Compare Current Mortgage Rates in Pennsylvania

When buying a new home, you might be tempted to skip right over rate shopping and head straight to picking out new paint colors. However, your interest rate plays a critical role in the overall cost of your home and shouldn’t be overlooked. Interest rates reflect the amount of money, in addition to your mortgage, you’ll need to pay the lender in exchange for them funding your loan. Even one percentage point can cost, or save, you thousands over the life of your loan.

Whether you’re buying in Pittsburgh, Philadelphia, or somewhere in between, here is everything you need to know to get the best mortgage rates in Pennsylvania. 

Pennsylvania mortgage rates are determined by individual lenders, such as banks and credit unions. To set their rates, lenders have to take into account many different factors, such as the risk of the borrowers they lend to, the health of the economy, and what their competition is offering. 

Outside of lowering your risk for lenders, these rate factors are generally outside of your control:

• The prime rate: The prime rate is the base interest rate that your lender will use when determining the mortgage rate it will offer you. Often, lenders turn to the Federal Reserve’s federal funds rate as a reference point for setting their prime rate. 
• Government bonds: The 10-year Treasury bond has a direct impact on mortgage rates and is often a good measure of how the market is behaving. When the yield for Treasurys is high, mortgage rates tend to follow. 
• Competition: When the housing market is hot, you’d think that competition would drive interest rates lower, giving you the best shot at a low mortgage rate. However, studies have found that increased competition in the mortgage market has increased home loan rates instead. 

If you’re buying a home in Pennsylvania, you can take advantage of multiple first-time homebuyer programs offered by the Pennsylvania Housing Finance Agency (PHFA). PHFA offers closing cost assistance, down payment assistance, and lower interest rates. These two loan programs in particular can help first-time buyers:

• HFA Preferred™(Lo MI) loan: The HFA Preferred™(Lo MI) loan is a conventional loan with a 30-year fixed-rate term and low private mortgage insurance (PMI) rates. To qualify, you’ll need to put at least $1,000 of your own funds down and have an income under the program limit for the county you’re buying in, among other requirements. 
• Keystone Home Loan: A Keystone Home Loan is a PHFA-sponsored mortgage loan that helps first-time buyers and discharged veterans secure housing. With this program, you can get a VA, FHA, USDA, or conventional loan. Repeat homebuyers can also use this program if they buy a home in one of the organization’s targeted Pennsylvania counties.

Since even the smallest difference in interest rates can have a big impact on the overall cost of your home loan, you’ll want to do everything you can to get the best rate. Although you can’t control every factor that determines your rates, you can do the following to help ensure you get the best rate possible: 

• Lower your debt-to-income ratio (DTI): Your DTI measures how much debt you have relative to your income. If you have a high DTI, this can signal to lenders that you already have more debt than you can handle, making you a higher risk. If you’re approved for a home loan with a high DTI, you’re likely to get a higher rate than borrowers with a low DTI. 
• Increase your credit score: Your credit score gives your lender an idea of how likely you are to pay off your debts. To improve your credit score, you’ll want to focus on lowering your credit utilization, paying off any debts in collections, and disputing any errors present on your credit report. 
• Increase your down payment amount: Putting down a larger payment upfront can lower the amount you’ll need to borrow. The less money you borrow and the more equity you have in the home, the less risky you are perceived, often securing you a better rate. 
• Compare multiple lenders: Each lender has its own interest rates, so it’s important to shop around. To find the best rate, request rate quotes from multiple lenders before deciding on a lender. 
• Take advantage of rate locks: Rate locks allow you to lock in the interest rate quoted to you by lenders in case the rate changes before you can close on your loan. If the lender of your choice offers a rate lock option, it’s often worthwhile to take advantage of it.

In Pennsylvania, you can get many different types of mortgage loans. However, you’ll need to meet certain requirements to qualify for each and understand the differences to make the best choice.

Here are the ins and outs of the most popular home loan types in Pennsylvania:

HFA Preferred™(Lo MI) Loan

• Best for first-time buyers in Pennsylvania
• No minimum score requirement, but you must show you can reliably make monthly payments
• Loan limits vary by county
• 0% Down payment requirements for single-unit homes, 3% for 2- to 4-unit homes

Keystone Home Loan

• Best for discharged veterans and homebuyers in specific Pennsylvania counties
• 660 min. credit requirement for Pennsylvania Housing Insurance Fund (PHIF), varies by lender
• Loan limits vary by county
• Down payment requirements vary by loan type

Conventional loan

• Best for homebuyers with fair or better credit
• Minimum credit requirements vary by lender
• $766,550 loan limit in most counties, but varies
• 3% Down payment requirement

FHA loan

• Best for First-time homebuyers
• 500 min. credit requirement with a 10% down payment or 580 with a 3.5% down payment
• Loan limits vary by county
• 3.5% Down payment requirement

VA loan

• Best for Eligible veterans and military members 
• No minimum score requirement is set by the Department of Veterans Affairs, but lenders might set their own
• No loan limit set by VA if you have full entitlement
• No down payment requirement

Jumbo loan

• Best for Homebuyers buying homes above the Federal Housing Finance Agency (FHFA) limit
• Minimum credit requirements vary by lender
• $766,550 loan limits or more, varies by location
• 10% down payment requirement