in some cases. Once approved, you can pay closing costs and close the deal.
4. PHFA services your loan
Even though you apply with a specific lender, the PHFA purchases the loan immediately after closing. So, instead of making monthly payments to the lender, you make them to the PHFA. The PHFA will service the loan for its entire term.
You can work with a Clever agent to make a more competitive offer and save on lower commission costs!
The bottom line
The Keystone Home Loan Program can be a great option for Pennsylvania borrowers looking for an affordable path to homeownership.
You should consider a Keystone Loan if:
- You are a veteran or a first-time homebuyer, or you want to purchase a home in a Targeted area.
- You need a fixed-rate loan with a stable monthly payment.
- You have a low-to-moderate income and may have difficulty making interest payments for a typical loan.
- You meet the Keystone Home Loan program eligibility and credit requirements.
- The house you want to buy is under the purchase price limit for the specific county.
Working with a quality agent can help you find the right home for you, and Clever has a network of top-notch buyer’s agent. To find a top-rated buyer’s agent in your area, take a short quiz.
FAQ
What credit score is needed for a Keystone Home Loan?
Generally, borrowers need a minimum credit score of 660 to qualify for a Keystone Home Loan, but specific requirements depend on the lender.
For conventional loans and FHA loans, you’ll also need to make a minimum down payment between 3% and 5% of the home’s purchase price.
Does the Keystone Home Loan Program have income limits?
Yes, the Keystone Home Loan Program has income and purchase price limits for borrowers. Income limits for a specific purchase price depend on the county and the number of household members.
Borrowers must also demonstrate their ability to make monthly payments and cover closing costs.
How does the Keystone Advantage Assistance Loan work?
A Keystone Advantage Assistance Loan is a second type of loan you can get to help cover down payment and closing costs. It is intended to be combined with a PHFA-backed mortgage to help first-time homebuyers manage housing costs.
How long does PHFA approval take?
Approval timelines for a PHFA-backed loan can vary depending on the specific lender, but most will take between 30 and 60 days to decide. However, extenuating circumstances can cause approval to take longer.
Who qualifies for the Keystone Home Loan Program?
First-time homebuyers who meet the PHFA’s purchase price and income limits are eligible for a Keystone Home Loan. Borrowers must also meet the minimum credit score requirement and show they can make the monthly payments.
You can also qualify for a Keystone Loan if you are a veteran or are buying a home in a Targeted county.