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The process — and price tag — of buying a house in Pennsylvania can look a lot different depending on where in PA you want to call home. This huge state covers more than 46,000 square miles! So, while data from the Pennsylvania Association of Realtors shows that the statewide median sale price was just over $219,000 in July of 2022, buying a house in Erie, on the shores of the Great Lakes, is different than buying one in Exton, just outside Philadelphia.
Still, there is one key commonality across the entire commonwealth: It’s a seller’s market. With that in mind, you might be trying to answer a tough question: Should you buy a house now or wait? The answer ultimately comes down to your finances and how long you plan to stay put. If you have great credit and long-term plans to be here, it’s still smart to buy in Pennsylvania. Read on for an in-depth introduction to everything you need to know about saving for a down payment, budgeting for closing costs and competing to win the home of your dreams.
How to buy a house in Pennsylvania
Decide where to live in Pennsylvania
How can you pick just the right spot amidst 46,000 square miles of land? Pennsylvania offers just about everything: rustic living in the Allegheny National Forest area, university charm in State College (home of Penn State), big-city energy in Pittsburgh and Philly.
In addition to what a town can offer in terms of quality of life, consider how much money you’ll need to be able to enjoy your time away from work. Bankrate’s cost of living calculator is a great tool to get a sense of how far your income can stretch in different places. For example, your total costs in Erie, including transportation, utilities, food and other essentials, will be nearly 20 percent lower than they would be in Philly. And here’s a bit of good news if you’re looking for a thriving downtown but don’t have an especially big budget: Pittsburgh topped Bankrate’s most recent list of the nation’s best cities for first-time homebuyers.
If this is your first home, you should also think about how long you want to stay. Are you looking for a starter home to build equity for now before you move on? Or do you want to find a place where you can plant roots and grow with your family? If it’s the latter, be sure to factor in things that might not be on your immediate to-do list but will be down the road, like daycare and schools.
Tips for buying a house in Pennsylvania
As you start comparing mortgage rates in Pennsylvania, it’s important to know how much money you can borrow without exceeding the Federal Housing Finance Agency’s conforming loan limits. The limit is the same — $647,200 — in every county with one exception: You can borrow up to $970,800 in high-priced Pike County. If you need to borrow more than that, you’ll cross into jumbo loan territory, which means you’ll need excellent credit and a bigger down payment to get approved.
If you’re planning to apply for an FHA loan in Pennsylvania, your borrowing limit will be much lower: $420,680 across most of the state, with exceptions in a few counties, including Lehigh ($372,600) and Montgomery ($408,250).
Things to know about buying a house in Pennsylvania
- Property taxes: In addition to the upfront price tag of your new home in Pennsylvania, you’ll need to budget for your annual property tax bill. This varies widely based on a property’s size and location. For example, according to H&R Block data, median property taxes in Fayette County are just $1,074, while in Bucks County they’re $4,090. One other thing to note: Set a calendar reminder for February. While property taxes are due on March 31 each year, you can receive a 1 percent discount on your property tax bill if you pay it before the end of this month.
- Dual agency: As in most states, dual agency is legal in Pennsylvania — meaning the real estate agent who represents you may also represent the owner of the property you want to buy. However, if this is the case, both you and the seller will need to formally agree to it in a written consent form.
- Seller’s disclosure: Speaking of forms, a Pennsylvania seller is required by law to provide a property disclosure statement that outlines any defects you might not be able to see. If you’re buying a condo or co-op, note that the seller’s disclosure only applies to the individual unit, not the shared common areas. So be sure to request additional information about the building or development overall, including any recent damages or upcoming assessments.
- Closing costs: While home prices here are relatively affordable compared with the rest of the Mid-Atlantic, closing costs are not. In 2021, the average closing costs in Pennsylvania totaled 4.3 percent of the home’s purchase price, according to data from ClosingCorp — a typical bill of $10,634. A big portion of that comes from the state’s real estate transfer tax, which is 2 percent of the purchase price (1 percent to the state and 1 percent to the local municipality). The good news is that you’ll likely split that tax 50/50 with the seller.
- Attorneys: You aren’t required to hire a lawyer when you’re buying a home in Pennsylvania. However, it’s smart to do so anyway: Buying property is a huge investment, and a real estate attorney has the legal expertise to make sure your interests are protected.
- Climate and weather considerations: If you’re thinking about buying a home, you already know you’ll need homeowners insurance. However, you might not know much about sinkholes. Pennsylvania is one of a handful of states most vulnerable to damage from sinkholes, according to the American Geosciences Institute, so you may need additional coverage. Flooding is also common in the commonwealth, so look into whether the property you are considering is in a high-risk flood area.
How much house can I afford in Pennsylvania?
With renting getting more expensive across the entire country, delaying your decision to buy might mean handing over more money in exchange for no equity. So, if your credit is in good shape and you’re planning to stay in Pennsylvania for a while, you’re a great candidate to buy a house. Use Bankrate’s new-home calculator to determine how much you can comfortably spend.
