Calculate your real PA mortgage payment with current rates (6.48%), county by county property tax (Philadelphia 0.95%, Allegheny 1.95%, Montgomery 1.50%), $265K median, Homestead/Farmstead exclusion, and Philadelphia city wage tax warning.
Educational tool — not financial advice. SavingsClub is not a licensed financial advisor or mortgage lender. Rates and prices shown are statewide or county averages; your actual loan terms depend on your credit, lender, and property.
Last updated June 2026
3.07%
Pennsylvania's flat state income tax the lowest of any flat tax state in America, AND PA doesn't tax retirement income (401k, IRA, pension, Social Security).
Source: Pennsylvania Department of Revenue
PA Mortgage Rate
6.48%
30-year fixed average
Median Home Price
$265K
Affordable Northeast
Property Tax Rate
1.43%
Above national avg
State Income Tax
3.07%
Flat — no retirement tax
Calculate your Pennsylvania payment
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Your PA dream home awaits. Pennsylvania remains one of the most affordable Northeast states median home prices 37% below the national average, stable appreciation, low disaster risk insurance, and PA doesn't tax retirement income.
Understanding mortgages in Pennsylvania
Pennsylvania is one of the most affordable Northeast states for homebuyers, with a median home price of approximately $265,000 — about 37% below the national median of $420,000. The state combines a low flat state income tax (3.07%) with above average property tax (1.43% effective), creating a tradeoff that especially benefits high earners and retirees. PA's 4.95% flat tax has zero brackets, no deductions for most items, but completely exempts retirement income making it one of the most retirement friendly states despite the upfront tax structure. Check your real take-home pay if you're comparing PA to neighboring high tax states like New York or New Jersey.
The current 30-year fixed mortgage rate in Pennsylvania averages approximately 6.48%, slightly below the national average. PA has a competitive lending market — regional credit unions (PSECU, First Commonwealth) and community banks often beat national lender rates by 0.10–0.25% for well qualified buyers.
The Pennsylvania property tax inversion: Pittsburgh vs Philadelphia
Pennsylvania has a unique property tax dynamic most homebuyers don't realize: Philadelphia County has lower property tax than Pittsburgh / Allegheny County. This is counterintuitive because Philly is the bigger, more expensive city — but it's true. Philadelphia funds itself heavily through wage taxes (the 3.75% city wage tax) while Pittsburgh's Allegheny County relies more heavily on property tax. The inversion can flip your "Pittsburgh is cheaper" assumption upside down.
Pittsburgh vs Philly difference+$2,650/year+$221/month
The catch with Philadelphia's low property tax: the city imposes a 3.75% wage tax on residents (3.44% for non residents who work in Philly). This is the highest city wage tax in the United States. For a buyer earning $100K, that's $3,750/year in city wage tax IN ADDITION to PA's 3.07% state tax. Always compare total cost of living not just property tax when deciding between Philly and Pittsburgh. Illinois has a similar suburb vs city dynamic worth comparing.
Pennsylvania's unique tax treatment of retirement
Pennsylvania is the only US state with this exact combination: 3.07% flat state income tax with no deductions for most items, BUT zero tax on retirement income. The implications are significant and often misunderstood.
💰 Pennsylvania's Retirement Tax Quirk
No deduction for 401(k) contributions going IN. Unlike most states, PA does NOT allow you to deduct traditional 401(k) contributions from state income tax. On a $20,000 contribution, that's $614 in extra PA tax compared to states that follow federal rules. This is the under appreciated downside of PA.
Zero PA tax on 401(k) / IRA withdrawals (after 59½). The upside is significant: once you start taking retirement distributions after age 59½, PA does not tax them. Over a 25 year retirement, this can save tens of thousands compared to PA neighboring states.
Social Security and pensions not taxed by PA. Combined with no retirement income tax, makes PA one of the most retiree friendly states in the country. Plan accordingly with our retirement calculator and 401(k) calculator.
Homestead/Farmstead Exclusion ~$200–$700 typical savings. PA's property tax exemption is modest compared to other states (TX has $100K homestead, FL has $50K). Saves $200–$700/year depending on school district. Apply through your county assessment office — not automatic.
Median home prices across Pennsylvania
PA's median home price of $265,000 is well below the national median. Major cities Philadelphia ($245K) and Pittsburgh ($235K) are both well below the median. Lancaster ($295K) is one of the more expensive PA cities due to its strong job market and proximity to Philadelphia. Erie ($155K), Scranton ($165K), and Reading ($185K) are some of the most affordable cities in the Northeast. Use our Down Payment Saver to plan how long until you can afford your target PA city.
Median home prices in top Pennsylvania cities
Lancaster$295,000
Bethlehem$255,000
Philadelphia$245,000
Pittsburgh$235,000
Allentown$235,000
Reading$185,000
Scranton$165,000
Erie$155,000
Pennsylvania first time homebuyer programs
The Pennsylvania Housing Finance Agency (PHFA) offers several solid programs for first time buyers. Use our Budget Planner to figure out how much DPA you actually need before choosing a program.
PHFA Keystone Home Loan
30-year fixed-rate mortgage through PHFA with competitive rates often 0.25–0.50% below market for income qualified buyers. Available to first time buyers and certain repeat buyers in targeted areas. Income and purchase price limits apply by county.
