PHFA K-FIT Grant Pennsylvania: Down Payment Assistance for First-Time Buyers
The PHFA K-FIT program provides Pennsylvania first-time homebuyers with a 5% down payment assistance loan — forgiven over 10 years — that can be combined with an FHA, VA, USDA, or conventional first mortgage. While commonly referred to as a “grant,” K-FIT is technically a forgivable second mortgage at 0% interest, meaning no additional monthly payment is required and the balance disappears entirely if you stay in the home for 10 years.
Dynamic Funding Solutions, Inc. helps Pennsylvania buyers access the PHFA K-FIT program as part of a complete homebuying strategy. Lena Polnet (NMLS #17225) has over 28 years of experience guiding first-time buyers through Pennsylvania’s down payment assistance programs — from determining eligibility to structuring the combined first and second mortgage so buyers reach the closing table with as little out-of-pocket cost as possible. Call us at (215) 364-7171 to get started.
Contact Us: PHFA K-FIT Down Payment Assistance
Dynamic Funding Solutions, Inc.
51 Buck Road, Huntingdon Valley, PA 19006
Phone: (215) 364-7171
Call Monday–Friday 9 AM–6 PM
What Is the PHFA K-FIT Program?
The Pennsylvania Housing Finance Agency (PHFA) is a state agency created to provide affordable homeownership and rental opportunities for Pennsylvania residents. PHFA administers a range of programs including first mortgage loans, down payment assistance, and home improvement funding — all designed to make homeownership more accessible to low- and moderate-income buyers across the Commonwealth.
K-FIT stands for Keystone Forgivable In Ten Years. Despite the word “grant” being widely used in online searches and everyday conversation, K-FIT is technically a second mortgage — but one that functions like a grant because of how it is forgiven. The loan carries a 0% interest rate, requires no monthly payments, and is forgiven at a rate of 10% per year. A borrower who remains in the home as their primary residence for the full 10 years owes nothing — the entire balance is wiped out. If the borrower sells, refinances, or converts the property before 10 years, the remaining unforgiven portion must be repaid at closing.
The K-FIT assistance amount is equal to 5% of the lesser of the purchase price or the appraised value of the home. There is no maximum dollar cap on the assistance under current program guidelines. The funds can be applied to the down payment, closing costs, or a combination of both. K-FIT cannot be used on its own — it must always be paired with a PHFA-approved first mortgage, specifically the HFA Preferred (conventional) program or the Keystone Home Loan (FHA, VA, or USDA).
How Much Down Payment Assistance Does K-FIT Provide?
K-FIT provides 5% of the lesser of the purchase price or appraised value. There is no maximum dollar cap under current program guidelines, which makes it one of the more flexible down payment assistance programs in Pennsylvania for buyers purchasing at higher price points. To put this in concrete terms: on a $200,000 home, K-FIT provides $10,000. On a $250,000 home, $12,500. On a $300,000 home, $15,000. That assistance can go toward the down payment, closing costs, or both — giving the buyer and their loan officer flexibility in how it is applied.
The K-FIT second mortgage carries a 0% interest rate, meaning there is no interest accruing on the balance and no monthly payment associated with it. Forgiveness happens automatically at 10% per year. After year one, 10% of the original balance is forgiven. After year five, 50% is forgiven. After year ten, the full balance is forgiven — provided the home has remained the borrower’s primary residence throughout. For example, if a buyer received $15,000 in K-FIT assistance and sells in year three, they would owe 70% of $15,000 ($10,500) at closing, because only 30% (3 years × 10%) had been forgiven at that point. The longer a buyer stays, the less they owe — and at 10 years, they owe nothing.
Who Qualifies for PHFA K-FIT in Pennsylvania?
K-FIT is designed for first-time homebuyers, defined by PHFA as buyers who have not owned a primary residence in the past three years. However, two important exceptions exist. First, buyers purchasing in a PHFA-designated “targeted area” — which are typically economically distressed census tracts spread across Pennsylvania — do not need to meet the first-time homebuyer requirement. Second, veterans and active-duty military members are also exempt from this requirement, meaning a veteran who previously owned a home can still qualify for K-FIT assistance. In both cases, all other eligibility requirements still apply.
