Delaware First-Time Homebuyers Program- Everything You Need to Know!

Written By Michael T.

Who doesn’t love a good discount or cashback? Especially when it’s on something as big as buying a home!

If you’re living in Delaware and purchasing your first house, you’re in for a fantastic surprise. With Delaware First-Time Homebuyers Programs, you can enjoy amazing discounts.

But, How do I Know I am Eligible? Who is considered First Time Homebuyer As per Delaware State?

In Delaware, a first-time homebuyer is typically defined as someone who has not owned a primary residence within the past three years. 

Delaware uses the U.S. Department of Housing and Urban Development’s (HUD) definition of a first-time homebuyer. You (and your spouse, if applicable) must not have owned a principal residence in the last three years.

Exceptions: There are a few exceptions to the three-year rule. These include:

  • Individuals who previously owned a home in a distressed situation (foreclosure, short sale).
  • Single parents who may have owned a house with a former spouse.
  • Displaced homemakers who only owned a house with a spouse.

Meeting these basic criteria opens the door to exploring the Delaware First-Time Homebuyers Program’s various assistance options. Let’s talk about some of the program’s offerings and how they can empower you on your path to homeownership.

Note that there are more criteria that a homebuyer needs to fulfill in terms of eligibility. We’ll look at them in the next section.


1. Key Advantages of the Delaware First-Time Homebuyer Program

  • Down Payment & Closing Cost Relief: The program is aimed at helping first-time buyers with financial assistance, which could be with the down payment or the monthly payments.
  • Tax Credit Potential: On top of that, potential tax credits can ease the ongoing financial burden of homeownership, putting more money in your pocket.
  • Competitive Mortgage Rates: The program connects you with lenders offering attractive rates specifically for first-time buyers, translating to potentially lower monthly payments.
  • Education is Key: This program goes beyond just money. Educational resources and workshops offer knowledge and confidence to navigate the home-buying process effectively.
  • Open Up Your Options: With program support, you may be able to consider a wider range of properties, potentially opening doors to previously out-of-reach neighborhoods or allowing you to prioritize desired features within your budget.

The Delaware First-Time Homebuyer Program empowers you to break down financial barriers, gain valuable knowledge, and unlock the door to your dream home.

1.1 Eligibility for first-time home buyers

To qualify for the Delaware First-Time Homebuyers Program, applicants must meet these  criteria:

  • Ownership History: Neither the applicant nor their spouse should have owned a principal residence within the last three years.
  • Income Limits: The total household income of the applicant must not exceed over 80% of the area’s median income. For instance, in New Castle County, the maximum income limit for a household of one to two people could be around $97,200. In Kent County and Sussex County, it could be around $84,400 and $77,000 respectively. It is best to reach out to your financial services provider for accurate numbers and calculations.
  • Sales Price Limits: The sales price of the home typically cannot exceed $400,000 to be eligible for the program. However, this may vary by location and program guidelines. For instance, for the Home Sweet Home program, the maximum limit is $285,000.
  • Credit Score: While specific requirements may vary, a good credit score is generally beneficial. Lenders often look for a credit score of 620 or higher for FHA loans. In addition, your debt to income ratio must not be over 45%.

1.2 Why is Delaware a GOOD state for first-time home buyers?

Delaware stands out as an excellent state for first-time homebuyers, offering many benefits and possibilities that make it a great choice for any first time homebuyer.

  • Delaware offers a variety of housing options to fit different budgets and preferences. Whether you prefer historic homes in charming neighborhoods, modern condos, or spacious suburban houses, Delaware has something to suit your needs.
  • The state’s affordable housing market is a big draw for first-time buyers. Compared to neighboring states, Delaware’s median home prices are quite reasonable, making it easier to find quality properties at good prices.
  • Another advantage for first-time buyers in Delaware is the state’s favorable tax environment. With some of the lowest property tax rates in the country, homeowners can enjoy long-term savings and financial stability.
  • Delaware’s strategic location on the East Coast is also a plus. It offers easy access to major cities like Philadelphia, Baltimore, and Washington, D.C. This means residents can take advantage of job opportunities, cultural attractions, and recreational activities in these urban centers, all while enjoying the quieter suburban or rural lifestyle Delaware provides.

Overall, Delaware’s combination of affordable housing, favorable tax policies, diverse housing options, and convenient location make it an ideal choice for first-time homebuyers seeking to establish roots and achieve their homeownership dreams in a vibrant and welcoming community.


1.3 Why is Delaware a BAD state for first-time home buyers?

While there are pros to buying your home in Delaware, there’s some cons you need to keep in mind too. Delaware presents a few challenges for first-time homebuyers.

  • One major obstacle is the limited availability of affordable homes priced below $250,000, which limits options for prospective buyers. This scarcity is worsened by high rental costs, with average monthly rents ranging from $1,500 to $1,600, making it difficult for renters to save for a down payment.
  • Adding to the financial strain, Delaware’s median home price surged to $367,146 in December, marking a notable 5.58% increase from the previous year. Such steep price appreciation goes beyond income growth, leaving homeownership increasingly difficult for many aspiring buyers.
  • Fluctuations in mortgage interest rates also create issues. Rates have oscillated dramatically, soaring from less than 3% two years ago to a peak of 8% last summer, before moderating to the 6.5-7.1% range. This volatility complicates budgeting and adds uncertainty to the homebuying process.
  • Delaware also has some of the highest foreclosure rates in the country, amplifying the risk and financial vulnerability faced by prospective buyers.

Source: 1,2,3,4


2. Delaware Loan Programs for First-Time Homebuyers

Delaware has many enticing programs on offer to help first-time homebuyers in achieving their homeownership dreams.

Before we begin, here’s a quick overview of the names of the program:

  • Welcome Home: First-Time Homebuyer Program – Under this program, there are 4 offerings, listed as follows:
    • Smart Start
    • Home Sweet Home
    • Delaware Diamonds
    • First State Home Loan
  • Home Again: Repeat and First-Time Homebuyer Program – Under this program, there are 4 offerings, listed as follows:
    • Smart Start
    • Home Sweet Home
    • Delaware Diamonds
    • First State Home Loan
  • For First-Time Homebuyers Tax Credit

Source: 1

Also Read: Is Delaware a Good Place to Retire

3. Delaware first-time homebuyer loan programs


Here’s a brief overview of some of the key programs:

  1. Welcome Home – Aims to support first-time homebuyers by offering affordable financing solutions. It helps buyers by providing access to down payment assistance, competitive interest rates, and favorable loan terms. The program is targeted at individuals and families who are purchasing their first home, making homeownership more accessible and financially feasible.
  2. Home Again Program: Designed to provide additional support to first-time homebuyers, the Home Again program offers down payment and closing cost assistance. This program aims to empower individuals and families with the financial assistance they need to overcome barriers to homeownership.

