Pennsylvania mortgages: the realty transfer tax, PHFA help and monthly costs

#The realty transfer tax: 1% to the state, plus a local share

Pennsylvania’s state realty transfer tax is 1% of the value of the property, the 5th-highest statewide rate among the states and DC. Local governments can levy their own realty transfer tax as well, and they may share it between the school district and the municipality. The county recorder of deeds usually collects the local tax together with the state tax when the deed is recorded, so ask the title company or recorder for the combined rate where you are buying.

Who pays is negotiable. The law makes the grantor and grantee jointly and severally liable, which means the state can collect from either side, so the purchase agreement should say how you and the seller divide the bill. Certain transfers are exempt, including some between family members. Price the state and local shares in the closing cost estimator, alongside the lender, title and recording costs that the CFPB’s 2%–5% rule of thumb puts at $5,552–$13,880 on the median home.

#Paying for the median Pennsylvania home

On Pennsylvania’s median household income of $77,545, Freddie Mac’s 30% guideline allows $1,939 a month for housing — about $244,000 of home with 10% down, $33,600 below the median value. Buying the median home within that guideline takes roughly $88,000 a year. See where your own income lands in the affordability calculator, or start from these figures in the payment calculator.

#Three PHFA ways to fund the down payment

The Pennsylvania Housing Finance Agency (PHFA) pairs its first mortgages with second-loan assistance. Each option below needs a credit score of at least 660, and buyers can’t have more than a set amount of liquid assets left after closing.

K-FIT pairs with the Keystone Home Loan, which is limited to first-time buyers outside targeted counties and has income and price limits. The Keystone Government Loan (FHA, VA, USDA) and HFA Preferred conventional loan don’t require first-time status. On the median home, K-FIT’s $13,880 more than covers a 3.5% down payment ($9,716). Compare PHFA’s options with national ones in the first-time buyer programs guide.

#Older houses: inspection first

Half of Pennsylvania’s homes were built before 1966, the 5th-oldest housing stock among the states and DC. Budget for what age brings — older wiring, plumbing, heating systems and roofs — and make your offer contingent on a full home inspection. If the house needs work, PHFA’s K-FIT and K-DATE come in Purchase & Improvement versions that fold repair costs into the purchase.

#Property taxes and the rebate program

Pennsylvania’s effective property tax rate of 1.16% is the 14th-highest among the states and DC, above the national 0.89%; the median owner pays $3,214 a year. School district taxes are usually the largest part of the bill, so the district matters as much as the town — look up the parcel’s millage on the county assessment site before you offer.

The state’s Property Tax/Rent Rebate Program pays up to $1,000 a year to homeowners and renters who are 65 or older, widows and widowers 50 or older, or people with disabilities 18 or older, with household income up to $48,110. The top rebate would cover about 31% of the median bill; the maximum goes only to the lowest incomes. Apply with the Department of Revenue each year.