Do You Qualify for the PFHA REAL Loan Program?

The Pennsylvania Housing Finance Agency (PHFA) offers a Refinance to an Affordable Loan (REAL) program that aims to help troubled Pennsylvania borrowers stay in their homes through flexible, government-subsidized financing options. Borrowers who cannot afford their current loans may be eligible for 100 percent financing on new 30-year loans. The loans are all initiated by approved lenders who receive incentive from the state government to assist needy borrowers.

Eligibility Requirements

In order to be eligible for the REAL loan program, the PHFA must determine three key factors. First, you must be a needy borrower. Second, you must be able to afford the home once it is refinanced. Third, you must be creditworthy enough to qualify for the new loan. To establish whether you meet these criteria, the following must be true:

  • You do not earn more than $120,000 on an annual basis. 
  • Your loan recently reset to a higher interest rate. Prior to this action, you were affording your loan, but you are unable to do so now that the loan has reset. 
  • The reset occurred within 12 months of the time you applied. During that 12-month period, you had no more than three 30-day delinquencies. 
  • The loan may be currently past due, but it cannot be more than 59 days past due. 
  • The loan payment does not amount to more than 50 percent of your monthly income. 
  • You have a credit score over 620. This is the threshold for a "B" credit rating.

Determining Your Eligibility

In order to determine if you qualify based on these factors, start by reviewing your loan and financial situation. If you feel your are eligible, you may begin by applying with a qualified bank. Only state-approved banks who are participating in the REAL program can help you with your application. You will need to supply verification of your income through at least two years of tax statements. You must also provide information on your loan by requesting full loan documentation from your existing mortgage lender. In some cases, your mortgage lender will be participating in the program, and you can therefore skip a few steps in requesting the documentation. 

Filing for REAL Assistance

Once you have submitted all of your documentation to a qualified lender, the lender will take the loan application through the "underwriting" process. This process verifies that all the information you provided on your application is correct and you do indeed qualify for the program. You will receive a response in writing within about two weeks to one month. During this time, you must continue to make your loan payments, or your loan may no longer qualify for the assistance. Once you have been approved for REAL assistance, you will receive a loan quote from the lender. The contract will offer 100 percent financing on the new loan, and you may even be eligible for assistance with closing costs and other fees associated with the refinance. The PHFA program is a great alternative to a Federal Housing Agency (FHA) refinance if you do live in Pennsylvania. The assistance is similar, but going through Pennsylvania directly can cut back on processing time and additionally leave you open to FHA help in the future.

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