Purchasing in Pennsylvania: The Best Home Loans in the Keystone State

As one of the original 13 colonies, Pennsylvania has always been a land of freethinkers, pioneers, and a place where all walks of life are welcome.  With lush landscapes, a thriving cultural scene, charming small towns, bustling cities, and a history that dates back before the Revolutionary War, the Keystone State offers something for everyone.

According a 2024 report from the PA Department of Community & Economic Development, 192.4 million people visited the commonwealth in 2022, an uptick from 180 million the year before. But Pennsylvania isn’t just a great place to visit. With an affordable cost of living, natural beauty, a rich history, and one of the largest GDPs in the country, the nearly 13 million full-time residents enjoy a high quality of life. If you are looking for a place to establish roots, Pennsylvania is a great option!

Prefer open spaces over crowds?

When it comes to breathing room, Pennsylvania delivers! According to the United States Census Bureau, Pennsylvania has the third largest rural population in the country. Based on population density and other factors, nearly all the 67 counties are considered rural or have rural areas. In fact, only Philadelphia County has no rural population.

With a USDA Rural Development (RD) loan, your sanctuary of solitude is within reach! Borrowers who want to purchase or build a single-family home can get up to 100% financing. The Rural Development loan is backed by the United States Department of Agriculture. Because of this backing, there is less risk to the lender. Therefore, these loans offer relaxed credit and bankruptcy guidelines and require no down payment!

RD loans are only available in areas designated as rural, but as stated earlier that’s nearly anywhere in PA! (But keep in mind, this is not available in Philadelphia County and only offered in the Chadds Ford area of Delaware County)

Whether your goal is to get away from people in the least populated Cameron County or to embrace your inner farmer in Lancaster, the most productive farming county in the United States, an RD loan may be right for you!

Are you a self-employed small business owner?

Pennsylvania is home to some of the biggest companies in the US including Rite Aid, Comcast, Phillips Lighting North America, Dick’s Sporting Goods, and Hersey’s, just to name a few. But it’s also a place where small businesses and startups thrive.

Entrepreneurs and established business owners are finding Pennsylvania to be a popular alternative to New York due to a lower cost of living, an income tax that is 1/3 of New York’s rate and a business survival rate that is higher than the national average.

According to the U.S. Census Bureau’s business formation statistics released in June 2024, business applications in Pennsylvania rose 54% from 2019 to 2021 and increased an incredible 113% since 2011. Additionally, Forbes Advisor recently ranked Pennsylvania as one of the top 10 places in the country to start a business based on business costs, business climate, economy, workforce, and accessibility to financing.

In a nutshell, business is booming in Pennsylvania, making this a desirable place for small business owners to live and work.

But while owning your own business has it perks, obtaining a traditional mortgage may be challenging. For borrowers who have inconsistent income like realtors, independent contractors, gig workers and small business owners, a Bank Statement home loan may be the perfect solution!

This type of loan allows you to qualify using your bank statements instead of paychecks or tax returns to verify your income. For those who have enough income to afford a home, but lack W-2s, Bank Statement loans can make homeownership possible.

Ready for rentals?

Rental properties in Pennsylvania can be a profitable business. In general, the state eviction laws tend to be attractive to landlords, purchasing property is still affordable, and tourism continues to grow, especially in hot spots like Philadelphia. Savvy investors can capitalize on the opportunity offered here with both long-term and short-term rental properties.

According to a 2023 year-end report by RentCafe, which analyzed 139 of the largest markets nationwide, Philadelphia ranked 8^th in the nation as the most competitive rental market overall. In Philly, when an apartment becomes vacant, there are 11 prospective renter applicants. In Pittsburgh, which ranked 20^th in the nation, the average prospective renter per unit is 7. And two PA cities, Harrisburg and Lehigh Valley ranked in the top 10 for hottest small rental markets.

Statewide, the average rent hovers around $1,900 a month. Landlords can expect to garner less than $1,000 a month is areas like Warren or Oil City, or as much as $3,000 a month in places like Aleppo Township, Allegheny County which has the highest median rent in the entire state.

Tourism here is a billion-dollar industry. According to the Pennsylvania Tourism Office, the commonwealth generated $76.7 billion in economic impact, and generated $9.6 billion in government revenues last year. This growth in tourism has directly led to an increased demand for short-term rentals.

Short-term rentals (STRs) are properties rented out for typically fewer than 30 days and are a great alternate to hotels. Sites like Airbnb, HomeAway and VRBO have helped the industry explode.

Whether its history buffs flocking to Independence Hall in Philadelphia, water lovers coming to enjoy Lake Erie, beer enthusiasts on a craft beer trail, art aficionados enjoying the famous Andy Warhol Museum, or families experiencing Hershey Park, the “Sweetest Place on Earth”, Pennsylvania has a steady influx of visitors year-round.

The Poconos Mountain area in particular draws around 30 million people each year.  In a recent article from the Pocono Record, the area has resorts, hotels, and inns, but not nearly enough capacity to support the number of tourists. STRs help address the demand, making the Poconos one of the best STR markets in the country.