Income limits apply to K-FIT and vary by county and household size. PHFA publishes current income limits on its website at phfa.org — these are updated periodically and vary meaningfully by region, so buyers should verify current limits for their specific county rather than relying on generalized figures. Purchase price limits also vary by county and property type. On the credit side, buyers using the conventional HFA Preferred first mortgage typically need a credit score of 660 or higher; buyers using FHA follow standard FHA guidelines, which allow scores as low as 580 for 3.5% down financing. All K-FIT borrowers must complete a PHFA-approved homebuyer education course before closing, and the property must be the buyer’s primary residence — K-FIT cannot be used for investment properties or vacation homes.
Which Loan Programs Work with PHFA K-FIT?
K-FIT must be paired with a qualifying PHFA first mortgage. The four eligible first mortgage types are:
- FHA Loan + K-FIT: The most common K-FIT pairing. FHA loans allow a 3.5% down payment with a minimum 580 credit score, making them accessible to buyers with limited savings or less-than-perfect credit. When combined with K-FIT, the 5% assistance can fully cover the 3.5% FHA down payment requirement and apply the remaining 1.5% toward closing costs — potentially allowing the buyer to reach the closing table with very little out-of-pocket expense. The first mortgage must be a PHFA-originated Keystone Home Loan.
- VA Loan + K-FIT: VA loans are available to eligible veterans, active-duty service members, and surviving spouses, and require no down payment. Because the down payment need is already eliminated, K-FIT assistance on a VA loan goes directly toward closing costs — reducing or eliminating what the veteran must bring to closing. This is the most advantageous pairing for veterans who want to preserve their cash reserves.
- Conventional (HFA Preferred) + K-FIT: PHFA’s HFA Preferred conventional program offers competitive interest rates and reduced private mortgage insurance (PMI) rates compared to standard conventional loans. This option typically requires a 660+ credit score. K-FIT covers the down payment and/or closing costs on a conventional purchase, making homeownership accessible to buyers who qualify for conventional financing but lack sufficient savings.
- USDA + K-FIT: USDA Rural Development loans are available for eligible properties in qualifying rural and suburban Pennsylvania areas and require no down payment. Like the VA pairing, K-FIT assistance on a USDA loan is directed primarily toward closing costs. Buyers in eligible USDA zones who want to minimize closing costs will find this a strong combination.
How Dynamic Funding Solutions Helps with PHFA K-FIT
Dynamic Funding Solutions, Inc. (NMLS #17144) is a licensed mortgage broker in Pennsylvania with access to more than 100 lenders. As a broker rather than a direct lender, DFS can shop the market on a buyer’s behalf — finding the best rate and terms on the PHFA first mortgage while structuring the K-FIT second mortgage alongside it. Lena Polnet (NMLS #17225) has been originating loans in Pennsylvania for over 28 years and has guided hundreds of first-time buyers through the PHFA process, including K-FIT, Keystone Advantage, and HOMEstead programs.
When a buyer contacts Dynamic Funding Solutions about K-FIT, the process begins with a straightforward eligibility review: household income versus county income limits, credit score against program requirements, target purchase price versus county purchase price limits, and first-time homebuyer status. From there, Lena determines which PHFA first mortgage type (FHA, VA, USDA, or conventional) is the best fit, calculates how K-FIT assistance should be allocated between down payment and closing costs, and walks the buyer through the PHFA homebuyer education requirement. The goal is to structure the entire transaction so the buyer’s out-of-pocket costs at closing are as low as possible.
Dynamic Funding Solutions is located in Huntingdon Valley, PA and serves all of Pennsylvania — including the Philadelphia metro area, Pittsburgh metro, the Lehigh Valley, Central PA, and surrounding regions. Buyers throughout the state can work with Lena by phone, email, and video consultation. DFS is also licensed in Florida for buyers relocating between states or exploring both markets.
