Pennsylvania Mortgage Loans: Your Guide to Smart Financing

Key Takeaways

What types of loans are available in Pennsylvania?

Homebuyers in Pennsylvania can choose from FHA loans for first-time buyers, VA loans for veterans, USDA loans for rural areas, conventional mortgages, jumbo loans for luxury homes, non-QM loans for self-employed borrowers and investors, renovation loans like FHA 203(k) and Homestyle, and reverse mortgages for homeowners aged 62 and older.

What credit score do I need to buy a house in Pennsylvania?

To buy a house in Pennsylvania, you generally need a 620+ credit score for conventional loans, 580 for FHA loans with 3.5% down (or 500 with 10% down), and around 580–620 for VA and USDA loans, though some lenders may be more flexible.

How much are closing costs in Pennsylvania?

Closing costs in Pennsylvania typically range from 2% to 5% of the home price and include lender fees, appraisal and title costs, deed recording fees, and the Pennsylvania realty transfer tax of about 2% total (1% state + 1% local, usually split between buyer and seller).

Is there first-time homebuyer assistance in Pennsylvania in 2025?

Yes. Programs like the PHFA Keystone Home Loan, Keystone Advantage Assistance Loan, and MCC tax credit provide first-time homebuyer assistance in Pennsylvania in 2025, reducing down payment and closing costs while expanding affordability for new buyers.

Who are the best mortgage lenders in Philadelphia PA?

The best mortgage lenders in Philadelphia PA offer FHA, VA, USDA, and PHFA Keystone loans. Truss Financial Group stands out for expertise in first-time buyer programs, non-QM financing, and jumbo loans for Main Line luxury homes.

Where can I find USDA eligible areas in Pennsylvania?

You can confirm eligibility using the USDA eligible areas Pennsylvania map, which highlights rural and suburban counties like Lancaster, York, and Centre. USDA loans offer 0% down payment for qualifying properties.

What is the minimum down payment for a house in Pennsylvania?

The minimum down payment to buy a house in Pennsylvania depends on your loan type: FHA loans: 3.5% with a 580+ credit score, or 10% with a 500–579 score. Conventional loans: As little as 3% down for first-time buyers, though 20% avoids private mortgage insurance (PMI). VA loans: 0% down for eligible veterans and service members. USDA loans: 0% down for homes in USDA-eligible rural and suburban areas.

What are the current mortgage rates in Pennsylvania?

Pennsylvania mortgage rates change daily based on market conditions, credit score, and loan program. In 2025, rates for conventional, FHA, VA, and USDA loans in Pennsylvania generally align with national averages. Jumbo loans for luxury homes in Philadelphia’s Main Line suburbs may carry slightly higher rates.

Areas We Serve

Our team provides mortgage solutions across Pennsylvania, including:

• Philadelphia Metro & Main Line Suburbs: Jumbo loans for luxury homes, FHA for first-time buyers.
• Pittsburgh & Allegheny County: Popular for VA loans with a strong veteran community.
• Harrisburg, Lancaster, and York: USDA and FHA loans common for rural and suburban buyers.
• Erie, Scranton, and Northeastern PA: Conventional and VA loans are popular.
• Statewide Support: Even smaller towns and rural counties benefit from USDA and PHFA Keystone programs.

No matter where you’re buying, we can help you choose the right program.

How Do Home Loans Work in Pennsylvania?

While the loan process is similar across the U.S., Pennsylvania has some state-specific requirements and costs you’ll need to plan for:

1. Loan Application & Pre-Approval

   Before shopping for a home, you’ll need pre-approval. This involves reviewing your income, assets, debts, and credit score. In PA, sellers often expect buyers to have a pre-approval letter before making an offer.

2. Appraisal & Inspection

   Your lender orders an appraisal to confirm the property’s value. Most PA buyers also pay for a home inspection to catch issues early, especially in older Pennsylvania homes that may have structural or historical quirks.

3. Underwriting & Verification (includes state-specific transfer tax checks)

   Underwriting includes standard verification of income and assets. In Pennsylvania, underwriters also account for the realty transfer tax (a state-specific cost).

4. Rate Lock & Closing Disclosure

   Once approved, you can lock your mortgage rate. You’ll then receive a closing disclosure, listing exact costs including state + local transfer tax.

5. Closing & Funding

   At closing, the deed is recorded, and taxes are paid. Note: Pennsylvania borrowers should budget for the 1% state transfer tax, which is often matched with a 1% local tax, plus deed recording fees. These are typically split between buyer and seller.

Home Loan Qualifications in Pennsylvania

To qualify for a mortgage in Pennsylvania, lenders evaluate your credit profile, income, and debt obligations. While requirements vary by loan program, here are the standard guidelines:

Credit Score Requirements

• Conventional Loans: Minimum 620 credit score. Borrowers with higher scores often receive lower interest rates.
• FHA Loans: Minimum 580 with just 3.5% down, or 500 if you can put at least 10% down.
• VA & USDA Loans: Flexible. These government-backed programs do not set a strict minimum credit score, but lenders typically look for 580–620+.

