How to Buy Your First Home in Philadelphia, PA
By Sam Alpert, President and Mortgage Loan Originator, NMLS #1961555
Philadelphia is affordable — but it moves fast. Here's how first-time buyers get pre-approved and pick the right loan. We average 21 days from application to closing.
Philadelphia is one of the most affordable major cities on the East Coast. You can buy a house here for what a studio apartment rents for in Manhattan. But the market moves — and if you're not prepared, you lose.
Here's what you need to know before you start.
Step 1: Know your numbers before you look
Philadelphia property taxes vary wildly by neighborhood. Fishtown, South Philly, and Kensington all have different tax assessments. Before you fall in love with a house, know what the actual monthly cost is — mortgage, taxes, and insurance combined.
A rough guide: budget 1.2–1.5% of the home's value per year for taxes and insurance. On a $300,000 home, that's $300–$375/month on top of your mortgage payment.
Step 2: Get pre-approved first
Philadelphia sellers want to see a real pre-approval — not an estimate, not a letter from an online calculator. A real one means a lender has pulled your credit and reviewed your income.
Without it, you won't get taken seriously. With it, you can move the day you find the right house.
When we have a complete file, we aim to issue a pre-approval within one business day.
Step 3: Pick the right loan
Conventional — 3% down
Best for buyers with 620+ credit. Clean process, no upfront mortgage insurance premium.
FHA — 3.5% down
More flexible on credit and debt-to-income. Popular for first-time buyers in Philly. Mortgage insurance stays for the life of the loan — plan to refinance once you've built equity.
USDA — 0% down
Doesn't apply inside Philadelphia city limits, but surrounding counties — Chester, Delaware, Montgomery — may qualify. Worth checking if you're open to suburbs.
VA — 0% down
VA loans can offer no down payment and no monthly mortgage insurance for eligible borrowers. A funding fee may apply, and the best option depends on the full file.
Step 4: Budget for closing costs
Pennsylvania closing costs are on the higher end nationally. Expect:
Transfer tax: 4% of the purchase price in Philadelphia (2% city, 2% state) — typically split 50/50 with the seller, but negotiate
Attorney fees: Not required in PA but recommended — budget $500–$1,000
Lender fees + title: $3,000–$5,000 depending on loan size
Home inspection: $400–$600
On a $300,000 home, plan for $10,000–$15,000 in total closing costs after your down payment.
Step 5: Move fast
Good properties in Philadelphia — Passyunk, East Falls, Roxborough, Germantown — go under contract in days. Your agent needs to be ready, and your lender needs to be faster.
We average 21 days from application to closing.
Ready to buy in Philadelphia?
Tell us where you are and we'll tell you what you qualify for.