Pennsylvania Mortgage Calculator

Factors in Your Pennsylvania Mortgage Payment

Two costs to factor in on top of your mortgage payment are property taxes and homeowners insurance. Pennsylvania property taxes vary widely across counties. Each county has its own method to assessing home value and its own rates. Your property tax rate could range as low as 0.87%, like it is in Bedford County, or as high as 2.45% in Monroe County. County property taxes include school and municipal taxes. If you want to dispute assessed value, you’ll need to produce data that backs your claim such as sale prices for comparable properties and pictures. There are also exemptions, such as the homestead exemption and the disabled veteran exemption.

Homeowners insurance is relatively cheap in Pennsylvania. In fact, across the U.S., the state ranks quite low according to data from insurance.com, at $1,720 a year. The location helps keep costs affordable. Pennsylvania doesn’t have coastal areas or a high risk of tornadoes, earthquakes or other natural disasters. If you can’t find private insurance, you have the option to secure basic homeowners insurance through the Pennsylvania FAIR Plan.

A financial advisor can help you understand how homeownership fits into your overall financial goals. Financial advisors can also help with investing and financial planning - including retirement, taxes, insurance and more - to make sure you are preparing for the future.

Costs to Expect When Buying a Home in Pennsylvania

For those still in the initial steps of home buying, you’ll want to consider the upfront charges. These are fees you’ll pay once, but still can add up to a respectable amount. One of the first you’ll come across is the home inspection. Before you finalize a contract, you’ll want to hire a home inspector to give you the details on the house you’re hoping to buy. Pennsylvania has laws on home inspections which cover what an inspector is required as well as prohibited to do.

Most inspections run about $275 to $675, and depend on the square footage of the home. While base home inspections cover most of the basics, such as roof, plumbing, electrical and structural, if you want specialized reports you’ll have to pay extra. This can consist of a termite inspection, radon test or mold testing. All inspections are optional, but as a buyer you’re highly recommended to make use of them to prevent future surprises about the home.

Once you’re in the final stages of the home buying process, you’ll set a date for “closing.” This is when all the final documents are signed and you pay fees called closing costs. Each state and county generally charge different fees, so it’s something that varies depending on property location. Your lender and other parties involved in the mortgage and property will also be paid from closing costs. Pennsylvania average closing costs range from 3.52% to 6.49% of the home value.

Our Closing Costs Study assumed a 30-year fixed-rate mortgage with a 20% down payment on each county’s median home value. We considered all applicable closing costs, including the mortgage tax, transfer tax and both fixed and variable fees. Once we calculated the typical closing costs in each county we divided that figure by the county’s median home value to find the closing costs as a percentage of home value figure. Sources include the U.S. Census Bureau, Bankrate and government websites.

The blanket term of closing costs can be broken down to line items to be paid out to relevant players in your home buying journey. Your mortgage lender’s cut is known as origination fees. This can cover loan underwriting, tax service, broker charge, commitment fees, points and document preparation. What you’re charged by the lender varies between mortgage providers and will depend on the company’s particular fee schedule.

In addition to paying your lender, you’ll have to consider third-party fees such as for an attorney, flood certification, surveys, credit reports and appraisals. Each homebuyer’s closing will differ on these costs because it depends on what services were used in the process. Not all homebuyers opt to arrange a property survey or for an attorney to be part of the process; it will depend on your particular selections.

Another charge is title insurance. Your lender will likely charge you for a policy that will cover the lender’s interest in the property. However, many homebuyers opt to purchase an owner’s policy as well to cover the full value of the property and to cover their own bases. Title insurance helps protect against future financial losses that stem from a title dispute on the property. This includes claims such as unpaid taxes, liens, easements and more.

One last charge is Pennsylvania realty transfer tax which is 1% of the value of real estate. The buyer and seller are jointly responsible for paying this fee. Some counties also charge an additional tax on top of the state transfer tax, with a maximum of 1%.

Details of Pennsylvania Housing Market

Pennsylvania, home to the City of Brotherly Love, Amish Country and Hershey Park, is the fifth-largest state by population in the U.S. with 12.9 million residents. The rectangular state is roughly 44,700 square land miles with about 284 people per square mile. The largest cities in the Keystone State are Philadelphia, Pittsburgh, Erie, Allentown and Reading.

According to recent Census data, the median home value in the state is $222,300.

If you’re looking to own a home in one of the bigger cities such as Philadelphia, prepare yourself for high demand and low supply. That said, Philadelphia is considered an affordable place to buy, with a median home value of $184,100 according to recent Census data.