Down Payment Requirements

• VA Loans: 0% down payment (for eligible veterans and service members).
• USDA Loans: 0% down payment (for homes in rural or eligible suburban counties).
• Conventional Loans: As little as 3% down, though 20% avoids private mortgage insurance (PMI).
• FHA Loans: 3.5% down with a 580+ score.

Debt-to-Income Ratio (DTI)

• Most Pennsylvania mortgage programs require a DTI of 43% or lower. Some government-backed or non-QM loans may allow higher ratios with strong compensating factors.

Income Documentation

• Traditional Borrowers: Pay stubs, W-2s, and tax returns.
• Self-Employed Borrowers: May qualify through bank statement loans or other non-QM options where cash flow and assets are used instead of W-2 income.

Pennsylvania Mortgage Programs Offered by TFG

At Truss Financial Group (TFG), we offer a wide range of mortgage products tailored to the unique needs of Pennsylvania homebuyers.

Whether you’re a first-time buyer in Philadelphia, a veteran in Pittsburgh, or purchasing a luxury property in the Main Line suburbs, we have financing solutions designed to fit your goals.

1. FHA Loans – Ideal for First-Time Buyers

   FHA loans are one of the most popular mortgage options in Pennsylvania, especially in Philadelphia, Pittsburgh, and Harrisburg. Backed by the Federal Housing Administration, these loans allow for:

2. Credit scores as low as 580 with just 3.5% down.
3. Flexible debt-to-income ratios compared to conventional loans.
4. The ability to use gift funds for your down payment.

Tip: FHA loans are especially useful in Pennsylvania’s urban markets, where home values are moderate but buyers often need flexible approval terms.

1. Conventional Loans – Standard & Flexible

Conventional mortgages remain the go-to choice for many Pennsylvania borrowers. Best for buyers with good credit and stable income, conventional loans offer:

• Down payments starting at 3% (20% avoids PMI).
• Competitive fixed and adjustable rates.
• Flexibility for refinancing or investment properties.

These loans are commonly used in suburban areas around Philly and Pittsburgh, where buyers want predictable terms without government program restrictions.

1. VA Loans – No Down Payment for Veterans

Pennsylvania has a strong veteran population, especially in Pittsburgh, Erie, and central PA. VA loans, guaranteed by the Department of Veterans Affairs, are designed exclusively for service members, veterans, and eligible spouses. They feature:

• 0% down payment required.
• No private mortgage insurance (PMI).
• Competitive rates and relaxed credit standards.

For veterans and military families, VA loans are often the most affordable way to buy a home in Pennsylvania.

1. USDA Loans – Rural and Suburban Opportunities

If you’re looking in Lancaster, York, Centre County, or other rural parts of Pennsylvania, USDA loans can be an excellent choice. Backed by the U.S. Department of Agriculture, they offer:

• 100% financing (no down payment required).
• Reduced mortgage insurance costs.
• Income-based eligibility for moderate- to low-income borrowers.
• Jumbo Loans – For High-Value Homes

  In luxury areas like Philadelphia’s Main Line suburbs or affluent neighborhoods outside Pittsburgh, property prices often exceed conforming loan limits ($766,550 in 2025). Jumbo loans help cover these purchases, offering:

• Financing for high-value homes.
• Flexible structures for large loan balances.
• Competitive rates for qualified borrowers with strong credit.

1. Non-QM Loans: Flexible Solutions for Self-Employed Borrowers & Real Estate Investors

Not every Pennsylvania borrower fits neatly into the traditional mortgage box.

Lenders typically want W-2s, steady pay stubs, and long employment history, but what if you’re self-employed, running your own business, freelancing, or investing in real estate?

That’s where non-qualified mortgage (non-QM) loans come in. These programs are designed for borrowers who have strong financial health but don’t meet standard underwriting rules.

At Truss Financial Group (TFG), we specialize in helping Pennsylvania’s self-employed professionals, small business owners, and investors secure financing through flexible documentation options.

1. Bank Statement Loans – Income Proof Without W-2s

Perfect for freelancers, consultants, independent contractors, and small business owners across Pennsylvania.

• Instead of W-2s or tax returns, your personal or business bank statements (usually 12–24 months) are used to show consistent income.
• Great for entrepreneurs in Philadelphia’s tech startups, Pittsburgh’s healthcare sector, or rural small businesses who reinvest earnings and don’t show high taxable income on paper.
• Down payments typically range from 10–20%, with credit scores as low as 600 accepted.
• Example: A Harrisburg-based wedding photographer with irregular income but steady deposits can qualify for a mortgage with this loan type.
• DSCR Loans – Designed for Real Estate Investors

  Debt Service Coverage Ratio (DSCR) loans are one of the fastest-growing financing tools for investors in Pennsylvania.

