Pros & Cons of The K-FIT Grant

Emily Terpak December 14, 2022

Information as of December 2022

The K-Fit grant allows borrowers to reduce their closing costs and down payment by 5% of the purchase price or appraised value (whichever is less). This means on a $400,000 house, you will reduce your out of pocket costs by $20,000! 
 
Will you ever owe this money back? It depends. K-FIT stands for ‘Keystone Forgivable in Ten Years’. First, the house you purchase must be your primary residence. The grant money you receive will become a secondary loan on the property. This loan will be forgiven in full after 10 years. If you sell the property before 10 years or rent it out, you will owe the prorated amount back to PHFA. For instance, if you receive $20,000 in grant money, and you sell or rent the home out after 5 years, you will owe PHFA $10,000. 
 
To see if you qualify and if this program is right for you, continue reading below for the eligibility requirements and a list of the pros and cons.
 

Do you qualify? 

  • You must have a credit score of 660 or higher
  • You cannot have purchased a home in the last 3 years
  • The borrower’s liquid funds cannot be greater than $50,000 after deducting the closing costs and down payment from the home purchase. This includes cash and funds in checking and savings accounts, stocks, bonds etc. 
  • Home must be purchased as a primary residence
  • For a household of 1-2 people, the combined yearly income cannot exceed $126,400 for Philadelphia and $105,400 for Bucks County, Montgomery County, Delaware County, and Chester County *see below for PDF
  • The purchase price cannot exceed $484,600 in Philadelphia or $396,500 in Bucks County, Montgomery County, Delaware County, and Chester County *see below for PDF

Pros

  • You save 5% of the purchase price!
  • This grant can be used towards your down payment and/or closing costs. Many grants will only cover one or the other. For example, if a grant program gives you $15,000 towards closing costs, but your closing costs are only $9,000, you do not get to use the difference towards other costs. With the K-FIT grant, that extra $6k can be applied towards your down payment.
  • If you sell the property before 10 years, the amount you owe will be prorated. Other grants require you to repay the full amount if you do not live in the house for a specified amount of time. 
  • This grant can be done with a Conventional, FHA, or VA loan
  • This grant is available all year round with no cap. Many grants start in January and will discontinue for the year once their funds deplete. This makes it difficult for those who find their home later in the year.

Cons

  • Your interest rate will be anywhere from 0.5% to 1% higher
  • You cannot refinance
  • You can only put 3% down. For people who would like to put more down to lower their mortgage, this might not be as ideal. 
  • To be safe, you should plan for a 60 day close. Once your lender approves the loan, it goes to PHFA for the grant approval. The turn times at PHFA are constantly changing (for better or worse). And they are processed in the order that they are received. Depending on their situation, a seller may be looking for a 30-45 day close. In that case, the seller might not accept your offer. 

K-FIT Purchase Price & Income Limit PDF


Work With Us

We pride ourselves in providing personalized solutions that bring our clients closer to their dream properties and enhance their long-term wealth. Contact us today to find out how we can be of assistance to you!

Follow Us