MiMutual Mortgage offers a variety of loan options to help you grow your real estate empire! Two common options include:

DSCR Loans

DSCR loans are specifically for investment properties. They open a world of opportunity to those who don’t have traditional income, for those who already have multiple investment properties or for those who are just starting their real estate investment journey.

DSCR, or Debt Service Coverage Ratio, is a financial metric used to evaluate the ability of an income-producing property to cover its debt obligations. In the context of real estate investment, it measures the property’s ability to generate enough rental income to cover the mortgage payments.

This means that instead of a borrower’s personal income, the primary qualifying factor is the investment property’s actual or potential income. With a DSCR loan, there is no Debt-to-Income Ratio calculation, and no personal income verification.

Conventional loans for multi-unit properties

Financing a multi-unit property with a conventional loan offers borrowers a way to not only afford a home for themselves, but to also bring in an additional source of income through rents.

In 2023, the Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, enacted a significant reduction in down payment requirements for primary residence multi-unit properties. This policy change applied to standard purchases, HomeReady and HomeStyle Renovation loans.

Prior to the change, one of the biggest barriers to purchasing a multi-unit was the requirement of a down payment as much as 25% of the purchase price. By reducing the down payment to just 5% for all 2, 3 or 4-unit properties, this expanded financing choices for homebuyers and investors alike.

Owner-occupant landlords can not only expand their rental property portfolio but can significantly reduce their mortgage payments by leveraging rental income. And the actual or potential rent can be counted when qualifying for the mortgage loan!

Looking for an affordable home?

Pennsylvania is a great option for homebuyers who want to stretch their dollars. The cost of living is 4% lower than the national average, and according to Redfin.com, the current median home price in the commonwealth is $298,400, significantly less than the national average. A 2023 study conducted by United Van Lines found that Americans are moving from expensive cities to lower-density, more affordable regions.

Some of the most affordable areas in Pennsylvania include Sharon, Oil City and Johnstown. Scranton, PA which has a cost of living 8% lower than the national average, saw a 45% increase of new residents in 2022 – the second largest nationally just behind Miami, Florida.

For buyers in these markets, a Conventional or FHA loan may work well. Conventional loans are applicable to just about any property type and offer flexibility in loan terms, programs, and limits. Although most people think you need 20% to obtain a conventional mortgage, that is not the case!

While a 20% down payment will allow you to avoid paying Private Mortgage Insurance (PMI), conventional loans only require 3% down! Also, once your property reaches 20% equity, PMI can be canceled. Conventional loans are a great option for borrowers with a good credit score as it can be more affordable than other loan programs.

FHA loans are backed by Federal Housing Administration and offer a great option for buyers who have little saved for a down payment, less than perfect credit and low-to-moderate income. Typically, a minimum credit score of 580 and 3.5% down payment is required. The down payment, however, can be 100% gifted!

Looking for luxury?

Although home prices in Pennsylvania tend to be affordable, there are some million-dollar neighborhoods that offer ease of living with private pools, lakes, golf, and more. The communities of Heartwood Farm in Newton Square, Haverford, Philadelphia, Chads Ford, and West Chester are where you can find some of most expensive homes in the state.

For buyers looking for a well-appointed estate with no shortage of luxury and charm, a Jumbo loan may be the right mortgage option. Jumbo loans can be used to purchase or refinance a primary residence, a second home or investment property. MiMutual Mortgage offers loans up to $4 million and has options with as little as 10% down. And unlike conventional loans, there is no private mortgage insurance (PMI) for having less than 20% equity!

Ready to Retire?

Although Pennsylvania may not be the first place that comes to mind when you think of retirement, it should be! In U.S. News & World Report’s  most recent list of the best places to retire in the US, a whopping 7 out of the top 10 cities were in Pennsylvania!

(Harrisburg, Reading, Lancaster, Scranton, Allentown, York, and Pittsburgh).

This is due in part to home affordability, access to top-rated medical facilities like Penn State Hersey Medical Center, Pinnacle and WellSpan health care systems, residents’ level of happiness and how well the needs of retirees are met. Additionally, taxes are low and easy to calculate. Some retirement income may be tax-exempt, and there is no tax on all prescriptions and non-prescription drugs, saving seniors quite a bit of money.

If you are looking to retire in Pennsylvania, MiMutual Mortgage offers a variety of loans to help you downsize or you can take advantage of our Reverse Mortgage program.

A Reverse Mortgage is a home loan exclusive to seniors aged 62 or older. This type of loan allows borrowers to use their home as collateral toward a new home or to age in place in their current home without having to make the usual monthly mortgage payments. MiMutual Mortgage has Loan Officers who specialize in this type of loan, and they help determine if this is right for you.

Ready to make a move?

Pennsylvania continues to be a welcoming place for newcomers or retirees of all backgrounds. With a rich history, lush landscapes, charming small towns, bustling cities, a thriving cultural scene, and great food, Pennsylvania is not only a great vacation destination but also the perfect place to call home.

At MiMutual Mortgage, our goal is to make homeownership accessible to everyone, regardless of their financial background or unique needs. When you’re ready to make a move, connect with one of Loan Officers to see what loan option is right for you!