• Instead of looking at your personal income, lenders evaluate the rental income potential of the property.
• If the property’s rent covers the mortgage payment (DSCR ratio of 1.0+), you can qualify.
• Ideal for investors in Philadelphia rowhomes, Pittsburgh duplexes, or student rentals in State College.
• Example: A Lancaster investor purchasing a multi-family unit qualifies based on projected rental income, not their tax returns.

1. Asset-Based Loans – Tap Into Your Net Worth

   For high-net-worth borrowers, liquid assets (like savings, investment accounts, or retirement funds) can be used to qualify instead of income.

2. Perfect for retirees, entrepreneurs, or professionals with significant assets but limited monthly income.
3. Often used by buyers in Main Line luxury markets or second-home buyers in the Poconos.
4. Example: A retired couple in Erie with strong retirement savings but no W-2 income can qualify for a new home purchase through asset-based lending.

Why Non-QM Loans Are Growing in Pennsylvania?

• Gig Economy Growth: Pennsylvania’s freelance economy is booming, with thousands of workers in healthcare, logistics, IT, and creative industries who can’t always document income traditionally.
• Real Estate Investment Demand: Investors are flocking to Philadelphia, Pittsburgh, and Harrisburg for multi-family and rental opportunities, DSCR loans unlock these deals.
• Flexibility for Self-Employed: Many small business owners reinvest profits, which lowers their taxable income but doesn’t reflect their true financial strength.

Renovation Loans – Financing Upgrades for Pennsylvania’s Older Homes

Pennsylvania is known for its historic rowhouses in Philadelphia, classic brick homes in Pittsburgh, and older properties in smaller towns across the state.

While these homes often have character, many need updates to meet modern living standards, from electrical rewiring to kitchen remodels. Renovation loans help buyers finance both the purchase price and the cost of improvements in a single mortgage.

Types of Renovation Loans:

• FHA 203(k) Loan
  
• Combines the home purchase price with renovation costs.
• Ideal for properties that need significant repairs.
• Commonly used by first-time buyers purchasing older homes in Philly or Harrisburg where affordability is strong but many homes require upgrades.
• Fannie Mae Homestyle Loan
  
• Offers broader renovation options with fewer restrictions than FHA 203(k).
• Can be used for luxury updates as well as repairs.
• Often chosen by buyers in Main Line suburbs or Pittsburgh neighborhoods upgrading mid-to-high value homes.

Reverse Mortgages – Accessing Home Equity for Seniors

For Pennsylvania homeowners 62 and older, a reverse mortgage (also known as a Home Equity Conversion Mortgage, or HECM) provides a way to access the value tied up in your home without selling it.

Key Benefits of Reverse Mortgages in Pennsylvania:

• No monthly mortgage payments required. Borrowers remain responsible for property taxes, homeowner’s insurance, and maintenance.
• Flexible payout options: Choose between a lump sum, monthly payments, or a line of credit.
• Stay in your home: Seniors can age in place while leveraging equity to cover retirement expenses, healthcare, or everyday living costs.

First-Time Buyer Programs in Pennsylvania

Pennsylvania offers several programs to make homeownership more affordable for new buyers. The Pennsylvania Housing Finance Agency (PHFA) provides some of the most widely used options:

• Keystone Home Loan Program – Affordable fixed-rate mortgages for first-time buyers and veterans.
• Keystone Advantage Assistance Loan – Offers up to $6,000 in down payment and closing cost help, repayable over 10 years with no interest.
• Mortgage Credit Certificate (MCC) – Provides a federal tax credit on mortgage interest, reducing annual tax bills.
• First-Time Homebuyer Assistance Pennsylvania 2025 – State and county-level grants and incentives that vary by region.

Are there first-time homebuyer programs or grants in Pennsylvania?

Yes. Pennsylvania offers several first-time homebuyer assistance programs through the Pennsylvania Housing Finance Agency (PHFA) and local counties. Popular options include:

• PHFA Keystone Home Loan Program – affordable fixed-rate mortgages for first-time buyers and veterans.
• Keystone Advantage Assistance Loan – up to $6,000 for down payment and closing costs, typically interest-free.
• Mortgage Credit Certificate (MCC) – a federal tax credit on mortgage interest paid.
• Local grants and county programs – additional down payment help depending on where you buy.

These Pennsylvania first-time homebuyer grants and programs can significantly lower upfront costs, making it easier to purchase a home in cities like Philadelphia, Pittsburgh, and Harrisburg, or in rural counties eligible for USDA financing.

Buying a House in Pennsylvania

Purchasing a home in Pennsylvania involves unique costs and local regulations.