K-FIT (Keystone Forgivable in Ten Years)
Up to $25,000 in down payment and closing cost assistance, structured as a forgivable second mortgage. Forgiven 10% per year over 10 years if you remain in the home. One of the most generous DPA programs in the Northeast.
Keystone Advantage Assistance Loan
Up to 4% of the purchase price (max $6,000) as a deferred payment second mortgage at 0% interest. Repayment only required when you sell, refinance, or pay off the first mortgage. Easier qualification than K FIT for moderate income buyers.
HFA Preferred Loan
PA's conventional loan option with reduced mortgage insurance costs for income qualified buyers. Lower monthly PMI than standard Fannie Mae conventional loans can save $50–$150/month over the life of the loan.
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SavingsClub Tips for Pennsylvania Buyers
Three PA specific things most out of state buyers don't know
1
Always apply for the Homestead/Farmstead Exclusion most PA homeowners forget to file. The exclusion isn't automatic. You file with your COUNTY assessment office (not the state) on Form HO-1 or the form provided by your county. Deadline is typically March 1 in most counties (some accept earlier). Savings are modest — $200 to $700 per year depending on your school district's reduction amount but it's free money for an hour of paperwork. New homeowners especially miss this in their first year.
2
If you're buying in Philadelphia OR working in Philadelphia, factor in the 3.75% city wage tax it's the highest in the US. Philadelphia City charges 3.75% wage tax on RESIDENTS and 3.44% on NON RESIDENTS who work within city limits. For a $100K income, that's $3,440 to $3,750/year IN ADDITION to PA's 3.07% state tax. Many buyers who choose Philly suburbs (Montgomery, Bucks) for "lower cost of living" still pay the 3.44% wage tax if they commute into the city. Always model your real take home before committing. Use our paycheck calculator to see your actual numbers.
3
PA's 401(k) quirk you pay 3.07% PA tax going IN, but ZERO tax coming OUT. Plan accordingly. Pennsylvania is the only US state with this exact treatment: you cannot deduct traditional 401(k) contributions from PA state income tax (so you pay 3.07% on the money going in), but PA does NOT tax 401(k) withdrawals after age 59½. For most retirees, this is a NET POSITIVE — the back-end exemption is worth more than the front-end loss over a typical retirement timeline. But it changes the math on Roth vs Traditional 401(k) decisions. Run your specific situation through our 401(k) calculator and retirement calculator before choosing your contribution strategy.
Frequently Asked Questions
What is the average mortgage rate in Pennsylvania in 2026?
As of June 2026, PA mortgage rates average approximately 6.48% for a 30 year fixed loan. Local credit unions like PSECU, First Commonwealth, and PNC often offer competitive rates 0.10–0.25% below national lenders for well qualified buyers. Borrowers with credit scores above 740 typically see additional rate reductions of 0.25–0.5%.
Is Pittsburgh or Philadelphia cheaper for buyers?
It depends on which cost you measure. Pittsburgh has slightly lower median home prices ($235K vs Philadelphia's $245K) BUT higher effective property tax (1.95% vs 0.95%) and lower city wage tax (~3% Pittsburgh vs 3.75% Philadelphia for residents). On a $265K home, Pittsburgh property tax is $2,650/year MORE than Philly. But if you earn over $75K and live in Philadelphia, your wage tax overhead can erase that property tax advantage. Run BOTH scenarios through our paycheck calculator with your actual income before deciding.
How does PA's 3.07% flat tax affect homeownership?
PA's flat tax means homebuyers cannot deduct mortgage interest on state taxes (only federal). However, the flat tax is low — only 3.07%, one of the lowest of any flat tax state. Combined with no PA tax on retirement income, PA is one of the most tax friendly states for long term homeowners planning to retire in place. The math gets less favorable for high income workers who could benefit from state level deductions in states like California, but for middle income PA homeowners, the simplicity is attractive.
What is the PA homestead exemption?
PA's Homestead/Farmstead Exclusion reduces the taxable assessment of your primary residence for school district taxes. Savings vary by district — typically $200 to $700 per year. Apply through your county assessment office; it's not automatic. Modest compared to Texas ($100K reduction) or Florida ($50K exemption), but free to file. Don't skip it.
What is the PA Property Tax/Rent Rebate program?
PA's Senior Rebate program refunds up to $1,000 in property tax paid annually for homeowners 65+ (or 50+ widowed, or disabled) with household income under approximately $46,000 (2026 limit). Filed annually with the PA Department of Revenue on Form PA-1000. This is in ADDITION to the Homestead Exclusion. Combined, PA seniors who qualify can offset $1,000–$1,500 of their property tax burden each year. Use our net worth calculator to factor lifetime tax savings into your retirement planning.
Are PA closing costs higher than other states?
PA closing costs are moderate — typically 2–4% of purchase price for buyers. PA charges a 1% Realty Transfer Tax (often split 0.5%/0.5% between buyer and seller in standard contracts), plus standard mortgage recording fees, title insurance, and inspection costs. Total closing costs on a $265K home are typically $5,000–$10,000. Significantly lower than New York (4–6% for buyers) and roughly comparable to most Midwest states.
The calculator above is pre filled with PA state defaults and includes county specific property tax (Philly vs Pittsburgh inversion), Homestead/Farmstead Exclusion, PA Senior Rebate, and Disabled Veteran options. For amortization schedules, extra payment scenarios, and side-by-side rate comparisons, use the main calculator.
