Buying a home

PHFA creates forgivable loan for down payments, closing costs

By Anthony SanFilippo
March 2021

In an effort to expand affordable housing opportunities throughout the state, the Pennsylvania Housing Finance Agency (PHFA) recently launched a loan to help with the purchase of a new home.

But the catch with the new loan is that it is Forgivable In Ten years, thus the name it is known by – K-FIT (The K is short for Keystone).

The loan can be used toward a down payment and closing costs. It is a forgivable second loan, in which 10% is forgiven each year over the span of a decade.

That means that no monthly payment is required.

“Experience shows that down payment and closing costs are two of the biggest barriers to homeownership that buyers face,” PHFA Executive Director and CEO Robin Wiessmann said in a press release. “For those homebuyers who qualify, our new K-FIT loan eliminates or reduces those hurdles and will help make homeownership achievable for many families.”

The K-FIT purchase assistance loan will help low- and moderate-income renters who want to become homeowners achieve that dream more quickly.

A K-FIT loan provides 5% of either the purchase price or the appraised value of the home – whichever is lower – but there is no maximum dollar amount.

As an example provided by the PHFA, If a home costs $215,000, the buyer can get a K-FIT loan of $10,750 to be used toward the transaction.

To be eligible for the K-FIT loan:

  • A borrower may not have liquid assets greater than $50,000 after deducting the funds to close on the loan.
  • They must have a minimum FICO score of 660.
  • Borrowers must complete homebuyer education counseling regardless of their credit score, which can be completed remotely during the pandemic.

Homebuyer education counseling is provided by PHFA-approved counselors at no cost to homebuyers. The counseling is designed to help potential homebuyers prepare for the financial responsibilities of homeownership.

The K-FIT loan may only be paired with PHFA’s Keystone Home Loan (KHL) program. However, conventional, Federal Housing Administration (FHA), Rural Development (RD) and Veterans Affairs (VA) financing options are available. (For RD and VA financing, K-FIT may only be used to cover closing costs.)

Homebuyers wanting more information about the new K-FIT home purchase assistance loan can visit PHFA’s website (see the second bullet). They also can call the agency’s Customer Solutions Center toll-free at 1-855-U-Are-Home (827-3466). Customer service representatives are available Monday through Friday from 8 a.m. until 5 p.m. Callers can also leave a message and request a call-back.


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