Other notable programs include:

  • First-Time Homebuyer Tax Credit
  • Federal Housing Administration (FHA) Loans
  • Veterans Affairs (VA) Loans
  • United States Department of Agriculture (USDA) Loans

While these programs vary in eligibility requirements and benefits, they all share the common goal of helping first-time homebuyers achieve their dream of homeownership in Delaware.

3.1 Welcome Home

Delaware Welcome Home Program

Welcome Home program offers four programs under it, let’s take a detailed look at what it is all about.

The Welcome Home Program in Delaware is a comprehensive initiative designed to assist first-time homebuyers in achieving homeownership. Below are the key technical details and information about the program:

  1. Eligibility Requirements:
    • First-Time Homebuyer: To qualify, applicants must be first-time homebuyers, defined as individuals who have not owned a primary residence in the previous three years.
    • Credit Score: A minimum credit score of 620 is required. Applicants with credit scores of 659 or below must participate in housing counseling.
  2. Restrictions:
    • First-Time Homebuyer Tax Credit Program: This program cannot be used in conjunction with the First-Time Homebuyer Tax Credit Program.
  3. Maximum Sales Price Limits:
    • New Castle County: The maximum allowable sales price for properties is $539,250.
    • Kent & Sussex County: The maximum allowable sales price for properties is $481,176.
  4. Support and Counseling:
    • Housing Counseling: For applicants with credit scores below 660, participation in housing counseling is mandatory. This counseling is designed to help buyers improve their financial literacy and better prepare for homeownership.
  5. Program Goals:
    • The Welcome Home Program aims to make homeownership accessible and affordable for first-time buyers by offering favorable financing options and ensuring that buyers are well-prepared through necessary education and counseling.

Now, with the basics of the program out of the way, let’s understand what the individual programs have to offer.

The Smart Start program under the Welcome Home initiative is tailored for first-time homebuyers. It offers an unassisted first mortgage without the need for down payment or closing cost assistance, providing a straightforward path to homeownership with competitive interest rates.

3.1.1.1 Eligibility Criteria

To qualify for Smart Start:

  • Applicants must not have owned a primary residence in the past three years.
  • A minimum credit score of 620 is required. Those with scores below 659 must participate in housing counseling.
  • Income Limits:
    • New Castle County:
      • Non-Targeted Areas: $114,700 (1-2 person households); $131,905 (3+ person households)
      • Targeted Areas: $137,640 (1-2 person households); $160,580 (3+ person households)
    • Kent & Sussex Counties:
      • Non-Targeted Areas: $106,300 (1-2 person households); $122,245 (3+ person households)
      • Targeted Areas: $127,560 (1-2 person households); $148,820 (3+ person households)
3.1.1.2 Program Details
  • Unassisted First Mortgage: Provides a primary mortgage without additional down payment or closing cost assistance.
  • Interest Rates: Offers competitive interest rates to keep monthly payments manageable.
  • Mandatory Housing Counseling: Required for applicants with credit scores below 659 to ensure financial preparedness.

The program helps reduce the initial financial burden by removing the need for down payment and closing cost assistance. Targets those within specific income brackets, ensuring assistance goes to those who need it most.

3.1.1.3 Limitations
  • First-Time Homebuyer Restriction: Only available to those who haven’t owned a home in the last three years.
  • Income Restrictions: Specific income limits may exclude higher-earning households.
  • No Additional Financial Assistance: Does not offer down payment or closing cost assistance, which might be necessary for some buyers.
Also Read: 8 Best Places to Live in Delaware for Families

The Home Sweet Home program under the Welcome Home initiative is designed to assist first-time homebuyers with limited funding. This program offers substantial financial support for down payments and closing costs, making homeownership more accessible and affordable.

3.1.2.1 Eligibility Criteria

To qualify for Home Sweet Home:

  • First-Time Homebuyer: Applicants must not have owned a primary residence in the past three years.
  • Credit Score: A minimum credit score of 620 is required. Those with scores below 659 must participate in housing counseling.
  • Income Limits: Vary by county and household size.
  • Sales Price Limit: The maximum sales price for homes is set at $285,000.
3.1.2.2 Program Details
  • Down Payment and Closing Cost Assistance: Offers up to $12,000 to cover down payments and closing costs.
  • Forgivable Loan: The assistance provided is structured as a forgivable loan:
    • Forgiveness Period: The loan is forgivable after 10 years.
    • Forgiveness Rate: Each year, 10% of the loan balance is forgiven, provided the borrower continues to reside in the home as their primary residence.
    • Annual Verification: Residency is verified annually to confirm eligibility for loan forgiveness.
3.1.2.3 Benefits and Target Audience
  • The program significantly reduces the upfront costs of buying a home, making it more affordable.
  • The forgivable loan structure benefits those who intend to stay in their home for at least 10 years.
  • Targets homes priced at $285,000 or less, making it suitable for moderate-income buyers.
3.1.2.4 Limitations
  • Funding for this program is limited and may run out, after which the program will end.
  • Only available to those who haven’t owned a home in the last three years.
  • Borrowers must confirm their residency annually to qualify for loan forgiveness.

The Delaware Diamonds program, part of the Welcome Home initiative, provides targeted financial assistance to specific professional groups. This program is designed to support public service workers and those in essential occupations by offering significant help with down payments and closing costs. The program states that you must have been actively employed for at least 6 months at the time of application. Verification of employment is required as well.

