Pennsylvania Mortgage Calculator
Break down the true cost of the Keystone State. Factor in high 1.53% property taxes, navigate brutal upfront Transfer Taxes, and avoid the hidden Local Earned Income Tax (EIT).
The Philly vs. Pittsburgh Divide
Pennsylvania offers excellent overall affordability compared to the rest of the Northeast. The statewide median home price is around $265,000. The state is anchored by two massive metros on opposite sides: Philadelphia in the east and Pittsburgh in the west, with the rural "T" in the middle.
While home prices are low, property taxes are very high. The statewide effective average is 1.53%. In PA, property taxes are intensely hyper-local, driven almost entirely by the local school district. A house in an affluent school district outside of Philadelphia (like the Main Line) will carry a staggeringly higher tax burden than a comparable house just a few miles away in a different township.
The "Transfer Tax" Trap
Out-of-state buyers are routinely blindsided at the closing table by PA's Real Estate Transfer Tax. In most of the state, it is 2% of the purchase price (usually split 1% buyer / 1% seller).
However, if you buy in Philadelphia, the total transfer tax is an astronomical 4.278%. If you split that 50/50 with the seller, you must bring over $8,500 in cash to closing on a $400,000 house—and that doesn't even include your actual down payment or lender fees.
The Hidden EIT Tax
Much like Ohio, Pennsylvania allows local municipalities to levy an Earned Income Tax (EIT). This is a local tax taken directly out of your paycheck.
Most townships charge around 1%, but in Philadelphia, the wage tax is roughly 3.75%. This is a massive hidden cost that directly reduces your take-home pay, severely impacting the actual budget you have available to pay your mortgage every month.
State Assistance: PHFA
To combat these brutal upfront cash requirements, the Pennsylvania Housing Finance Agency (PHFA) provides some of the best Down Payment Assistance (DPA) in the region.
- K-FIT (Keystone Forgivable in Ten Years): Provides 5% of the purchase price in down payment assistance. It is forgiven at a rate of 10% per year, completely disappearing after 10 years.
- Keystone Advantage Assistance: Provides a loan of up to 4% of the purchase price (max $6,000) amortized over 10 years at a 0% interest rate to help cover closing costs and Transfer Taxes.
Calculating Your Pennsylvania Budget
Let's calculate a realistic payment for a $265,000 home purchase in a Pittsburgh suburb, utilizing a 10% down payment and a 6.5% interest rate:
- Mortgage Amount: $238,500
- Principal & Interest: ~$1,507/mo
- Property Taxes (1.53%): ~$338/mo
- Home Insurance: ~$91/mo
- Total Payment: ~$1,936/mo
Remember: Your upfront cash needed at closing will be heavily inflated by the PA Transfer Tax. You MUST budget an extra 1% to 2% of the home's value in cash.
Crucial Keystone State Inspections
- Lateral Sewer Line Camera: PA has an incredibly old housing stock. Homes built before 1950 have terra cotta or cast iron sewer lines. They collapse and fill with tree roots. It costs $150 to camera the line during an inspection, but $15,000 to dig up the street to fix it after you move in.
- Knob and Tube Wiring: Older homes in Philadelphia and Pittsburgh often hide active Knob and Tube wiring in the plaster walls. Many insurance carriers will flat-out refuse to insure the property until an electrician fully rewires the house.
- Radon Gas: A massive percentage of Pennsylvania homes test positive for elevated levels of radioactive radon gas. Ensure a radon test is part of your standard inspection period.
Frequently Asked Questions
Are property taxes high in Pennsylvania?
Yes. While home prices in PA are very affordable, the property taxes are quite high, averaging around 1.53%. Taxes are heavily driven by the local school district, meaning a house on one side of a street might pay thousands more in taxes than a house on the opposite side.
What is the Pennsylvania Real Estate Transfer Tax?
When a property is sold in PA, the state charges a 1% transfer tax, and the local municipality usually charges another 1% (totaling 2%), typically split evenly between buyer and seller. However, in Philadelphia, the total transfer tax is a staggering 4.278%, requiring massive upfront cash at closing.
What is the Local Earned Income Tax (EIT)?
Similar to Ohio, Pennsylvania allows local municipalities and school districts to levy an Earned Income Tax (EIT) directly on your paycheck. This is usually around 1%, but can be nearly 4% in Philadelphia. This hidden tax reduces your take-home pay and impacts your housing budget.
What is the PHFA K-FIT program?
The Pennsylvania Housing Finance Agency (PHFA) offers the Keystone Forgivable in Ten Years (K-FIT) program. It provides eligible buyers with up to 5% of the purchase price (or appraised value) in down payment assistance. It is forgiven at 10% per year over a 10-year period.
Why do I need a sewer line inspection in PA?
Pennsylvania has incredibly old housing stock. Homes built before 1950 often have terra cotta or cast-iron lateral sewer lines connecting the house to the street. These frequently collapse or get invaded by tree roots, costing $10,000+ to replace. Always pay $150 for a camera inspection.
Nearby Real Estate Markets
Comparing housing markets or considering a move across state lines? Check out the true cost of homeownership in neighboring states: