The median sales price for a Pennsylvania home is $219,154, which is far below the national median home price of $440,300. But every housing market in the Keystone State has different price points, and some are changing. For instance, the median sales prices on single-family homes dropped from 2021 to 2022 in Philadelphia, Erie, and Harrisburg.
Some of the price fluctuations are due to “a flight away from single-family homes in those metro areas toward multi-family homes,” says Matthew Ricci, a home loan specialist with Churchill Mortgage. “This is increasing the demand for multi-family homes and decreasing demand for single-family homes, and therefore reducing that price point.”
What Are Today’s Mortgage Rates in Pennsylvania?
For Monday, September 26, 2022, here are the current mortgage rates in Pennsylvania. The average 30-year fixed mortgage rate is 6.490%. The average 30-year fixed mortgage refinance rate is 6.540%. Today, the average 15-year fixed mortgage rate is 5.660%.
Looking at variable rate loans, the average 5/1 adjustable-rate mortgage (ARM) rate is 4.900%.
This information is from Bankrate’s latest survey of the nation’s largest mortgage lenders.
Current Mortgage Rates in Pennsylvania
How Much of a Mortgage Do You Need to Buy a Home in Pennsylvania?
Pennsylvania’s median home price—$219,154—is roughly half of the national median, making it a little easier to save for a down payment compared to some other states in the U.S.
A down payment is a lump sum of money you commit toward the home purchase. If you’re taking out a conventional loan, you’ll need a down payment of at least 3% of the purchase price. You’ll need a down payment of either 3.5% or 10% to get an FHA loan, depending on your credit score. VA loans don’t require a down payment in most cases.
The table below shows how much a down payment might cost in different metro areas in Pennsylvania.
|Metro Area||Median Home Price||3.5%||10%||20%|
|Allentown – Bethlehem – Easton||$277,200||$9,702.00||$27,720||$55,440|
|Harrisburg – Carlisle||$215,200||$7,532.00||$21,520||$43,040|
Types of Home Loans Available in Pennsylvania
The major mortgage programs in Pennsylvania include conventional loans, FHA loans, and VA loans. Nationwide, conventional loans accounted for more than three-quarters of new-home sales in the beginning of 2022, according to an analysis by the National Association of Home Builders. But you should check all your options, because each program comes with its own eligibility requirements and pros and cons. Here’s a rundown.
Conventional loans are mortgages that aren’t associated with a government program. To qualify for one of these home loans, you’ll need a down payment of at least 3%, a credit score of at least 620, and a maximum debt-to-income ratio of 45% in most cases. Conventional loans also come with monthly private mortgage insurance if your down payment is under 20%. The good news is that you can eventually drop PMI once your loan-to-value ratio (LTV) is less than 80%.
If you don’t qualify for a conventional loan, consider an FHA loan. These home loans are backed by the Federal Housing Administration (FHA) and have looser eligibility requirements. Buyers either need a minimum credit score of 580 and a down payment of 3.5%, or a credit score of 500 and a down payment of at least 10%. The buyer’s DTI ratio can be up to 50%. These loans come with both upfront and monthly mortgage insurance, which can make them more expensive than conventional loans over time.
VA loans are mortgages that are insured by the U.S. Department of Veterans Affairs. They’re available to service members, veterans, and surviving spouses, and they come with competitive interest rates and extremely low closing costs. Qualified borrowers don’t have to provide a down payment or pay mortgage insurance, but they’ll need to meet their lender’s specific credit score and DTI limits. There’s also an upfront funding fee that’s equal to 1.4% to 3.6% of the loan amount. However, some borrowers are exempt from paying the fee.
First Time Homebuyer Programs in Pennsylvania
First-time homebuyer programs help cover some of the upfront costs of buying a home such as the closing costs and down payment. Homebuyers pay an average of $10,634 for closing costs in Pennsylvania, according to a survey by Bankrate, which is owned by the same parent company as NextAdvisor.
“Pennsylvania by far, in comparison to neighboring states like New Jersey, has much higher closing costs for the buyer,” Ricci says. One of those closing costs is the transfer tax, which varies based on area, county, and township. It comes out to 1% of the price of the house on the state level, then other city-level adjustments will be made.
Additionally, “you’ve really got to pay attention to the property tax in Pennsylvania,” Ricci says. “You’ve got three separate tax authorities: school tax, municipal tax, and county tax. A good portion of these taxes are paid on an annualized basis, so at closing you’ll have to prepay them and put them in escrow.”
Pennsylvania has home-related tax credits along with first-time homebuyer programs on both the state and local level. Using one of these programs could make it difficult to compete against other buyers, says Nicole Rueth, a producing branch manager with Fairway Independent Mortgage Corp. However, “once the interest rates jumped as high as they did, to where now homes are sitting on the market a little bit longer and we’re seeing those [with] down payment assistance, the first-time homebuyers who can’t offer over asking, finally have a seat at the closing table,” Rueth says. “They can finally place an offer and win.”
The Pennsylvania Housing Finance Agency is a state-affiliated agency that has generated more than $16.5 billion of funding toward affordable housing since its creation in 1972. Some of its programs include:
- Mortgage loans: The PHFA sponsors several 30-year fixed-rate home loans with competitive interest rates, fewer fees, and potential down payment and closing cost assistance. You can apply through a participating lender, and the PHFA will service the payments for the life of the loan.
- Grants: Eligible borrowers may receive $500 as a grant to use toward the down payment and closing costs on certain PHFA-sponsored home loans. The grant does not have to be repaid.
- Keystone Advantage Assistance Loan Program: Qualified borrowers can receive a second mortgage for up to 4% of the purchase price or market value, up to $6,000, in down payment and closing cost assistance. There are monthly payments associated with the second mortgage over a 10-year term with a 0% interest rate.
- HOMEstead program: Qualified borrowers may receive up to $10,000 in down payment and closing cost assistance in the form of a no-interest, second mortgage loan. The mortgage is forgiven after the buyer lives in the home for five years.
- Mortgage Tax Credit Certificate: When homeowners receive the Mortgage Tax Credit Certificate, they can claim 20% to 50% of the mortgage interest they pay each year as a federal income tax credit. The credit is worth up to $2,000 annually. To qualify, homebuyers must have a PHFA-sponsored first mortgage and request the certificate from their lender.
Pennsylvania has some of the highest closing costs in the country, but there are programs on the state and local level to help cover some of the costs. To use one of these programs, you’ll need to find a lender that accepts homebuyer assistance and then meet eligibility requirements.
The city of Philadelphia offers a homebuyer assistance grant of up to $10,000 (or 6% of the purchase price, whichever is less) to help first-time home buyers. To qualify, you’ll need to be a first-time homebuyer and meet income limits. The grant doesn’t have to be repaid as long as the buyer lives in the home for at least 15 years.
Lackawanna County and the city of Scranton both offer similar programs for qualified first-time homebuyers who meet income restrictions. You can receive at least $5,000 as a forgiven, deferred-payment loan in Scranton and a minimum of $7,500 from the county to help with down payment and closing expenses.
And in Pittsburgh, first-time homeowners who meet income restrictions can receive up to $7,500 in down payment and closing cost assistance in the form of a 0% interest, five-year deferred loan. You won’t have to repay the loan if you meet residency requirements.