Your income is the most important figure in the equation — general wisdom says you shouldn’t spend more than 28 percent of your earnings each month on housing expenses — but there are other key considerations. What are your other regular debt payments? What kind of interest rate can you qualify for? Can you come up with a down payment that equals 20 percent of the purchase price, or will you need to pay for private mortgage insurance?
Saving for a down payment in Pennsylvania
The median down payment for homebuyers in Pennsylvania is $24,000. If that number feels impossible for you, don’t worry: There are quite a few down payment assistance options available specifically designed to help first-time homebuyers and low-income homebuyers deal with the large upfront costs of purchasing a place. The Pennsylvania Housing Finance Agency offers programs that include interest-free second mortgages, along with forgivable loans that are canceled after you live in the home for a period of five or 10 years. If you’re buying in a major city, you’ll likely want to explore local programs. For example, Pittsburgh’s Urban Redevelopment Authority offers assistance for first-time buyers based on annual earning limits.
Get preapproved for a mortgage
Once you have an idea of how much you can contribute to a down payment, you need to get preapproved for a mortgage. A preapproval isn’t an official “yes” to financing, but it is a lender-issued document that helps a seller know you are a serious, qualified buyer. The process is fairly easy: You share a range of information about your finances, and a lender will offer an initial assessment of their confidence that you’ll be able to pay the money back.
Find the right lender
All mortgage lenders that operate in Pennsylvania are not created equal. Some might tempt you with really low rates but charge high fees that add to your closing costs. Others might promise low costs but not be able to close very quickly. And some might be able to give you the best of everything: low fees, low rates and outstanding customer service. Be sure to compare offers from at least three lenders to find the deal that best fits your finances.
Find the best local real estate agent in Pennsylvania
Pinpointing the right place for you requires more than just browsing on Redfin and Zillow. It’s important to find a real estate agent who will understand your needs and guide you through what can be an overwhelming process. Plus, agents may have advance knowledge of new places before they hit the market, so they can give you a competitive edge as a buyer.
One quirk of the Philadelphia metro area specifically: If you’re looking for a place that’s commutable to Philly, you’ll want to find an agent who is also licensed to help you buy a house that isn’t in Pennsylvania. Plenty of Philly professionals commute from just across nearby state lines in Delaware and New Jersey, so make sure you ask the agents you’re considering about their experience all over the tri-state area.
Start house hunting
When you’re ready to start touring properties, go into the process with an understanding of where you’re willing to compromise to find the right place. Rather than stretch your budget beyond your means, be willing to stretch your thoughts on how to make a home work for you. That might mean considering properties that don’t check off all your wants right now — an updated kitchen and a finished basement, for example — with a plan to upgrade the home after a few years. And be prepared to be patient: Plenty of buyers in Pennsylvania have been submitting offers on multiple homes before finally landing a deal.
Get a home inspection and appraisal
After that patience pays off and your offer is accepted, it’s almost time to celebrate — but not quite. You still need to take a much closer look at the property by hiring a professional home inspector to inspect every detail of the home. It will cost a few hundred bucks, but this is an expense you shouldn’t skimp on.
While the home inspection is optional and at your discretion, a home appraisal will be required by your lender. It’s a step that every lender takes to make sure the property is indeed worth the money they are letting you borrow to buy it.
Final walk-through and closing on your new Pennsylvania home
Before you head to the closing table, you’ll have one more opportunity to verify that the home is ready for you. Final walk-throughs are typically quick, but there’s plenty to confirm before you become the official owner. Make sure the seller has removed all their belongings, that no damage has occurred during their move-out and that the property is exactly as you expect it.
After that, it’s time to close. Your lender’s representative and your attorney will prepare you for this moment by telling you what you need to bring and how much money you need for the closing (which you’ll likely need to pay via a certified or cashier’s check). Then, you’ll sign your name on what feels like a novel’s worth of pages. Finally, the time is here: You are officially a Pennsylvania homeowner. Congratulations, the keys to the Keystone State are yours.
If you have great credit and you can qualify for a conventional loan, the minimum down payment you’ll need will be 3 percent of the purchase price. So, on a typical $219,000 property, that would be $6,570. To avoid paying private mortgage insurance, though, you’ll need much more – 20 percent of the purchase price. And if you have bad credit (less than 580) and you’re applying for an FHA loan, you’ll need at least 10 percent. In March of 2022, the typical homebuyer in Pennsylvania made a down payment of $24,000.
It depends on the type of loan and your lender’s standards. With conventional loans, a 620 credit score is usually the basic requirement. If you have less-than-perfect credit, FHA loans will likely be a better route. Some FHA lenders will accept credit scores as low as 500, with the tradeoff of making a larger down payment.
Compared with national sale prices, buying a home here is affordable. The state’s median sale price was $219,154 in July 2022, according to the Pennsylvania Association of Realtors — a significantly smaller price tag than the national median sale price of $403,800. However, it’s important to note that there are still plenty of areas in Pennsylvania where buying a home isn’t cheap at all. Some Philadelphia suburbs in particular, like Villanova and Bryn Mawr, have much higher home prices.