PHFA K-FIT vs. Other Pennsylvania Down Payment Assistance Programs
PHFA offers several down payment and closing cost assistance programs. Understanding the differences helps buyers choose the right combination for their situation:
| Program | Assistance Amount | Forgiveness | Interest Rate | Notes |
|---|---|---|---|---|
| K-FIT | 5% of purchase price or appraised value (lesser) | 10% per year over 10 years (fully forgivable) | 0% | No dollar cap; must pair with PHFA first mortgage (FHA, VA, USDA, or conventional) |
| Keystone Advantage Assistance | 4% of purchase price, up to $6,000 | Not forgivable — must be repaid | 0% | Repayable second mortgage; no monthly payment but due at sale or refinance |
| HOMEstead | Up to $10,000 | 20% per year over 5 years (fully forgivable) | 0% | Limited to eligible buyers in HUD-designated areas; subject to fund availability |
Program availability, income limits, purchase price limits, and funding levels change over time. Lena stays current on all active PHFA programs and can advise which combination is the best fit for each buyer’s income, credit profile, target purchase price, and county. Call (215) 364-7171 for a no-obligation program review.
Frequently Asked Questions About PHFA K-FIT
Does PHFA K-FIT need to be repaid if I sell my home?
Yes. The K-FIT assistance is forgiven at 10% per year. If you sell, refinance, or stop using the property as your primary residence before the 10-year period ends, the remaining unforgiven balance must be repaid at closing. For example: if you received $15,000 in K-FIT assistance and sell in year three, 30% has been forgiven (3 years × 10%), meaning you owe the remaining 70% — or $10,500 — at closing. If you sell in year seven, only 30% remains owed. If you remain in the home for the full 10 years and continue using it as your primary residence, the entire balance is forgiven and nothing is owed.
Can I use PHFA K-FIT with an FHA loan?
Yes. The FHA + K-FIT combination is the most common pairing for Pennsylvania first-time homebuyers. Your FHA first mortgage must be a PHFA-originated loan under the Keystone Home Loan program. K-FIT then provides 5% of the purchase price toward your down payment and/or closing costs. FHA requires a minimum 3.5% down payment with a 580+ credit score — K-FIT can fully cover this amount and apply the remaining 1.5% toward closing costs, potentially allowing buyers to reach the closing table with very little cash out of pocket. Lena at Dynamic Funding Solutions can run the numbers for your specific purchase price and show you exactly how much you would need to bring to closing.
What are the income limits for PHFA K-FIT in Pennsylvania?
Income limits vary by county and household size and are updated periodically by PHFA. Because limits differ meaningfully across Pennsylvania’s 67 counties — reflecting differences in area median income — we do not publish specific figures here that could become outdated. The most accurate and current income limits are published directly on PHFA’s website at phfa.org. To get a quick eligibility answer for your specific county and household size, call Lena Polnet at Dynamic Funding Solutions: (215) 364-7171. She stays current on all PHFA program limits and can tell you within minutes whether you qualify.
Do I need to complete homebuyer education to get PHFA K-FIT assistance?
Yes. PHFA requires completion of an approved homebuyer education course before closing on any PHFA-assisted loan. The course covers household budgeting, the mortgage process, homeownership responsibilities, and how to avoid predatory lending. PHFA accepts online courses from eHome America and Framework, as well as in-person counseling through HUD-approved housing counseling agencies. The course typically takes 4 to 8 hours to complete and can be done on your own schedule before your closing date. Your certificate of completion must be submitted to PHFA as part of the loan package.
Can veterans use PHFA K-FIT even if they have owned a home before?
Yes. Veterans and active-duty military members are exempt from the first-time homebuyer requirement for PHFA programs, including K-FIT. A veteran who previously owned a home — even recently — can still apply for and receive K-FIT assistance. All other standard PHFA eligibility requirements remain in effect: income limits, purchase price limits, credit score requirements, homebuyer education, and the primary residence requirement all still apply. Veterans using K-FIT typically pair it with a VA first mortgage, which eliminates the down payment requirement entirely, directing the K-FIT funds toward closing costs for maximum benefit.
Dynamic Funding Solutions, Inc. NMLS #17144 | Lena Polnet NMLS #17225 | Licensed in Pennsylvania and Florida | Equal Housing Lender | This content is for informational purposes only. Program eligibility, income limits, and purchase price limits are subject to change. Visit phfa.org for current program details.