In addition to standard mortgage steps (application, underwriting, and closing), buyers must plan for transfer taxes and property taxes, which are often higher than the national average.

How Much Do Houses in Pennsylvania Cost?

As of 2025, the median home price in Pennsylvania is around $280,000.

Prices are higher in Philadelphia’s Main Line suburbs (often $600,000+) and parts of Pittsburgh’s growing neighborhoods, while more affordable homes can be found in Harrisburg, Erie, and rural counties.

How Much Is a Down Payment in Pennsylvania?

• 0% down: VA and USDA loans (for eligible buyers).
• 3–3.5% down: FHA and Conventional first-time buyer programs.
• 20% down: Avoids PMI on Conventional loans.
• PHFA programs can provide down payment assistance to reduce upfront costs.

What Credit Score Is Needed to Buy a House in Pennsylvania?

• Conventional loans: 620+
• FHA loans: 580 (3.5% down) or 500 (10% down)
• VA and USDA loans: Flexible: many lenders approve scores in the 580–620 range
• Buyers using PHFA Keystone loans must meet program credit guidelines, often aligned with FHA or Conventional minimums

Pennsylvania-Specific Notes

Buying in Pennsylvania comes with unique state considerations:

• Mortgage & Realty Transfer Tax: A 1% state tax, usually paired with a 1% local tax, for a total of ~2%. This cost is typically split between buyer and seller. (Search intent keyword: Pennsylvania mortgage transfer tax explained).
• Mortgage Act: Pennsylvania operates under a mortgage system rather than deeds of trust, meaning judicial foreclosure processes apply.
• High Property Taxes: Property taxes in Pennsylvania are among the highest in the U.S., averaging around 1.5% of assessed home value. This makes taxes a major affordability factor, especially in suburban counties.
• Example: A $300,000 home in Pennsylvania could cost ~$4,500 annually in property taxes, in addition to mortgage payments.

Apply for a Pennsylvania Home Loan with Truss Financial Group

Buying a home in Pennsylvania doesn’t need to feel overwhelming.

At Truss Financial Group (TFG), we guide borrowers across the state, from first-time buyers in Philadelphia to veterans in Pittsburgh and families in rural USDA-eligible counties, through the entire process.

With access to FHA, VA, USDA, jumbo, non-QM, renovation, and reverse mortgage options, our team helps you compare programs, secure competitive rates, and avoid costly mistakes like underestimating Pennsylvania’s transfer taxes or property tax impact.

Frequently Asked Questions: Pennsylvania Mortgages

How much does it cost to buy a house in Pennsylvania?

The cost of buying a home in Pennsylvania includes more than just the purchase price. In 2025, the median home price is about $280,000 statewide, with higher prices in the Philadelphia suburbs and lower prices in rural counties. Buyers should also plan for a down payment ranging from 0% to 20% depending on the loan program, closing costs of 2% to 5% of the loan amount including title fees and transfer taxes, and property taxes averaging around 1.5% of the home’s assessed value, which are among the highest in the U.S.

How does escrow work in Pennsylvania?

In Pennsylvania, most lenders require an escrow account to cover property taxes and homeowners insurance. Each month, part of your mortgage payment is deposited into escrow, and the lender uses those funds to pay taxes and insurance when due.

What is the Pennsylvania Realty Transfer Tax and who pays it?

The Pennsylvania realty transfer tax is a closing cost made up of a 1% state tax and about a 1% local tax, which varies by municipality. The total of around 2% is usually split between buyer and seller. For example, on a $250,000 home, the tax would be $5,000, with each party typically paying about $2,500.

Do I need flood insurance in Pennsylvania?

Flood insurance is required if your property lies in a FEMA-designated flood zone, which is common along rivers such as the Susquehanna, Delaware, and Allegheny. Even if not required, many PA homeowners purchase flood insurance voluntarily due to heavy rains and storm risk.

How do I get pre-approved for a Pennsylvania mortgage loan?

To get pre-approved for a Pennsylvania mortgage, you’ll need to submit income documents (W-2s, pay stubs, or bank statements for self-employed borrowers), credit history, and assets. A lender like Truss Financial Group will then issue a pre-approval letter, which shows sellers you are a serious buyer, helps you understand your budget, and speeds up the closing process once you find a home.

Can I qualify for a USDA loan in Pennsylvania?

Yes. Many parts of Pennsylvania, especially outside metro areas, qualify for USDA loans. Borrowers can get 0% down payment mortgages in counties like Lancaster, York, Centre, and rural parts of western PA.

How long does it take to close on a home in Pennsylvania?

The average time to close a mortgage in Pennsylvania is 30–45 days. Factors include loan type (FHA/VA may take longer), appraisal and inspection scheduling, and underwriting. Non-QM loans like bank statements or DSCR may require additional documentation, extending the process slightly.