Pennsylvania ranks as the number one state to offer the most types of home buying assistance programs, according to data compiled by the mortgage website HSH.com.
While all 50 states have at least one program to help home buyers, Pennsylvania has 11 programs, including for first-time and repeat buyers, and assistance for homeowners looking to make improvements.
According to HSH, each state defines a first-time home buyer as someone who has never owned a home, or who has not owned a home in the past three years.
To qualify for one of the statewide home buyer assistance programs, borrowers are typically required to attend a home buyer education course.
“A lot of them are on line so people don’t have to take off work,” said Suzanne Huls, assistant vice president of mortgage lending at Somerset Bank based in Somerset.
Assistance programs range from below-market mortgage rates to down-payment assistance with special programs for police or firefighters. All programs must be acquired through a participating lender.
In Pennsylvania, programs are offered for first-time buyer, repeat buyer, mortgage credit, energy efficient, purchase program, home improvement, veterans program, disabled homeowner, down-payment assistance, and job specific.
Huls said a popular program that caters to low income applicants at Somerset is the First Front Door Program.
Somerset works with Federal Home Loan Bank of Pittsburgh for the program that assists with closing costs and down payment.
For every $1 spent, Huls said the bank will provide $3 in grant assistance, up to a maximum of $5,000.
Huls said the $5,000 serves as a second lien on the property that is forgiven after five years as long as the owner doesn’t move within that time.
“The good thing is a customer can apply and it is reserved for them up to six months as they look for a home,” said Huls.
Community Bank in Carmichaels also offers, the program, however, has not had any applicants, according to Christine Turcheck, mortgage administrator.
“It’s a great program, but I think what holds people back is the income guidelines,” said Turcheck.
She went on to say eligibility is determined by U.S. Department of Housing and Urban Development set at $33,150 for an in individual in Greene County.
While not necessarily new, state home buyer assistance programs may be more critical than ever, reports Time Network’s Money Magazine.
The magazine attributed the large number of programs to lingering after-effects of the 2008-2009 financial crises such as depleted savings and an expensive rental market that have made it particularly hard for millenials to buy homes.
Traditionally, obtaining a mortgage in the private market requires a down payment of 20 percent, according to the magazine.
Huls said the bank also works with the United States Department of Agriculture, which offers up to 100 percent financing depending on the appraised value of a property located in a qualifying rural area.
Additionally, Somerset utilizes the Pennsylvania Housing Finance Agency, which partners with private sector mortgage lenders that qualify borrowers and offer the program to eligible first-time home buyers in the state.
“Some of these places are starting to work together for the end result of home ownership,” said Huls.
Huls noted that realtors also play a role by helping home buyers search for such assistance programs.
Pennsylvania offers closing-cost assistance up to $6,000 in the form of a no-interest, 10-year loan open to all borrowers at participating lenders, HSH reports.
Meanwhile, first-time home buyers can also use the mortgage credit certificate program to claim a federal income tax credit of 50 percent of the mortgage interest paid each year, capped at $2,000 annually.