Buying Your First Home in Pennsylvania? Start Here.

By Joy Daniels

In her position, Daniels is a listing specialist who works with sellers to achieve their specific real estate goals while helping them to understand their home’s value and the current local market.

If you’re a first-time buyer getting ready to start your home search in Central Pennsylvania, I want to make sure you know a few things before you even set foot in a house. Not the generic advice you can find anywhere online. The Pennsylvania-specific details that will actually affect your experience, your budget, and your timeline.

Some of these are going to save you money. Some of them are going to cost money you didn’t expect. All of them are things I wish every first-time buyer knew before they started looking.

You need a buyer representation agreement before you tour homes

This is new as of 2024, and it catches a lot of first-time buyers off guard. Before you can start touring homes with an agent, you’re required to sign a buyer representation agreement. This is a written agreement between you and your agent that outlines their services and their fee. Think of it like a listing agreement, but on the buyer side.

This isn’t something to be nervous about. It’s actually a good thing. It means you and your agent have a clear understanding of what you’re getting and what it costs before you start the process. A good agent will walk you through this and answer every question you have before you sign anything.

Pennsylvania has programs that can save you thousands. This is the part most first-time buyers don’t know about, and it’s a big deal. The Pennsylvania Housing Finance Agency offers several programs specifically designed for first-time buyers.

• The Keystone Advantage Assistance Loan provides up to 4% of your purchase price, with a maximum of $6,000, as a zero-interest second mortgage to help cover your down payment and closing costs. You repay it over 10 years.
• The K-FIT program is even more powerful. It provides up to 5% of your purchase price with no maximum dollar limit, and the entire amount is forgiven over 10 years. That means if you stay in the home for 10 years, you never pay it back. One important note: you can’t combine K-FIT and Keystone Advantage on the same loan, so you’ll want to work with your lender to figure out which one makes more sense for your situation.
• PHFA also offers a Mortgage Credit Certificate, which is one of the most underused tools available. It gives you an annual federal tax credit of up to $2,000 a year on the mortgage interest you pay, for as long as you hold the mortgage. Over 10 years, that’s potentially $20,000 in tax savings. Most first-time buyers have never heard of it.

To qualify for PHFA programs, you’ll typically need a minimum credit score of 660, and your liquid assets can’t exceed $50,000 after closing. If your credit score is below 680, PHFA requires you to complete a homebuyer education course in person before closing. Even if it’s not required for you, I’d recommend doing it. It’s free through PHFA-approved agencies, and it walks you through the entire process.

The transfer tax that surprises everyone. Here’s the one that catches first-time buyers off guard almost every time. Pennsylvania charges a 2% transfer tax on every real estate transaction, split between the buyer and the seller. That’s 1% to the state and 1% to your local municipality. On a $300,000 home, your share of the transfer tax is $3,000.

That’s a closing cost that many buyers from other states or buyers who’ve never purchased before simply don’t have on their radar. Your settlement agent will calculate it for you, but I want you to know about it now so it doesn’t show up as a surprise on your closing disclosure.

The good news: some of the PHFA programs we just talked about can help offset these costs. And the split is negotiable. In some situations, you can negotiate for the seller to cover a larger share as part of the offer.

Know your loan options. Beyond PHFA programs, you have several loan types available depending on your situation.

• FHA loans require as little as 3.5% down and are one of the most popular options for first-time buyers. On a $250,000 home, that’s about $8,750.
• VA loans are available to veterans and eligible service members with zero down payment. If you’ve served, this is one of the strongest homebuying tools available.
• USDA loans offer zero-down financing for homes in qualifying rural areas. Parts of Central PA outside of the larger metro areas may qualify, and it’s worth checking with your lender because the savings are significant.
• Conventional loans through PHFA can go as low as 3% down, and when paired with PHFA assistance programs, your out-of-pocket cost could be significantly lower than you’d expect.

What to do right now. If buying a home is on your radar in the next year, here’s my advice. Get pre-approved before you start looking, not after you find a home you love. Talk to a PHFA-approved lender so you can take advantage of every program you qualify for. Complete the homebuyer education course early so it’s done and behind you. And start thinking about what you actually need in a home versus what would be nice to have, because clarity on that saves you weeks of searching.

If you’re new to the area or just starting to explore, take a look at why so many people are choosing Central PA as their home base. And if you want to understand what’s been happening in our local market, that context will help you see where things stand before you start making decisions.

The more prepared you are before you start looking, the stronger your position will be when the right home shows up. And in Central PA, where well-priced homes still move quickly, being prepared is the difference between getting the home and watching someone else get it.

If you want to talk through where you are in the process and what your next step should be, I’d love to help. Call me at (717) 695-3177, text me at (717) 409-5588, or email me at Info@joydaniels.com. You can also visit joydaniels.info for more on what’s happening in our market.