Pennsylvania Mortgage Guide

Pennsylvania Different

Transfer taxes add up fast. Pennsylvania has a 1% state transfer tax, but localities can (and do) add their own. In Philadelphia, the total transfer tax is now 4.578% as of July 2025 — one of the highest in the country. Pittsburgh (Allegheny County) is 5% total. On a $300,000 home in Philadelphia, you'll pay nearly $14,000 just in transfer taxes at closing.

Two major metros, very different markets. Philadelphia and Pittsburgh anchor opposite ends of the state with completely different housing dynamics. Philly is expensive with Northeast Corridor pricing; Pittsburgh is one of the most affordable major metros in the country. Everything in between is either suburban sprawl, small towns, or rural.

Property taxes vary enormously by school district. Pennsylvania's school funding system relies heavily on local property taxes, creating massive variation. The same-priced home could have property taxes of $3,000/year in one school district or $9,000/year in an adjacent one. Always check the specific school district's millage rate, not just the county average.

No transfer tax for first-time buyers (sometimes). Some Pennsylvania municipalities exempt first-time homebuyers from the local portion of transfer tax. Philadelphia does NOT offer this exemption, but some suburban areas do. Check with your settlement company.

Flat state income tax. Pennsylvania has a flat 3.07% state income tax — lower than NY, NJ, or CA. However, Philadelphia adds its own 3.75% wage tax for residents, and many other municipalities have local income taxes (typically 1-2%).

• Benefit: Below-market 30-year fixed-rate mortgage (conventional, FHA, VA, or USDA)
• Who qualifies: First-time buyers, veterans, or buyers in targeted counties
• Income limits: Vary by county; generally moderate-income focused
• Down payment: As low as 3%
• Website: phfa.org/programs/homepurchase.aspx

• Benefit: Second mortgage up to 4% of purchase price or $6,000 (whichever is less)
• Interest rate: 0%
• Repayment: Over 10 years with monthly payments
• Use: Down payment and/or closing costs
• Must pair with: PHFA first mortgage
• Website: phfa.org/programs/assistance.aspx

• Benefit: Up to 5% of purchase price, completely forgiven after 10 years
• How it works: No payments, no interest — just stay in the home 10 years
• Who qualifies: Lower-income first-time buyers
• Great program: One of the most generous forgivable DPA programs in the country

• Benefit: Second mortgage up to $10,000 at 0% interest
• Repayment: Deferred until sale, transfer, or payoff of first mortgage
• Who qualifies: Income limits apply; for purchase of homes in specific municipalities

• Benefit: Forgivable loan up to $10,000 for down payment/closing costs
• Requirement: Complete free homeownership counseling before signing Agreement of Sale
• Who qualifies: First-time buyers below income limits, buying in Philadelphia
• Website: Check PHDC (Philadelphia Housing Development Corporation)

• Urban Redevelopment Authority (URA): Down payment and closing cost assistance
• Dollar Bank First-Time Buyer: Local bank offers competitive first-time buyer products
• Check with local housing agencies — Pittsburgh has multiple programs

(January 2026)

Median home prices by area:

• Philadelphia: $285,000 (city proper); suburbs vary widely
• Philadelphia suburbs (Montgomery/Bucks): $450,000-550,000
• Delaware County: $300,000
• Pittsburgh: $225,000
• Pittsburgh suburbs: $275,000-350,000
• Lehigh Valley (Allentown/Bethlehem): $325,000
• Harrisburg: $220,000
• Lancaster: $310,000
• State College: $325,000
• Erie: $175,000
• Scranton/Wilkes-Barre: $185,000

  Market trends:

• Philadelphia is seeing steady appreciation but remains affordable compared to NYC/DC
• Pittsburgh continues to be one of America's most affordable major metros
• Lehigh Valley has grown significantly due to NYC commuter migration
• Rural PA remains very affordable but with limited inventory

  Best value areas for 2026:

• Pittsburgh metro (healthcare, tech, education — affordable living)
• Scranton/Wilkes-Barre (very affordable, improving economy)
• Harrisburg area (state capital, reasonable prices)
• Erie (most affordable, though colder climate)
• Reading/Lancaster (growing areas with reasonable prices)