Pittsburgh is a similarly hot market, but at a different price point. Census data shows the median home value in the Steel City is $147,600.

Local Economic Factors in Pennsylvania

Pennsylvania, known for the Marcellus shale deposit and job opportunities in natural gas and energy, also counts manufacturing, agribusiness, life sciences, plastics and tourism among its top industries. From 2007 to 2012, Pennsylvania experienced a 259% increase in oil and natural gas industry employment. This is mainly due to the surge in shale gas production through drilling in the aforementioned deposit. 

Home to around two dozen Fortune 500 companies, Pennsylvania hosts the headquarters of Comcast, Rite Aid, PNC Financial and Aramark, among other industry giants. Pittsburgh and Philadelphia host a number of these companies, as well as a number of educational institutions such as Carnegie Mellon and University of Pennsylvania. Top employers include the federal and state government, Walmart, University of Pennsylvania and the city of Philadelphia.

The state unemployment rate in December 2022 was 3.9%, compared to the national rate of 3.5%. As of 2021, Pennsylvania's per capita personal income (PCPI) is $57,861. The national average is $65,148.

You will have to pay state income tax if you live or work in Pennsylvania. The state levies a flat tax of 3.07% on taxable income. There are no standard deductions or exemptions for Pennsylvania residents, unlike several other states which offer exemptions, such as Minnesota. However, you can claim itemized deductions for medical savings account contributions, health savings account (HSA) contributions and 529 college savings plan contributions.

In addition to state income tax, municipalities in Pennsylvania collect income tax. Larger cities generally have higher rates while smaller towns collect less. Sales tax is about 6% with two counties charging an additional 1% to 2%. The state also taxes inheritances with rates depending on the relationship between the deceased and the receiver. Direct descendants are charged less.

To put living in Pennsylvania in perspective, you can compare your current cost of living to a city or town in the Keystone State. A single person with an income of $75,000 moving from Cleveland, Ohio to Pittsburgh would experience a 1% increase in cost of living on average. This difference is mainly due to increases in housing and food costs.

The same individual moving to Philadelphia would have a 17% average increase in cost of living, mainly due to a 38% spike in housing costs. However, a move from Columbus, Ohio to Pittsburgh would see just a 1% increase in costs on average, and a move from D.C. to Philadelphia would result in a 12% decrease in cost of living, on average.

Mortgage Legal Issues in Pennsylvania

Pennsylvania is one of a handful of states that has specific seller disclosure laws. Many states have laws that include language regarding not concealing any material defects when selling a property. The Keystone State takes it a few steps further by detailing exactly what needs to be included in a seller’s disclosure. Plumbing, water and sewage, hazardous substances, legal issues, basements and structural problems are some of the subjects that you’ll find in the disclosure. You can find property and disclosure law under Pennsylvania Title 68.

Foreclosure in Pennsylvania is judicial, which means the lender pursuing foreclosure must file a lawsuit. Judicial foreclosures usually take longer than non-judicial foreclosures due to the involvement of the court system. Each county may differ with how long it takes for a lawsuit to make it through the system, however. Most lenders will send notice 60 days after a missed payment. A law passed in 2013 prohibits filing a foreclosure suit until 120 days past the missed payment, but lenders are allowed to send notice of missed payments before then. The average foreclosure takes 300 to 540 days, according to Safeguard Properties.

Pennsylvania Mortgage Resources

The Pennsylvania Housing Finance Agency (PHFA) urges homebuyers to start with them. The state-created agency offers free homebuyer counseling and education, competitive interest rates, low or fewer fees and can be used with other loan types such as FHA or VA. The Keystone Advantage Assistance Loan and the Homestead Program are two additional programs for those who meet income limits. PHFA also offers down payment and closing cost assistance and programs for persons with disabilities. For those facing foreclosure, PHFA offers emergency foreclosure payment help in the form of loans for those who qualify.

If you’re interested in rural property, you can check eligibility on the USDA website. You have to meet certain requirements for USDA-backed mortgages, but it’s a good option for those with low to moderate income. Much of Pennsylvania is within the eligibility areas except for urban areas such as Philadelphia, Pittsburgh and Harrisburg.

Moving to the Keystone State? You can always get a step ahead on budgeting by calculating what your Pennsylvania paycheck will look like. Or, start crunching loan costs with current Pennsylvania mortgage rates. It’s always helpful to get started sooner rather than later for a smooth move and home buying experience.