How to Get Preapproved for a Home Loan in Pennsylvania

The practice of buying a home is a strange thing indeed. Unless you're independently wealthy, you need a loan to buy a home. But you also need to know how much you need to borrow before you can get a loan. And therein lies the catch -- what good is a home loan in Pennsylvania or anywhere else without a home to buy? Unfortunately, that's just the nature of home buying today, and first-time homeowners can be even more confused as to exactly what they'll need as they attempt to navigate the tricky world of a home purchase.

Other buyers that have a home purchase or two under their belts may better understand the process, but it can still be confusing -- and professionals are undoubtedly utilized along the way to facilitate it all behind the scenes. But while everyone's familiar with the realtors that help negotiate a final sale price, when it comes to actually buy a home, you'll need someone else in your corner. It's called a loan officer, and they're responsible for helping homebuyers get the loans they need to help buy their next home.  

But just because you've owned a home in the past doesn't mean you can't take advantage of homebuyer programs. Some programs are open to anyone, and as long as you rent or haven't owned your primary residence for the last three years, you can actually qualify as a first-time buyer. Veterans and residents of certain counties can also benefit from first-time buyer programs even if they currently own a home they live in.

Let's take a look at your options.

National Home Loans

A conventional mortgage is great for those that haven't saved up much for a down payment, and these types of mortgages also tend to have limited mortgage insurance premiums that can help save money when the bills come each month. They're not guaranteed or insured by the federal government, but these home loans in Pennsylvania and elsewhere tend to have super-low down payments -- as low as three percent for first-time or lower-income homebuyers. Borrowers are also able to eventually cancel their mortgage insurance or avoid the cost of mortgage insurance entirely with a more typical 20 percent down payment.

An FHA loan is ideal for homebuyers that have a low credit score and requires a low down payment like a conventional mortgage. While a conventional mortgage may only require a three percent down payment, FHA home loans in Pennsylvania and elsewhere may only need a three-and-a-half percent down payment with a credit score of 580 or higher. Lower credit scores down to about 500, however, may need to put down up to 10 percent.

For veterans and active-duty military, the U.S. Department of Veterans Affairs will help service members and their families buy a home with competitive interest rates and no down payment or mortgage insurance. But you'll need a credit score of at least 640 to qualify for a VA-approved loan.

If you live in a rural area, you may qualify for a USDA loan, which is a loan issued by the U.S. Department of Agriculture as part of the USDA Rural Development Guaranteed Housing Loan Program. While there are some income limitations in place, USDA loans that have a credit score of 640 or higher are fast-tracked and easier to get, while lower credit scores carry more strict requirements.

Home Loans in Pennsylvania - What's the PHFA?

In Pennsylvania, however, residents have more options when it comes to financing the purchase of a new home. It’s the product of the PHFA, or the Pennsylvania Housing Finance Agency, which helps residents qualify for a home loan in Pennsylvania with various assistance programs. While there are many different programs available, PFHA loans come with down payment and closing cost assistance, help for borrowers with disabilities, various tax credits, purchase and refinancing options -- and they're also commonly 30-year fixed-interest loans.

But eligibility is strictly policed, and borrowers can't have more than $50,000 in assets -- excluding retirement accounts -- after closing on their home purchase. Borrowers also aren't able to overreach and must spend no more than 30 percent of their monthly income on their monthly mortgage payment. Other various requirements are also in place, including restrictions on household income and purchase price, and the home must be a primary residence. A minimum credit score of 660 is required for some programs; borrowers with credit scores of less than 680 must complete a buyer education course.

That said, there are a ton of options when it comes to a home loan in Pennsylvania via the PFHA, even if you're not a first-time homebuyer. Some loans have no mortgage insurance requirements, which is largely based on what you're able to put down; less than 20 percent requires mortgage insurance, though monthly mortgage payments may be lower. Some PFHA loans even forego the first-time homebuyer restriction altogether, which means that any resident may qualify. They're called HFA preferred loans, and they're only available to Pennsylvania residents as part of the PFHA program.

Other state-wide loans utilize government-backed lenders such as the FHA, USDA, and VA loans, and they typically come with lower requirements, though other limitations may be in play. 

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To learn more about your home loan options in Pennsylvania, contact the experts at Homeway Real Estate. We can help you secure a loan, sell your existing Pennsylvania home, and buy a new one, even if it's your first. Contact us today!