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The Pennsylvania Housing Finance Agency launched a home purchase assistance loan that is "forgivable in 10 years," giving it the K-FIT designation. This loan will be used to assist homebuyers with their down payment and closing costs, according to a press release.
The PHFA revealed that K-FIT is a forgivable second loan, with 10% forgiven each year over the course of 10 years and no monthly payment is required.
"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."
PHFA is looking to expand affordable housing opportunities throughout Pennsylvania and launched the K-FIT purchase assistance loan as a way to help fulfill that mission by assisting low- and moderate-income renters who want to become homeowners. Homebuyer education that is provided by PHFA-approved counselors at no cost to homebuyers helps prepare them for the financial responsibilities of homeownership, according to the press release.
The K-FIT purchase assistance 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. The PHFA states that RD and VA financing may only use K-FIT to cover closing costs.
A K-FIT loan provides 5% of the lesser of the purchase price or appraised value with no maximum dollar amount. For instance, 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.
All borrowers requesting K-FIT funds must have a minimum FICO score of 660. Borrowers obtaining K-FIT funds must complete homebuyer education counseling regardless of their credit score. During the pandemic, that counseling may be completed remotely and does not have to be done face-to-face. 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.