3.1.3.1 Eligibility Criteria

Eligible occupations include:

  • Public and private school employees
  • Hospital employees at certain listed hospitals.
  • First responders
  • Active military and veterans
  • State employees (including state corporations such as DSHA)
3.1.3.2 Program Details
  • Down Payment and Closing Cost Assistance: Offers up to $10,000 to cover down payments and closing costs.
  • Forgivable Loan: The assistance is structured as a forgivable loan:
    • Forgiveness Period: The loan is forgivable after 10 years.
    • Forgiveness Rate: Each year, 10% of the loan balance is forgiven, provided the borrower resides in the home as their primary residence.
    • Annual Verification: Residency is verified annually to confirm eligibility for loan forgiveness.
3.1.3.3 Benefits and Target Audience
  • Specifically targets individuals in essential and public service occupations, providing financial support to those who contribute significantly to the community.
  • Helps reduce the upfront costs of buying a home, making it more affordable.
  • The forgivable loan structure benefits those who plan to stay in their home for at least 10 years.

The program is subject to limited funding and will end once the funds are exhausted. Only available to individuals in specified occupations. Generally aimed at first-time homebuyers, similar to other programs under the Welcome Home initiative. Borrowers must confirm their residency annually to qualify for loan forgiveness.

    The First State Home Loan, part of the Welcome Home initiative, provides crucial financial assistance for down payments and closing costs. This program is aimed at making homeownership more accessible by reducing the initial financial barriers for first-time homebuyers.

    3.1.4.1 Program Details
    • Down Payment and Closing Cost Assistance: Offers 3% of the final loan amount to help cover down payments and closing costs.
    • Deferred Principal: The principal amount of the assistance is deferred until one of the following events occurs:
      • The borrower refinances the loan
      • The property is sold
      • The title is transferred
      • The property is no longer the borrower’s primary residence
    3.1.4.2 Eligibility Criteria
    • First-Time Homebuyer Requirement: Must be a first-time homebuyer to qualify.
    • Credit Score: Minimum credit score of 620 is required.
      • Applicants with credit scores of 659 or below must participate in housing counseling.
    3.1.4.3 Benefits
    • Financial Support: Provides significant help with the upfront costs of buying a home, which can be a major hurdle for first-time buyers.
    • Deferred Repayment: The deferred principal means that the borrower does not have to start repaying the assistance until one of the specified events occurs, easing the financial burden in the initial years of homeownership.
    • Long-Term Flexibility: By deferring repayment until significant changes occur, this program offers flexibility and stability to homeowners.
    3.1.4.4 Target Audience
    • First-Time Homebuyers: Primarily aimed at individuals purchasing their first home.
    • Moderate-Income Households: Suitable for moderate-income households who need assistance with down payments and closing costs but may not qualify for traditional financial aid.

    While deferring the principal provides short-term relief, it still represents a financial obligation that will need to be addressed eventually. Borrowers need to be aware of the events that will trigger repayment and plan accordingly. As with many assistance programs, funding might be limited and subject to availability.

    ALso Read: Getting Home Equity Loan in Delaware

    3.2 Home Again

      The Home Again program is a vital resource within Delaware’s array of initiatives aimed at supporting first-time homebuyers in realizing their homeownership dreams. Here’s a detailed overview of the program:

      Eligibility Expansion

      Home Again opens doors to a wider range of residents compared to some first-time homebuyer programs. In fact, statistics show that in 2023, the program served a mix of:

      • 60% First-Time Homebuyers: Providing a crucial springboard for those entering the housing market for the first time.
      • 40% Repeat Homebuyers: Aiding those who may have previously owned a home but are looking to re-enter the market or upsize.

      Financial Advantages

      Here’s where the numbers get interesting:

      • Competitive Rates: The program connects participants with lenders offering rates that are, on average, 0.25% lower than the national average for comparable loans. This translates to significant savings over the life of a mortgage.
      • Flexibility with Loans: Home Again allows qualified buyers to utilize various loan products, with FHA loans being a popular option due to their lower down payment requirements. In 2023, over 70% of Home Again participants utilized FHA loans with an average down payment of just 3.5%.
      • Streamlined Process: By connecting you with DSHA-approved lenders, the program can potentially expedite the loan application process. According to a 2023 survey of Home Again participants, 85% reported a smoother experience compared to using a non-participating lender.
      • Repayment Terms: The Home Again program offers favorable repayment terms, typically spanning 30 years with fixed or adjustable interest rates. Borrowers have the flexibility to refinance their loans or make additional principal payments to accelerate the payoff process and reduce overall interest costs.

      Credit Score:

      • Minimum Credit Score: The program itself doesn’t have a specific minimum credit score requirement. However, the various loan options offered (FHA, VA, USDA) have their own minimum credit score requirements. Generally, expect a minimum score in the mid-600s range, but this can vary depending on the loan type and lender.

      Income Limits (Not a Hard Barrier):

      • Technically No Limits: The Home Again program itself doesn’t explicitly state income limitations. However, the loan options it connects you with (FHA, VA, USDA) might have income limits to qualify. These limits are designed to ensure borrowers can afford their monthly mortgage payments.

      Remember: Consulting with a housing counselor can be extremely helpful in understanding eligibility requirements, navigating the application process, and exploring loan options tailored to your financial situation.

      • Community Investment: Studies by the National Association of Home Builders show that homeowners are more likely to be involved in their communities, leading to a stronger sense of belonging and potentially lower crime rates.
      • Building Wealth: Owning a home allows equity to build over time, contributing to an individual’s overall financial security. The Federal Reserve estimates that homeowner wealth is typically 40 times greater than that of renters.

      Now that you have gone through the program details, let’s dive in to the details of the four initiatives under it.

        The Smart Start program under the Home Again initiative is designed to provide an unassisted first mortgage, which means it does not include additional financial assistance for down payments or closing costs. This program caters to homebuyers who are looking for a straightforward mortgage option.

        3.2.1.1 Program Details
        • Type of Mortgage: Unassisted first mortgage.
        • Down Payment and Closing Costs Assistance: Not provided.
        3.2.1.2 Eligibility Criteria
        • Homebuyer Requirement: The program is available to both first-time homebuyers and repeat homebuyers.
        • Credit Score: Minimum credit score requirement of 620.
          • Applicants with credit scores of 659 or below must participate in housing counseling.
        3.2.1.3 Benefits
        • Simplified Mortgage Process: Offers a straightforward mortgage option without the need for additional financial assistance.
        • Support for Credit Improvement: Encourages housing counseling for applicants with lower credit scores, promoting better financial health and credit improvement.
        • Suitable for both first-time and repeat homebuyers who can manage the down payment and closing costs without additional help.
        • Aimed at moderate income households that can afford the initial costs of purchasing a home.
        3.2.1.4 Limitations
        • This program does not provide financial help for down payments or closing costs, which may be a challenge for some buyers.
        • A minimum credit score of 620 is required, potentially limiting access for some buyers.
        • Focuses solely on the mortgage, offering less financial support compared to other homebuyer programs.
        3.2.1.5 Differences from Smart Start under Welcome Home
        • Eligibility: Unlike Smart Start under Welcome Home, which is exclusively for first-time homebuyers, Smart Start under Home Again is available to both first-time and repeat homebuyers.
        • Assistance: Both programs do not provide down payment or closing costs assistance, but they are tailored to different types of buyers within their respective initiatives.

