Buying a Home
in Philadelphia, PA

Philly First Home is a City of Philadelphia down payment and closing cost assistance program for first-time buyers purchasing a primary residence in the city. Income limits apply and the property must meet certain conditions. Assistance is structured as a grant or forgivable loan depending on program terms at the time of your application. Because program funding is limited and terms can change, confirming current availability early in your process is a practical first step rather than an afterthought.

Philadelphia charges a city transfer tax in addition to Pennsylvania's state transfer tax. Combined, these can represent a notable addition to your closing costs compared with buying in many suburban Pennsylvania counties that charge only the state rate. Custom in Philadelphia is for the buyer and seller to split the transfer tax, but this is negotiable. Building the full transfer tax amount into your cash-to-close estimate from the beginning prevents a common and frustrating surprise late in the process.

The honest answer depends on your credit score, down payment amount, and how long you plan to stay in the home. FHA loans offer more flexible credit requirements and a lower minimum down payment, but they include mortgage insurance for the life of the loan in most cases. Conventional loans with private mortgage insurance (PMI) may allow you to cancel that insurance once equity builds. Comparing both options with a loan officer using your actual figures is more useful than relying on general rules of thumb.

Yes, in many cases. Pennsylvania's Keystone Advantage Assistance Loan, for example, is compatible with certain conventional loan products, not just government-backed loans. Eligibility depends on income, purchase price limits, and the specific first mortgage product being used. A common misconception is that down payment assistance only pairs with FHA loans; layering assistance onto a conventional loan is possible and sometimes produces a more cost-effective long-term outcome depending on your profile.

Philadelphia historically offered a ten-year real estate tax abatement on new construction and substantial improvements, which significantly reduced carrying costs during the abatement period. The program has been modified in recent years. Buyers purchasing new construction or recently renovated properties should confirm the current abatement status of the specific property, because the abatement affects your effective carrying cost and, relatedly, what a lender may include in your monthly payment estimate for tax escrow purposes.

Closing costs in Philadelphia tend to run higher than the national average primarily because of the combined city and state transfer tax. A general planning range often cited is 3% to 6% of the purchase price, but the transfer tax alone can account for a substantial share of that figure. Requesting a Loan Estimate from your lender after identifying a target purchase price is the most reliable way to see an itemized projection based on your specific transaction, rather than relying on broad percentages.

Philly First Home and some other local assistance programs require completion of a HUD-approved homebuyer education course before you can access funds. This is not a formality worth rushing. Philadelphia has multiple HUD-approved counseling agencies that offer both in-person and online sessions. Beyond satisfying a program requirement, the counseling often surfaces practical information about budgeting, maintenance reserves, and the settlement process that is genuinely useful for first-time buyers navigating an unfamiliar city market.