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The Difference Between FHA & PHFA

The Federal Housing Administration and the Pennsylvania Housing Finance Agency are just two government bodies vowed to create greater opportunity for Americans to purchase homes. Even though both are government agencies, they offer different programs to different groups.


The FHA is a national agency that functions as a division of the Department of Housing and Urban Development. Approved private lenders, not the authorities, provide the loans and perform all of the loan servicing. The FHA provides the mortgage insurance for mortgage loans produced by the approved lenders nationwide that follow their guidelines. FHA loans are restricted in scope; everyone who qualifies for an FHA loan application gets the very same terms. There’s no benefit, for example better interest rates or a lower down payment, for borrowers with better credit ratings.


The PHFA is a state agency for the sake of Pennsylvania residents. Participating private lenders also originate and finance PHFA loans. The PHFA program allows participating lenders to supply a variety of loans for borrowers. These loans can be any kind: conventional, FHA, VA or Rural Housing Service loans. Following the lender funds the loans, the PHFA then buys the loans and performs the servicing. This allows debtors to take advantage of greater conventional terms if they’re eligible, but still receive the advantages of a PHFA loan.

Down Payment

FHA loans require a minimum deposit of 3.5 percentage; 10 percent for borrowers with credit ratings under 580. This deposit has to be the borrower's funds, and can’t be borrowed from a lender. The PHFA Keystone Authorities Loan Program allows buyers to borrow payment funds using a Keystone Authorities Assistance Loan. This assistance loan is a 0% interest with a maximum of $2,000 for first-time home buyers and $1,000 for additional home buyers. Those utilizing this program shouldn’t have more than $5,000 in liquid funds. This usually means that PHFA loans can require $0 to less than 3.5 percent .

Education Classes

FHA borrowers are not required to take instruction courses so as to qualify for an FHA loan. PHFA borrowers utilizing the Keystone Authorities Loan Program, with a credit rating beneath 660, has to complete a home buyer education course. Approved counseling agencies offer these courses to help home buyers prepare for the responsibilities and additional expenses that home ownership entails. The goal is to give them the skills they have to keep their homes for the long term.

Extra Loans

The PHFA offers several programs that aid with repairs, energy-efficiency improvements and home modifications to support those with disabilities. These loans are not refinances of the whole loan. They are additional loans secured by the home, for example home equity loans. Homeowners can borrow up to 120% of the value of their home. The FHA just offers loans for improving energy efficiency or for necessary renovations, but these are limited to first purchase loans or refinances of the whole mortgage amount, plus fixes , up to 97 percent of their appraised value.

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