HOMEstead Downpayment and Closing Cost Assistance Loan
Homebuyers eligible for the HOMEstead program may qualify for up to $14,999 in downpayment and closing cost assistance in the form of a no-interest, second mortgage loan. HOMEstead funds are forgiven at 20 percent per year over five years. The minimum loan amount is $1,000. The first mortgage is provided by PHFA at the same rate as the Keystone Home Loan PLUS program. A fee of one percent plus $300 is applicable, but may be financed by the HOMEstead loan.
Borrowers must have sufficient funds to make a downpayment of at least three percent of the purchase price, or $1,000 for borrowers who have a credit score of at least 660. HOMEstead funds provide the remainder of the downpayment and the closing costs. In certain cases, based upon family need, the funds may provide additional down money to make the property affordable to the buyer.
Buyers participating in PHFA’s Keystone Home Loan Program are eligible to apply if they meet certain Program Income Limits and home Program Acquisition Cost Limits that vary by county. Most major cities and seven counties are wholly excluded from the program because they receive their own federal allocation. Eligible areas are noted on the limits above. The home must also meet other property guidelines specified by federal rules. Federal regulations for Lead-Based Paint Hazard Reduction (24 CFR Part 35) are applicable to HOMEstead Second Mortgage Program applicants.
As in all PHFA homeownership programs, loans are made by local lending institutions, not by the Agency itself. More than 70 lenders participate statewide.
Program requirements and funding availability are determined by the US Department of Housing and Urban Development as set forth in the HOME Investment Partnership Program and the American Dream Downpayment Initiative. PHFA HOMEstead funding is therefore allocated to eligible homebuyers on a first-come, first-served basis.
Main Line and Beyond 
Jim N
December 8, 2008
How do they determine which counties (and parts of counties are eligible)? Seems most of suburban Philly is excluded.