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Living in Delaware comes with one money-saving perk: no sales tax. However, it’s still a relatively pricey place to buy a home. Whether you’re a first-time homebuyer looking to live on the beach or planning to move to downtown Wilmington, the Delaware State Housing Authority can lend a hand with a more affordable mortgage and down payment and closing cost help.
Delaware first-time homebuyer loan programs
DSHA Homeownership Loan Program
The Delaware State Housing Authority’s (DSHA) Homeownership Loan Program offers a mix of 30-year fixed-rate conventional, FHA, VA and USDA loans, all with competitive interest rates. These are available to both first-time and repeat homebuyers, and can be combined with the agency’s down payment and closing cost assistance. However, there’s no limit on the purchase price of the home.
To qualify for a Homeownership Loan, you’ll need a credit score of at least 620. If your score is 659 or less, you’ll also need to go through housing counseling — a program requirement. If your credit score is less than 620, the DSHA can connect you to free financial coaching to help you improve your standing.
Your household also must be within income limits, which vary by county:
- New Castle County: No more than $113,400 for a one- or two-person household and no more than $141,750 for a household with three or more members
- Kent and Sussex counties: No more than $99,600 for a one- or two-person household and no more than $124,500 for a household with three or more members
Delaware down payment assistance
DSHA Preferred Plus
If you qualify for DSHA’s Homeownership Loan Program, you might also be able to take advantage of the agency’s Preferred Plus down payment and closing cost assistance. This program offers homebuyers a no-interest second mortgage in the amount of 2 percent to 5 percent of your overall loan amount. It needs to be repaid when you move out, sell your home, refinance your first mortgage or when the home otherwise isn’t your primary residence anymore.
Other Delaware homebuyer assistance programs
First-Time Homebuyer Tax Credit
As a first-time homebuyer in Delaware, you can also take steps to reduce your tax bill. Delaware offers a federal tax credit for first-time homebuyers of up to 35 percent of your annual mortgage interest, up to $2,000 a year. You can apply for the credit alongside the DSHA’s mortgages and down payment assistance program.
To qualify, you must be a first-time homebuyer (or have not owned a home in the past three years), or purchasing a home in a special “Targeted Area” or a veteran. The home’s price also needs to fall within purchase limits for the county, which range from $311,979 for a single-family home in Sussex County or Kent County to $726,059 for a four-unit home in New Castle County. Your income also must be within the household income limits. Here’s a breakdown of the differences based on area and size of household:
|County||Area||1-2 Person Household||3+ Person Household|
|New Castle County||Targeted||$113,400||$132,300|
|New Castle County||Non-Targeted||$94,500||$108,675|
|Kent or Sussex County||Targeted||$99,600||$116,200|
|Kent or Sussex County||Non-Targeted||$83,000||$95,450|
Other first-time homebuyer loan programs
First-time homebuyers in Delaware could be eligible for other loan programs backed by the government, such as FHA, VA or USDA loans. These programs are popular with those who have lower credit scores or can’t afford a high down payment. Fannie Mae and Freddie Mac also back conventional loans with down payments as low as 3 percent, which can be another option for first-time buyers. To learn more about these types of loans and more, take a look at Bankrate’s first-time homebuyer loans and programs guide.
As you reach out to mortgage lenders and consider your loan options, keep the Delaware State Housing Authority’s loans and assistance program in mind, as they can help you get into a home sooner and for less money upfront. You can also connect with one of the agency’s partner lenders to get the process started. Compare quotes from at least a few lenders to make sure you get the terms that best fit your financial needs. When you find a mortgage rate and offer that look especially attractive, ask your lender about a rate lock.
With additional reporting by David McMillin
First-time homebuyer programs in nearby states
- Maryland first-time homebuyer programs
- New Jersey first-time homebuyer programs
- Pennsylvania first-time homebuyer programs