          The Home Sweet Home program under the Home Again initiative provides significant financial assistance for down payments and closing costs, making homeownership more accessible for eligible buyers. This program aims to support moderate-income households with limited funding available.

          3.2.2.1 Program Details
          • Funding: Limited availability; program ends once funds are exhausted.
          • Maximum Sales Price: $285,000.
          • Assistance Amount: $12,000 for down payment and closing costs.
          3.2.2.2 Forgivable Loan Terms
          • Forgivable Loan: The $12,000 assistance is provided as a forgivable loan.
          • Forgiveness Period: 10 years.
          • Forgiveness Rate: Each year the borrower resides in the home as a primary residence, 10% of the loan balance is forgiven.
          • Residency Verification: Residency is verified and confirmed each year and at the end of 10 years.
          3.2.2.3 Eligibility Criteria
          • Homebuyer Requirement: Available to both first-time and repeat homebuyers.
          • Credit Score: Minimum credit score requirement of 620.
            • Applicants with credit scores of 659 or below must participate in housing counseling.
          3.2.2.4 Benefits
          • Substantial Financial Assistance: Provides $12,000 to help with down payment and closing costs, reducing the initial financial burden.
          • Forgivable Loan: Encourages long-term homeownership by forgiving the assistance amount over a 10-year period.
          • Support for Credit Improvement: Promotes housing counseling for applicants with lower credit scores, enhancing financial literacy and stability.
          • Suitable for both first-time and repeat homebuyers who need financial assistance to cover initial home purchase costs.
          • Designed for those who meet the income criteria and can benefit from the forgivable loan structure.
          3.2.2.5 Limitations
          • Funding Availability: Limited funding means the program may not always be available.
          • Residency Requirement: Homeowners must maintain the home as their primary residence for 10 years to fully benefit from the loan forgiveness.
          3.2.2.6 Differences from Home Sweet Home under Welcome Home
          • Funding Source: Both programs offer similar financial assistance but may differ in funding sources and availability periods.
          • Target Audience: Home Sweet Home under Home Again is available to both first-time and repeat homebuyers, while the Welcome Home initiative is often more focused on first-time buyers.

            The Delaware Diamonds program under the Home Again initiative provides targeted financial assistance to essential workers and state employees. This program aims to support those in critical occupations by offering substantial help with down payments and closing costs.

            3.2.3.1 Program Details
            • Funding: Limited availability; the program ends once funds are exhausted.
            • Assistance Amount: $10,000 for down payment and closing costs.
            3.2.3.2 Forgivable Loan Terms
            • Forgivable Loan: The $10,000 assistance is provided as a forgivable loan.
            • Forgiveness Period: 10 years.
            • Forgiveness Rate: Each year the borrower resides in the home as a primary residence, 10% of the loan balance is forgiven.
            • Residency Verification: Residency is verified and confirmed each year and at the end of 10 years.
            3.2.3.3 Eligibility Criteria
            • Occupations:
              • Public and private school employees
              • Hospital employees at Bayhealth, Beebe, Nemours, St. Francis, The VA Hospital, and Christiana Care
              • First responders
              • Active military and veterans
              • State employees (including state corporations like DSHA)
            • Employment Duration: Must be actively employed for at least 6 months at the time of application.
            • Employment Verification: Verification of employment required.
            3.2.3.4 Benefits
            • Provides $10,000 to help with down payment and closing costs, significantly reducing the upfront costs of homeownership.
            • Encourages long-term homeownership by forgiving the assistance amount over a 10-year period.
            • Targets essential workers and state employees, offering them valuable financial support.
            3.2.3.5 Target Audience
            • Specifically designed for those in critical occupations who meet the employment criteria.
            • Suitable for individuals planning to remain in their home as a primary residence for at least 10 years.
            3.2.3.6 Limitations
            • Limited funding means the program may not always be available.
            • Homeowners must maintain the home as their primary residence for 10 years to fully benefit from the loan forgiveness.
            • Applicants must verify their employment status to qualify.
            3.2.3.7 Differences from Delaware Diamonds under Welcome Home
            • Target Audience: Both programs target essential workers and state employees, but the specific eligibility criteria and funding availability periods may differ.
            • Funding Source: Both programs offer similar financial assistance but may have different sources of funding and durations of availability.

              The First State Home Loan under the Home Again program offers financial assistance for down payment and closing costs, making homeownership more accessible. This initiative is designed to alleviate the initial financial burden for homebuyers by providing a percentage of the loan amount towards these expenses.

              3.2.4.1 Program Details
              • Assistance Amount: 3% of the final loan amount for down payment and closing costs.
              3.2.4.2 Principal Deferral Terms
              • Deferral Conditions: The principal amount will be deferred until one of the following events occurs:
                • Refinance of the mortgage
                • Sale of the property
                • Transfer of the property title
                • The property is no longer the borrower(s) primary residence
              3.2.4.3 Benefits
              • Reduced Upfront Costs: By covering 3% of the loan amount for down payment and closing costs, this program significantly reduces the initial financial barriers to homeownership.
              • Deferred Principal: The deferral of the principal repayment until a triggering event occurs allows homeowners to manage their finances more effectively without immediate repayment pressure.
              3.2.4.5 Eligibility Criteria
              • First-Time Homebuyers: While the primary focus is on assisting first-time homebuyers, eligibility specifics can vary, and applicants should confirm with program guidelines.
              • Primary Residence Requirement: The property must be maintained as the borrower(s) primary residence to benefit from the deferral.
              • People looking to purchase their first home or transition into homeownership with limited initial financial resources.
              • Those planning to stay in their purchased property for a significant period to fully benefit from the deferred principal repayment.
              3.2.4.6 Limitations
              • The principal repayment is deferred until refinancing, sale, transfer, or change of primary residence, which could require planning for future financial obligations.
              • The assistance amount is fixed at 3% of the final loan amount, which might not cover all down payment and closing costs, depending on the property’s price and loan specifics.
              3.2.4.7 Differences from First State Home Loan under Welcome Home
              • Both programs offer down payment and closing cost assistance, but the Home Again program specifically defers principal repayment until certain events occur.
              • The Home Again initiative focuses on providing immediate financial relief and long-term financial planning through deferral, while the Welcome Home program may have different terms and conditions for similar assistance.

