HFA Preferred™ (Lo MI) Pennsylvania

For many first-time buyers, the hardest part of buying a home isn’t qualifying for the mortgage—it’s keeping monthly costs affordable. That’s where the HFA Preferred™ (Lo MI) program comes in.

Offered through the Pennsylvania Housing Finance Agency (PHFA), the HFA Preferred™ (Lo MI) mortgage helps buyers reduce the cost of private mortgage insurance (PMI), making monthly payments lower and homeownership more attainable.

If you’re searching for HFA Preferred™ (Lo MI) Pennsylvania, this guide will explain how it works, who qualifies, and why it may be the right fit for your Pennsylvania home loan.

What Is HFA Preferred™ (Lo MI)?

The HFA Preferred™ (Lo MI) program is a conventional loan option available through PHFA that offers:

Down payments as low as 3%
Lower-cost mortgage insurance (MI) than standard conventional loans
30-year fixed-rate mortgages for stable monthly payments
Eligibility for down payment assistance programs (like Keystone Advantage, K-FIT, or HOMEstead)

In simple terms: It’s a conventional loan with discounted PMI, designed specifically for first-time buyers and moderate-income households in Pennsylvania.

Why Is “Lo MI” Important?

Normally, when you put down less than 20% on a conventional mortgage, you must pay private mortgage insurance (PMI). This protects the lender but adds to your monthly costs.

With HFA Preferred™ (Lo MI):

PMI is reduced compared to standard conventional loans.
PMI automatically cancels once you reach 20% equity.
This results in lower monthly payments and faster long-term savings.

Compared to FHA loans, Lo MI is a big advantage—because FHA mortgage insurance lasts for the life of the loan (unless refinanced).

Who Qualifies for HFA Preferred™ (Lo MI)?

To be eligible, you must:

Qualify for a PHFA mortgage (HFA Preferred™ is one of PHFA’s first mortgage options).
Be a first-time buyer, unless purchasing in a PHFA-targeted area.
Have a minimum credit score of 660.
Meet income and purchase price limits, which vary by Pennsylvania county and household size.
Use the home as your primary residence.
Complete homebuyer education if your credit score is below 680 or if you’re using assistance programs.

Benefits of HFA Preferred™ (Lo MI)

Lower monthly mortgage insurance than FHA or standard conventional loans.
Affordable down payments starting at just 3%.
Pair with PHFA assistance programs like Keystone Advantage ($6,000), K-FIT (forgivable loan), or HOMEstead ($10,000).
Fixed interest rate for 30 years—no surprises.
PMI eventually drops off, unlike FHA, where mortgage insurance is permanent.

Example: HFA Preferred™ vs FHA Loan

Scenario: Buying a $200,000 home in Philadelphia County

Feature	HFA Preferred™ (Lo MI)	FHA Loan
Down Payment	3% ($6,000)	3.5% ($7,000)
PMI / MIP	Lower monthly PMI; cancels at 20% equity	1.75% upfront + monthly MIP for life of loan
Long-Term Cost	Lower over time since PMI drops off	Higher, since MIP never cancels
Assistance Eligible	Yes (Keystone Advantage, K-FIT, HOMEstead)	Sometimes (but PHFA favors HFA Preferred™)