How Much Money Do You Need to Buy a House in PA?

In this video, Rob explains the costs associated with buying a home in PA and how much you will need.

 Most people dream of buying a home, but calculating exactly how much you need can be tricky. There are so many factors that determine the amount you will need to close, but understanding closing costs in Pennsylvania can help you get an estimate.

Buying a Home with a Conventional Mortgage

If you are buying a home with a conventional loan, you are going to pay approximately 5% down and 4% in closing costs. That’s 9% of your home’s value that you’ll need in cash to close. In a normal market, you could get seller’s assistance which would allow you to get back a portion of your down payment, but this is a seller’s market, so assistance is hard to come by. Once you have the cash, the next step is qualifying for the mortgage. Lenders will look at your debt-to-income ratio when determining how much they can loan to you. Your debt, including your mortgage, can not exceed half your income.

FHA and VA Non-Conforming Loans

Right now, the housing market is very competitive, and it’s hard for FHA and VA loans to get accepted. Some people who appreciate veterans will still accept VA loans. VA loans are 0% down, but you will have closing costs.

K-FIT First Time Home-Buyer Program

In Pennsylvania, you can get a forgivable loan for up to five percent of your home price if you make under $96,000 a year. In Philadelphia, there is no income limit for this program. If you get the five percent from K-FIT, then all you have to come up with is the 4% for closing costs.

Get Pre-Approved and Have Cash on Hand

While many people are hesitant to get pre-approved because it can cause a slight decrease in your credit score, it usually only goes down by a few points. Your mortgage broker will give you an estimate of your closing costs, so you will know exactly how much cash you need to close. They will also be able to give you an estimate of what your monthly mortgage payment will be.

In today’s market, having as much cash as possible is definitely an advantage when you go to buy a home. Having cash on hand guarantees appraisal and shows more financial strength when you go to write an offer. Sellers will be able to see how much cash you have when you fill out a buyer’s financial information form. Being able to offer 10, 20, or 30 percent down can really make or break a deal in this market.

Buying a Home in PA? The Rob Lawrence Team Can Help

If you want to buy a home in Pennsylvania, our team of realtors can help. We are based in West Chester and part of the Vanguard Realty Alliance. We have licensure in PA, DE, and MD, and we serve Chester, Montgomery, Delaware, and New Castle County. Contact us today and get matched with a realtor that can help you find your dream home.