First Time Homebuyer Credits In Pennsylvania
Pennsylvania first-time homebuyers in 2025 can access programs through the Pennsylvania Housing Finance Agency, including a Mortgage Credit Certificate that allows eligible buyers to claim a federal tax credit on a portion of annual mortgage interest. PHFA also offers down payment and closing cost assistance programs, and buyers who combine these with a Mortgage Credit Certificate can significantly reduce both upfront costs and ongoing federal tax liability.
Pennsylvania does not allow a deduction for mortgage interest or real estate taxes on the state personal income tax return, which is a notable difference from most other states. However, many Pennsylvania municipalities and school districts offer homestead exclusions that reduce the assessed value of a primary residence for local property tax purposes, and these are applied automatically once a homestead application is approved.
Buyers should retain their PHFA Mortgage Credit Certificate, Form 1098, and local property tax statements. Because Pennsylvania's state tax treatment of homeownership differs from the federal treatment, buyers should be careful not to assume that deductions available on the federal return will carry over to the PA-40 state return.