By Lena Polnet, Mortgage Loan Originator | NMLS #17225
Published April 28, 2026
K-FIT is Pennsylvania’s most generous down payment assistance loan, and most first-time buyers in the state never hear about it from their realtor. The Keystone Forgivable in Ten Years Loan (K-FIT) gives you 5% of your purchase price toward down payment and closing costs, with no maximum dollar cap, and forgives 10% of that loan every year for ten years. After year ten, you owe nothing. I’m Lena Polnet, a mortgage loan originator with Dynamic Funding Solutions, and K-FIT is the program I run for Pennsylvania buyers who would otherwise wait two more years to save a down payment they don’t actually need to save.
What K-FIT Actually Is (and What It Isn’t)
K-FIT is a second-mortgage loan from the Pennsylvania Housing Finance Agency that you stack on top of a PHFA first mortgage. It is not a grant. It is not free money on day one. It is a forgivable loan: the balance burns down by 10% of the original amount every year you stay in the home, and after ten years the lien is released and you owe zero.
The headline number is 5%. You receive 5% of the lesser of the purchase price or appraised value, with no maximum dollar limit. On a $350,000 home, that’s $17,500 toward down payment and closing costs. On a $500,000 home, it’s $25,000. There’s no cap on the K-FIT amount itself, only on the home price PHFA will finance.
K-FIT replaced the older Keystone Advantage Assistance second loan for buyers who want forgiveness instead of a 10-year repayable second. It is paired with a PHFA first mortgage — typically Keystone Government (FHA, VA, or USDA) or HFA Preferred (conventional). You cannot use K-FIT with a non-PHFA loan.
What you get at closing
The K-FIT funds wire to the closing table the same day as your first mortgage. They cover your down payment first, then closing costs. If 5% of the purchase price exceeds what you need for both, the rest applies to principal reduction or stays unused per program rules.
What happens if you sell before year ten
If you sell, refinance to take cash out, or move out of the home before the ten-year forgiveness period ends, you repay the unforgiven balance from the sale proceeds. Year three sale = 70% balance repaid. Year seven = 30% repaid. No interest accrues. No prepayment penalty.
K-FIT Loan Forgiveness Schedule
10% forgiven each year — balance fully cleared after Year 10
FORGIVEN100%
Remaining Balance
Who Qualifies for K-FIT
K-FIT eligibility is more accessible than buyers think. You do not need to be a first-time buyer in the strict three-year sense for K-FIT itself (the underlying PHFA first mortgage may carry that requirement depending on which product you choose).
Income limits
The borrower income limit is $196,200 [PHFA verified 2026-04-28]. That is the borrower’s qualifying income, not total household income. A two-earner household where only one person is on the loan only counts that one income toward the limit.
Purchase price limits
The maximum purchase price for K-FIT is $659,000 [PHFA verified 2026-04-28]. That ceiling covers nearly every starter home and most move-up homes across Pennsylvania, including Bucks, Montgomery, Chester, Delaware, and Philadelphia counties.
Credit score and assets
Minimum FICO score is 660. Liquid assets after closing cannot exceed $50,000 — meaning if you have $80,000 in checking and savings and need $25,000 to close, you’re at $55,000 post-closing and over the limit. Retirement accounts (401k, IRA, pension) do not count as liquid assets for this test.
How to apply
You apply through a PHFA-approved lender. Dynamic Funding Solutions is a PHFA participating lender. The application starts with a standard mortgage pre-approval — income, assets, credit — and we layer K-FIT eligibility into the same file. PHFA also requires homebuyer education counseling for K-FIT borrowers, which is free and available online.
How K-FIT Combines With Other Programs
K-FIT layers on top of a PHFA first mortgage, which itself is usually FHA-insured or HFA Preferred conventional. That means K-FIT effectively covers the FHA 3.5% down payment plus most or all of your closing costs.
K-FIT cannot be combined with most other PHFA assistance programs (HOMEstead, Keystone Advantage). It can be combined with the ACCESS Home Modification Loan for buyers with disabilities, and with PHFA’s Mortgage Credit Certificate when you choose the HFA Preferred or Keystone Government product. Stacking K-FIT + MCC is the most powerful combination PHFA offers — forgivable down payment up front, federal tax credit every year you own the home.
If you’re comparing all your options, see what nobody tells first-time home buyers in Pennsylvania.
What Most Buyers Get Wrong About K-FIT
The biggest mistake is assuming you make too much. The $196,200 borrower income ceiling is far higher than buyers expect, and most dual-income couples putting only one person on the loan come in well under.
The second mistake is assuming the $50,000 liquid asset limit means you can’t have any savings. You can have up to $50,000 left over after closing. If you need $20,000 to close, you can have up to $70,000 in liquid assets going into application. Buyers self-disqualify because they think the $50,000 cap applies to pre-closing balances. It doesn’t.
The third mistake is treating K-FIT as a backup plan. K-FIT should be your first conversation, not your fallback after a conventional loan falls through. The 5% comes off your cash-to-close, which means you can qualify for a more expensive home with the same savings, or keep your savings intact for the move, repairs, and emergency fund.
Next Steps With Lena
If you have a 660+ FICO, income under $196,200, and you’re shopping for a Pennsylvania home under $659,000, K-FIT should be on your loan estimate. The way to know in 15 minutes whether you qualify is a quick call. I run the income, asset, and credit test before you fill out a single form, and I tell you flat whether K-FIT works for your file or whether a different PHFA product fits better.
Watch: K-FIT Explained
Frequently Asked Questions
Hover any row to expand. About = primary subject of this page. Mentions = referenced entity.
| Entity | Type | Role | Link |
|---|---|---|---|
| Pennsylvania Housing Finance Agency
State agency administering K-FIT, HOMEstead, MCC, and all PHFA first mortgage products in Pennsylvania.
|
Government Agency | About | Wikipedia |
| K-FIT — Keystone Forgivable in Ten Years
PHFA second mortgage providing 5% of purchase price toward down payment and closing costs. Forgiven 10% per year over 10 years. No dollar cap.
|
Loan Program | About | PHFA.org |
| Dynamic Funding Solutions
PHFA-approved mortgage lender. NMLS #17144. Lena Polnet NMLS #17225. Licensed in Pennsylvania and Florida.
|
Mortgage Lender | About | Website |
| Pennsylvania
U.S. state. K-FIT is available statewide for qualifying properties and income-eligible borrowers through PHFA-approved lenders.
|
U.S. State | About | Wikipedia |
| Federal Housing Administration (FHA)
Federal agency insuring FHA loans. K-FIT pairs with PHFA’s Keystone Government product, which delivers FHA financing as the first mortgage.
|
Federal Agency | Mentions | Wikipedia |
| Mortgage Credit Certificate (MCC)
Federal tax credit program. K-FIT + MCC is the most powerful PHFA combination — forgivable down payment plus annual tax credit for the life of the loan.
|
Tax Credit Program | Mentions | DFS Guide |
- RelatedHOMEstead Program — $10,000 Forgivable Down Payment in Pennsylvania
- RelatedMortgage Credit Certificate (MCC) for Pennsylvania Home Buyers
- RelatedCounty Down Payment Assistance — Montgomery, Bucks, Philadelphia
- RelatedWhat Nobody Tells First-Time Home Buyers in Pennsylvania
- PHFAPHFA Official K-FIT Program Page
- PHFAPHFA Homebuyer Counseling (required for K-FIT)
- FederalHUD — Local Homebuying Programs by State
- FederalCFPB — Owning a Home Resource Center
Talk to Dynamic Funding Solutions
K-FIT works for more buyers than realize it, and the asset and income tests have specific exceptions most lenders don’t bother to explain. I’ll run your numbers in 15 minutes and tell you flat whether K-FIT fits your purchase.
Book a free 15-minute strategy call: calendly.com/lpolnet71/strategy_15min
Pennsylvania: (215) 364-7171
Florida: (561) 247-4888
Related reading: HOMEstead Program: $10,000 Forgivable Down Payment Assistance | Mortgage Credit Certificate (MCC) for Pennsylvania Buyers | How First-Time Home Buyer Programs Work
About the Author
Lena Polnet is a licensed Mortgage Loan Originator (NMLS #17225) with Dynamic Funding Solutions, serving home buyers across Pennsylvania and Florida. She specializes in PHFA loan products, K-FIT down payment assistance, and FHA/VA financing for first-time and move-up buyers. Lena has closed K-FIT loans across Bucks, Montgomery, Chester, Delaware, and Philadelphia counties and works directly with buyers from pre-approval through funding.
Legal Disclaimer
Dynamic Funding Solutions, NMLS #17144 | Lena Polnet, NMLS #17225 | Equal Housing Lender | Licensed in Pennsylvania and Florida.
This article is for informational purposes only and does not constitute a loan offer, commitment to lend, or financial advice. All loans are subject to credit approval, income verification, and property appraisal. Program terms, rates, limits, and availability are subject to change without notice. Consult a licensed mortgage professional regarding your specific situation.