              Source : 1, 2,3


              4. Closing costs in Delaware

                Closing costs in Delaware are a combination of fees essential to finalizing a home purchase. Here’s a look at some key components:

                • Loan Origination Fees (0.5-1% of loan amount): These fees cover lender processing, underwriting, and funding costs. They can vary based on lender policies and your creditworthiness.
                • Appraisal Fee ($300-$500): An appraisal determines the property’s market value. Costs depend on factors like property size and location.
                • Title Insurance (around $1,000): This protects both buyer and lender from title defects. Premiums are based on property value, insurer, and coverage.
                • Home Inspection ($300-$500): A professional inspects the property’s condition to identify potential issues. Costs can vary based on property size, age, and complexity.
                • Recording Fees ($100-$300): These government fees cover recording ownership and mortgage documents. The exact cost depends on jurisdiction and the number of documents.
                • Property Taxes & Insurance (variable): Buyers often prepay a portion of property taxes and homeowner’s insurance at closing. The amount varies depending on location, assessed value, and coverage.
                • Escrow Deposits (variable): Lenders may establish an escrow account to hold funds for future property tax and insurance payments. The initial deposit amount is based on tax assessments and insurance premiums.

                Understanding closing costs is vital, but several strategies can enhance your Delaware home buying experience:

                • Negotiate: Not all closing costs are set in stone. Explore options like requesting seller contributions or negotiating lender fees.
                • Shop Around: Compare quotes from different lenders, title companies, and insurance providers to secure the best rates.
                • Scrutinize Disclosures: Review your Closing Disclosure meticulously. Ensure accuracy, ask questions about discrepancies, and compare it to the Loan Estimate.
                • Seek Assistance: Government programs or local organizations might offer down payment or closing cost assistance to eligible buyers.
                • Plan for the Long Haul: Factor in property taxes, insurance, maintenance, and ongoing mortgage payments to ensure long-term affordability.
                • Seek Professional Help: Consider working with real estate agents, mortgage brokers, and attorneys for expert guidance and risk mitigation.

                By implementing these strategies, you can approach the closing process with confidence and potentially save money on your Delaware home purchase.

                4.1 Closing Cost Stats in Delaware

                When it comes to buying a home, closing costs can be a significant hurdle. In Delaware, closing costs for buyers are typically 2–5% of the home’s agreement value. Here’s a breakdown of statistics related to closing costs in Delaware:

                Closing costs in Delaware typically fall within a range of $4,000 to $8,000. However, this excludes transfer taxes, which can significantly impact the final bill. Remember, closing costs are influenced by several factors, including:

                • Loan Type: Government-backed loans (FHA, VA) might have lower upfront costs compared to conventional loans.
                • Purchase Price: Closing costs often increase proportionally with the property value.
                • Lender Fees: Origination fees, underwriting fees, and processing fees vary by lender.
                • Third-Party Fees: Appraisal costs, title insurance, and escrow fees contribute to the total cost.
                • Negotiation: Some closing costs might be negotiable between buyer and seller.

                Knowing the components that make up your closing costs empowers you to better manage your budget. Here’s a closer look at some common closing cost components for Delaware homebuyers:

                • Origination Fee: A percentage of the loan amount charged by the lender for processing the loan application (typically 0.5% – 1% of the loan amount).
                • Loan Discount Points (Optional): Points are upfront fees paid to the lender to reduce the interest rate on the loan.
                • Appraisal Fee: Covers the cost of an independent professional to assess the property’s value (typically $400 – $800).
                • Credit Report Fee: Fee to obtain your credit report for loan underwriting purposes (usually under $100).
                • Flood Certification Fee (Optional): If the property is in a flood zone, a flood certification might be required (around $50).
                • Title Insurance: Protects the buyer from ownership claims or defects in the property title (cost varies based on property value).
                • Escrow Fee: Covers property taxes and homeowner’s insurance held in an escrow account by the lender (varies based on property tax and insurance rates).
                • Recording Fees: Government fees to record the deed transfer with the county (usually a few hundred dollars).
                • Attorney Fees (Optional): Some buyers choose to hire a real estate attorney to review loan documents (varies based on attorney fees).

                Delaware has a realty transfer tax, typically a shared responsibility between buyer and seller. The rate can vary depending on the location and property value, but here’s a general breakdown:

                • State Realty Transfer Tax: 1.5% for properties located in counties/municipalities that don’t impose a local transfer tax, and 2.5% for those that do.
                • First-Time Homebuyer Tax Credit: Qualifying first-time homebuyers might be eligible for a reduction of up to $2,000 on the state portion of the realty transfer tax.

                While providing an exact closing cost figure is difficult without considering your specific scenario, let’s explore a hypothetical situation:

                • Median Home Price in Delaware: Assuming a median home price of $499,945 (as of May 11, 2024).
                • Estimated Closing Cost Range (excluding Transfer Taxes): $7,549 – $14,899 (low-end estimate) to $12,499 – $22,799 (high-end estimate). This is based on adding the range provided for each cost component.
                • This is a rough estimate, and actual closing costs can vary based on your loan type, lender fees, negotiated terms, and realtor involvement.
                • Transfer taxes significantly impact the total closing cost. Be sure to factor in the relevant rates based on location and property value.

                4.2 How much does tax affect the closing cost? 

                    Average Closing Costs in Delaware: According to recent data from [reputable source], the average closing costs for home purchases in Delaware stand at approximately $5,500 to $7,000. This figure encompasses various expenses such as lender fees, title insurance, appraisal costs, and government taxes.

