Homebuyers who need assistance with their down payment and closing costs may be eligible for a new home purchase assistance loan from the Pennsylvania Housing Finance Agency, Keystone Forgivable in Ten Years Loan Program or K-FIT.
The K-FIT loan is a forgivable second loan, with 10% forgiven each year over the next decade, requiring no monthly payment. The goal of the loan is to assist low- and moderate-income renters who are striving to become homeowners but struggling with the cost.
“Experience shows that down payment and closing costs are two of the biggest barriers to homeownership that buyers face,” said PHFA Executive Director and CEO Robin Wiessmann. “For those homebuyers who qualify, our new K-FIT loan eliminates or reduces those hurdles and will help make homeownership achievable for many families.”
A K-FIT loan provides 5% of the lesser of the purchase price or appraised value with no maximum dollar amount. For example, if the price of a home is $215,000, the buyer may receive $10,750 in K-FIT loan assistance to be used toward the transaction. A borrower applying for a K-FIT loan may not have liquid assets greater than $50,000 after deducting the funds to close on the loan. The minimum amount for the loan is $500.
To be eligible for a K-FIT loan, borrowers must have a minimum FICO score of 660 and must complete homebuyer education counseling, which may be done remotely during the pandemic.
The loan may only be paired with PHFA’s Keystone Home Loan program. Conventional, Federal Housing Administration, Rural Development and Veterans Affairs financing options are available. (For RD and VA financing, a K-FIT loan may only be used to cover closing costs.)
To be approved for a K-FIT loan, all borrowers must be eligible for the KHL program and meet the K-FIT loan program eligibility requirements.
The PHFA is offering free education for Realtors®. For more information, visit www.phfa.org, email [email protected] or call 717-780-3800.