First-time home buyer programs in Delaware: assistance, loans and real costs
Delaware has no sales tax and low property taxes but one of the highest transfer taxes in the country — the first-time buyer exemption is worth up to $2,000 and is easy to miss if the settlement attorney is not told you qualify. That is the one sentence to keep in mind while reading the programs below.
| State housing agency | Delaware State Housing Authority (DSHA) |
|---|---|
| Median home price (approx.) | $390,000 — statewide order of magnitude; metros differ |
| 3.5% / 5% / 20% down | $13,650 / $19,500 / $78,000 on the median |
| Property tax (effective) | about 0.57% — roughly $2,223 a year on the median |
| Mortgage credit certificate | Yes — mortgage credit certificate offered |
| Transfer tax | Delaware’s realty transfer tax is 4% of the price (2.5% state plus 1.5% local), customarily split equally between buyer and seller; first-time buyers receive a reduction of 0.5% on the state portion for the first $400,000 of price. |
State programs for first-time buyers in Delaware
The Delaware State Housing Authority’s Welcome Home program offers 30-year fixed first mortgages (FHA, VA, USDA, conventional) with the Home Sweet Home down payment loan, and the DSHA Homeownership Loan for repeat buyers. Delaware also reduces its transfer tax for first-time buyers.
The down payment help, and how it must be repaid
Home Sweet Home provides a forgivable second loan (forgiven after ten years of occupancy) of up to $12,000 toward down payment and closing costs for buyers within income limits; a smaller amount is available through the Preferred Plus second.
Every assistance dollar comes in one of four shapes — grant, forgivable, deferred or repayable — and the shape decides what it costs you over ten years. Get it in writing before you apply. See how down payment assistance programs work.
Is there a first-time buyer tax credit?
DSHA’s Delaware First-Time Homebuyer Tax Credit is a Mortgage Credit Certificate providing a federal tax credit on a portion of annual mortgage interest, available with or without a DSHA first mortgage.
Income and purchase price limits
DSHA income limits depend on county and household size and purchase price limits apply; the program requires a minimum credit score around 620 and homebuyer counseling. First-time buyer status is waived in targeted areas and for veterans.
Transfer taxes and closing costs in Delaware
Delaware’s realty transfer tax is 4% of the price (2.5% state plus 1.5% local), customarily split equally between buyer and seller; first-time buyers receive a reduction of 0.5% on the state portion for the first $400,000 of price.
The 4% transfer tax makes Delaware one of the most expensive states to close in: a buyer’s customary 2% share plus attorney and title fees often totals 4% to 5% of the price, reduced somewhat by the first-time buyer exemption. For the line-by-line, see closing costs explained and seller concessions limits.
The numbers on a typical Delaware home
On a home at Delaware’s rough median of $390,000, here is what the three standard first-time structures look like at an illustrative 6.5% rate — principal and interest only, before homeowners insurance and any mortgage insurance. The tax column uses the state’s approximate effective rate of 0.57% (about $2,223 a year on this price). Neither number is an offer; both are the right order of magnitude for a budget.
| Structure | Down payment | Loan amount | P&I at 6.5% (30 yr) | Property tax / mo (est.) |
|---|---|---|---|---|
| FHA, 3.5% down | $13,650 | $376,350 | $2,379 | $185 |
| Conventional, 5% down | $19,500 | $370,500 | $2,342 | $185 |
| Conventional, 20% down (no PMI) | $78,000 | $312,000 | $1,972 | $185 |
Illustrative rate and approximate state figures — not an offer or a quote. Full payment tables cover $150,000 to $800,000 at 5% to 8%; the affordability guide explains how lenders size the loan.
Frequently asked questions
Does Delaware have down payment assistance for first-time buyers?
Home Sweet Home provides a forgivable second loan (forgiven after ten years of occupancy) of up to $12,000 toward down payment and closing costs for buyers within income limits; a smaller amount is available through the Preferred Plus second. Amounts and structures are updated regularly; treat the figures here as the shape of the program and verify the current numbers with the agency.
Is there a first-time home buyer tax credit in Delaware?
DSHA’s Delaware First-Time Homebuyer Tax Credit is a Mortgage Credit Certificate providing a federal tax credit on a portion of annual mortgage interest, available with or without a DSHA first mortgage. An MCC must be issued at closing — it cannot be added to an existing loan — so ask about it before you choose a lender.
What are typical closing costs when buying a house in Delaware?
The 4% transfer tax makes Delaware one of the most expensive states to close in: a buyer’s customary 2% share plus attorney and title fees often totals 4% to 5% of the price, reduced somewhat by the first-time buyer exemption. Delaware’s realty transfer tax is 4% of the price (2.5% state plus 1.5% local), customarily split equally between buyer and seller; first-time buyers receive a reduction of 0.5% on the state portion for the first $400,000 of price.
Read next
- Gift funds for a down payment: the rules, the letter, the paper trail
- Debt-to-income ratio limits by loan type — and how to lower yours
- Credit score needed to buy a house: minimums by loan type, and what it costs to be average
- Twelve first-time home buyer mistakes — and the cheap fix for each
Also for this state: hard money rules in Delaware · foreclosure in Delaware.