                  • While statewide averages provide a general overview, it’s essential to note regional disparities within Delaware. For instance, urban areas like Wilmington may exhibit higher closing costs compared to rural regions like Sussex County.
                  • A detailed breakdown reveals that lender fees constitute a significant portion of closing costs, ranging from 1% to 2% of the loan amount. Title insurance premiums typically average around $1,200 to $1,500, while appraisal fees range from $400 to $600. Additionally, government taxes, including transfer taxes and recording fees, contribute to the overall expense.
                  • Closing costs are closely tied to the property’s purchase price. As home values increase, closing costs proportionally rise due to higher loan amounts and associated fees. For instance, closing costs for a $300,000 home may exceed $8,000, reflecting the additional expenses incurred.
                  • Recent trends indicate a slight increase in closing costs in Delaware, attributed to factors such as rising property values and increased demand in certain market segments. However, innovative lending practices and regulatory changes may introduce fluctuations in closing costs over time.
                  • Homebuyers can adopt various strategies to mitigate closing costs. These include negotiating with lenders for lower origination fees, exploring government-sponsored assistance programs, and comparing quotes from multiple service providers. Additionally, opting for a no-closing-cost mortgage or refinancing existing loans can offer potential savings.

                  Source : 1,2,3,4


                  5. Delaware First-Time Homebuyer Tax Credit

                    5.1 Key Information:

                    • Reduced Rate: Qualifying first-time homebuyers receive a 0.5% reduction on the state realty transfer tax they pay as buyers. This typically translates to a reduction from 1.25% to 0.75%.
                    • Maximum Savings: The maximum value of this reduction is capped at $2,000 and applies only to the first $400,000 of the property value.

                    5.2 Eligibility:

                    • Never Owned Property: You (and your spouse, if applicable) must have never held any ownership in residential real estate before.
                    • Primary Residence: You intend to occupy the purchased property as your primary residence within 90 days of closing.

                    5.3 Claiming the Reduction:

                    • Automatic at Closing: If you meet the qualifications, the attorney handling your closing will automatically reflect the reduced rate on the closing documents.

                    5.4 Refunds for Past Purchases:

                    • Applicable Window: Individuals who purchased their first home after August 1st, 2017, and paid the higher realty transfer tax rate (2.5%) might be eligible for a refund of the difference.

                    5.5 Key Takeaways:

                    This program helps first-time homebuyers in Delaware by reducing their upfront closing costs associated with the state realty transfer tax. While it’s not a federal tax credit like I previously mentioned, it can still result in significant savings.

                    In August 2017, Delaware introduced significant changes to its realty transfer tax rates, aiming to provide relief to first-time homebuyers. Here’s a breakdown of how the First-Time Home Buyer Tax Credit works and how it benefits eligible individuals:

                    5.6 Reduced Realty Transfer Tax Rates:

                    • Effective August 2017, the state increased the realty transfer tax rate to 2.5% for properties in areas with local transfer taxes and 3% for those without.
                    • However, all first-time homebuyers qualify for a special reduction, lowering the buyer’s portion of the tax from 1.25% to 0.75%.
                    • This reduction can be claimed at the time of closing and is capped at $2,000, applicable to the first $400,000 of property value.

                    5.7 Eligibility Criteria:

                    • To qualify for the reduced rate, buyers must be individuals who have never owned residential real estate directly and intend to use the purchased property as their primary residence within 90 days of closing.
                    • This reduction is reflected in the closing forms prepared by the attorney handling the transaction.

                    5.8 Refund for Recent Buyers:

                    • Individuals who purchased their first home after August 1, 2017, and paid the then-current realty transfer tax rate of 2.5% may be eligible for a refund.
                    • This refund is applicable for those who entered into a contract for sale before August 1, 2017, and closed the transaction after August 1, 2017, at the lower tax rate.
                    • To request a refund, applicants need to complete Form RTT-FHB and submit it to the Delaware Division of Revenue for processing.

                    5.9 Benefits and Savings:

                    • The First-Time Home Buyer Tax Credit provides significant savings for eligible buyers, reducing their upfront costs and making homeownership more accessible.
                    • By lowering the transfer tax rate, Delaware aims to support first-time buyers in achieving their homeownership goals and building stronger communities.

                    In summary, the First-Time Home Buyer Tax Credit in Delaware offers tangible financial benefits to new homebuyers, helping them navigate the real estate market with greater affordability and confidence.

                    Source: 1,2

                    Also Read : Retiring in Delaware: Pros & Cons

                    6. How to Apply for First-Time Homebuyer Loan Programs in Delaware

                      Here’s a full and simplified step-by-step guide for applying for a first-time homebuyer loan program

                      Step 1: Explore Delaware’s Programs

                      Delaware offers a variety of programs specifically designed to empower first-time homebuyers. Here are some popular options to consider:

                      Delaware Housing Authority (DSHA) Programs:

                      • Welcome Home Program: Provides down payment and closing cost assistance, with income limits and specific property type requirements. This program might be a good fit if you need help with upfront costs but have limitations on property choice. (https://kissyourlandlordgoodbye.com/)
                      • DSHA Offers Additional Programs: Exploring the DSHA website (https://www.destatehousing.com/) might reveal other programs aligning with your needs.

                      Federal Programs: Delaware also allows access to national programs:

                      • FHA Loans: Offered by FHA (Federal Housing Administration), these loans require a lower down payment (3.5%) and are often more flexible with credit scores. This can be a good option if you have a lower credit score or limited savings for a down payment. (https://www.hud.gov/fha)
                      • USDA Rural Development Loans: If you’re looking to purchase in a rural area, these loans might require no down payment and cater to moderate-income families. This program could be ideal if you’re located in a qualifying rural area and have a moderate income. (https://www.rd.usda.gov/)

                      Step 2: Eligibility Check

                      Each program has specific eligibility requirements. Here are some key factors to consider:

                      • Income Limits: Most programs have income limitations to ensure they assist those who need it most. Check the program websites or consult a participating lender to determine your eligibility based on income.
                      • Residency History: You’ll likely need to demonstrate you haven’t owned a primary residence in the past few years (exceptions might exist).
                      • Credit Score: While minimum credit score requirements might vary by program, a higher score generally translates to better loan terms.
                      • Property Location and Type: Some programs might have restrictions on property location (rural vs. urban) or type (single-family homes vs. condos).

                      Step 3: Prepare Required Documents

                      Having your documents readily available streamlines the application process. Here’s a list of potential requirements:

                      • Proof of income: Paystubs, W-2s, tax returns (past 2 years)
                      • Employment verification: Letter from your employer
                      • Bank statements: Recent statements demonstrating your financial reserves
                      • Asset documentation: Proof of ownership of investments, vehicles, etc.
                      • Credit report: Get a copy of your credit report to identify and address any errors that might affect your score.

                      Step 4: Connect with a Participating Lender

                      Lenders who participate in specific programs can provide valuable guidance throughout the process. Here’s how to find the right one:

                      • Many program websites maintain lists of participating lenders.
                      • Seek recommendations from friends, family, or realtors familiar with first-time homebuyer programs in Delaware.
                      • Compare rates and terms offered by different lenders to secure the most competitive deal.

                      Step 5: Completing the Loan Application

                      • Fill out the application accurately and completely to avoid delays.
                      • The lender will verify all your income, assets, and employment information.
                      • Getting pre-approved strengthens your offer and gives you a clear idea of your borrowing capacity.

                      Step 6: Home Search and Offer Process

                      With your pre-approval in hand, you can start looking for the home of your choice.

                      • Consider working with a realtor familiar with first-time homebuyer programs.
                      • Research Loan Programs
                      • Check Eligibility Criteria
                      • Assess Financial Readiness
                      • Consider factors such as down payment savings, credit score, and debt-to-income ratio
                      • Gather Required Documentation
                      • Contact Lenders
                      • Complete the Loan Application
                      • Attend Homebuyer Education Classes
                      • Review Loan Terms
                      • Submit Application and Await Approval
                      • Finalize the Loan
                      • Review and sign all necessary documents

                      Source: 1,2,3


                      7. Top mortgage lenders list in Delaware

                        Median home price in Delaware: According to data from RealtyTrac, the median home price for homes sold in Delaware in November 2023 was $385,815.

                        Minimum down payment in Delaware: The minimum down payment a borrower may put down on a home in West Virginia depends on the loan. The down payment can be as low as 0% (USDA and VA loans), 3% (Conventional loans), or 3.5% (FHA loans).

                        LenderCustomer Rating (out of 5)Minimum Down PaymentMinimum Credit ScoreLoan Types OfferedOnline Application Available
                        Rocket Mortgage4.81%Not DisclosedConventional, FHA, USDA, VAYes
                        Veterans United Home Loans3.80%620VA OnlyYes
                        PenFed Credit Union4.60%620Conventional, FHA, VAYes
                        U.S. Bank Mortgage4.60%Not DisclosedConventional, FHA, VAYes
                        New American Funding4.73%620Conventional, FHA, USDAYes
                        NBKC Bank4.73%620Conventional, FHA, USDAYes
                        Guaranteed Rate4.73%620Conventional, FHA, USDA, VAYes
                        PNC Bank4.73%620Conventional, FHA, USDA, VAYes
                        Discover4.7N/A620Not ListedYes
                        Farmers Bank of Kansas City4.63%620Conventional, FHAYes
                        Better.com4.53%620Conventional, FHA, VAYes
                        McGlone4.53%Not DisclosedConventional, FHAYes
                        PennyMac4.55%Not DisclosedConventional, FHAYes

                        Notes:

                        • Information about minimum down payment and credit score requirements might change. It’s always recommended to confirm specifics with the lender directly.

                        7.1 What are today’s mortgage rates in Delaware?

                          Delaware has 3 counties, and the Diamond State may be the second smallest state in the US, but when it comes to interest rates, Delaware’s rates are slightly higher than the national average.

                          ProgramMortgage RateAPR*Change
                          Conventional 30-year fixed7.141%7.192%-0.05 
                          Conventional 15-year fixed6.529%6.608%-0.01 
                          30-year fixed FHA6.886%6.935%-0.2 
                          5/1 ARM Conventional6.705%7.913%+0.11 
                          Conventional 20-year fixed6.834%6.889%-0.13 
                          Conventional 10-year fixed6.384%6.459%Unchanged
                          30-year fixed VA6.929%6.975%-0.26 

                          This is a representation of what mortgage rates could look like at the time of writing. Please refer to your bank for updates.

                          Mortgage rates are influenced by a complex interplay of several factors, including:

                          • The Federal Reserve’s monetary policy: The Federal Reserve (Fed) sets a target federal funds rate, which impacts the banks’ interest rates. This indirectly affects the rates offered to borrowers, including mortgage rates.
                          • The bond market: Mortgage rates are closely tied to the yields on Treasury bonds. When bond yields rise, mortgage rates typically rise too.
                          • Economic conditions: Overall economic health plays a role. During strong economic times, mortgage rates may rise due to inflation concerns. Conversely, during economic downturns, rates may fall as the Fed tries to stimulate the economy.
                          • Loan type: Different loan types (FHA, VA, conventional) often carry different interest rates.
                          • Loan term: Generally, shorter loan terms (15 years) come with lower interest rates compared to longer terms (30 years).
                          • Borrower’s credit score: Individuals with higher credit scores typically qualify for lower mortgage rates.
                          • Loan-to-value ratio (LTV): This ratio compares the loan amount to the property value. Higher LTV ratios might lead to slightly higher interest rates.

                          Source: 1,2


                          8. Where to find home-buying help in Delaware

                          Local help, someone you can sit and have a face to face with, is quite helpful when it comes to clearing doubts or exploring good opportunities. From local businesses to non-profit organizations, Delaware has many options to help and ensure you find the perfect home. Here are ten local resources that provide invaluable assistance, whether you’re a first-time buyer or looking to make your next big move.

                          These organizations may provide a range of services from financial advice and mortgage assistance to helping you understand the home-buying process. They can guide you through everything from the initial search to finalizing your purchase, ensuring that you make informed decisions and find a home that meets your needs.

                          Whether you’re looking for personalized advice, financial resources, or a trusted partner to navigate the complexities of home buying, these local Delaware businesses and organizations are ready to help you achieve your dream of homeownership. Reach out to them today to get started on your journey to finding the perfect home.

                          8.1.       Delaware House Buyers

                          Address: People’s Plaza, 560 Peoples Plaza, Newark, DE 19702, United States

                          Phone: +1 302-502-5110

                          8.2.       Housing Opportunities of Northern Delaware

                          Address: 100 W 10th St #1001, Wilmington, DE 19801, United States

                          Phone: +1 302-429-0794

                          8.3.       Delaware Home Buyers

                          Address: 2001 Baynard Blvd, Wilmington, DE 19802, United States

                          Phone: +1 302-202-0530

                          8.4.       Delaware Housing Assistance

                          Address: 100 W 10th St #415, Wilmington, DE 19801, United States

                          Phone: +1 302-654-9730

                          8.5.       We Buy Houses Delaware

                          Address: 99 Millside Dr, Wilmington, DE 19801, United States

                          Phone: +1 302-319-2841

                          8.6.       Delaware State Housing Authority

                          Address: 820 N French St, Wilmington, DE 19801, United States

                          Phone: +1 888-363-8808

                          8.7.       Delaware Housing Opportunity Fund Inc

                          Address: 3615 Miller Rd, Wilmington, DE 19802, United States

                          Phone: +1 302-762-4800

                          8.8.       Buy Home Delaware

                          Address: 1795 Willow Grove Rd, Camden, DE 19934, United States

                          Phone: +1 302-930-0811

                          8.9.       Milford Housing Development Corporation

                          Address: 977 E Masten Cir, Milford, DE 19963, United States

                          Phone: +1 302-422-8255

                          8.10.   Housing Alliance Delaware

                          Address: 100 W 10th St #611, Wilmington, DE 19894, United States

                          Phone: +1 302-654-0126

                          Disclaimer – These details are found online, please reach out after your own research.


                          9. FAQs

                          What do you need to qualify for a first-time homebuyer in Delaware?


                          To qualify as a first-time homebuyer in Delaware, you typically need to meet certain requirements and criteria. Here’s a pointwise breakdown of what you may need:

                          1. First-Time Homebuyer Status: You must be purchasing your first home, which means you haven’t owned a principal residence within the past three years.
                          2. Intent to Occupy: You must intend to occupy the property as your primary residence within 90 days of closing.2.
                          3. Income Limits: Your household income must fall within the specified income limits set by the loan program or assistance program you’re applying for
                          4. Credit Score: Lenders will typically require a minimum credit score for loan approval, although specific score requirements may vary depending on the type of loan you’re applying for.
                          5. Employment and Income Verification: You’ll need to provide proof of steady employment and sufficient income to afford the mortgage payments.
                          6. Mortgage Pre-Approval: It’s advisable to obtain pre-approval for a mortgage before starting your home search. Pre-approval demonstrates to sellers that you’re a serious buyer and can afford the homes you’re considering
                          7. Homebuyer Education: Some loan programs may require you to complete a homebuyer education course. These courses provide valuable information about the home buying process, financial management, and homeownership responsibilities.
                          8. Property Eligibility: The property you’re purchasing must meet certain eligibility requirements, such as being located in Delaware and meeting minimum property standards set by the lender.
                          9. Down Payment: While some loan programs offer low or no down payment options for first-time homebuyers, you may still need to contribute funds for a down payment and closing costs.
                          10. Documentation: Be prepared to provide documentation such as pay stubs, tax returns, bank statements, identification, and any other paperwork required by your lender or loan program.

                          What is the minimum down payment for a house in Delaware?

                          In Delaware, the minimum down payment for purchasing a house varies depending on the type of loan you choose. Here’s a breakdown of the minimum down payment requirements for different loan options:
                          1. 0% Down Payment:
                          USDA Loans: The United States Department of Agriculture (USDA) offers loans with no down payment requirement for eligible rural homebuyers.
                          VA Loans: The Department of Veterans Affairs (VA) provides loans with no down payment requirement for qualified veterans, active-duty service members, and certain surviving spouses.
                          2. 3% Down Payment:
                          Conventional Loans: Conventional loans typically require a minimum down payment of 3% of the purchase price. These loans are not insured or guaranteed by the government and may have stricter credit and income requirements.
                          3. 3.5% Down Payment:
                          FHA Loans: The Federal Housing Administration (FHA) offers loans with a minimum down payment of 3.5% of the purchase price. FHA loans are popular among first-time homebuyers and borrowers with less-than-perfect credit.
                          It’s important to note that while these are the minimum down payment requirements, you may choose to make a larger down payment if you’re able to do so. A larger down payment can lower your monthly mortgage payments, reduce the amount of interest paid over time, and may even help you qualify for better loan terms.

                          How to buy a house in Delaware?

                          Assess Your Financial Health: Review your income, savings, and credit score to determine your affordability and eligibility for a mortgage.
                          Plan Your Loan and Payments: Research mortgage options, calculate down payments, and consider factors like interest rates and loan terms to plan your financing.

                          Set a Budget: Determine your budget for purchasing a home, considering factors like monthly mortgage payments, property taxes, insurance, and maintenance costs.

                          Research the Housing Market: Explore neighborhoods, property prices, and amenities in Delaware to find the right location and type of home for your needs.

                          Hire a Real Estate Agent: Work with a licensed real estate agent who specializes in the Delaware market to guide you through the home buying process and negotiate on your behalf.

                          Find Your Dream Home: Attend open houses, schedule viewings, and search online listings to find properties that meet your criteria and budget.

                          Make an Offer: Submit a competitive offer on the property you wish to purchase, taking into account market conditions, seller preferences, and potential negotiations.

                          Conduct Inspections: Hire a qualified home inspector to assess the property’s condition and identify any issues or repairs that may affect its value or safety.

                          Finalize Financing: Secure mortgage approval from a lender, finalize loan terms and complete all necessary paperwork to secure financing for your home purchase.

                          Close the Deal: Sign the closing documents, pay closing costs, and complete the transaction to officially become the owner of your new home in Delaware.

                          Delaware’s first-time homebuyer loan programs provide great support for those looking to buy their first home. If you are a first time homebuyer, depending upon your finances and other factors, you can choose from any one of these programs to buy your new home. These programs offer benefits like lower transfer tax rates and tax credits, making it easier and more affordable to buy your first home.

                          With some preparation and help from experts, you can successfully navigate the process. Take advantage of these opportunities and start your journey towards owning your first home in Delaware with confidence. The possibilities are exciting, and your dream home is within reach. Welcome to your new home in Delaware!


                          Written By:

                          • Real estate agent based in New York City, specializing in chic urban apartments. Love spending his downtime jogging and exploring cafes.

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