First-Time Home Buyer Assistance Programs In Delaware: A Guide

Buying your first house anywhere is exciting and a little nerve-wracking. In Delaware, however, you may have a few options available via the state housing authority to help make your journey more affordable. Let’s go over a few of them to help you get started.

Why Move To Delaware?

If you don’t already live in Delaware, why move there? Well, one main reason that new buyers flock to Delaware is for the economic opportunity. Many companies are located in this East Coast state, so there are plentiful job opportunities in many industries. In addition to that, there is also a relatively low cost of living and no state sales tax.

As an East Coast state, Delaware also has beautiful beaches and is a short road trip away from big cities including Philadelphia and New York City. And for the history lovers, it was also one of the original 13 colonies.

Delaware is a well-known place to retire, but it’s also a great place for first-time home buyers to plant their roots and take advantage of the beautiful scenery and affordable cost of living.

What First-Time Home Buyer Programs Does Delaware Offer?

Like other states, Delaware has its own housing authority that offers aid and education to home buyers. It’s called the Delaware State Housing Authority, or DSHA. DSHA offers many home buying programs to its citizens, from down payment assistance to aid for citizens recently released from incarceration.

Let’s talk about a few programs you may be able to take advantage of.

DSHA Loans Available At Or Below Market Interest Rates

In cooperation with participating lenders, DSHA offers DSHA mortgages, which are loans available at or below the current standard market interest rate. You can get a DHSA loan in the form of a Federal Housing Administration (FHA) loan, Veterans Administration (VA) loan or U.S. Department of Agriculture (USDA) loan.

In order to qualify for one of these loans with favorable rates, you must meet certain income requirements set by the DSHA, including:

• Maximum household income must be below the number set for your county
• Minimum credit score of 620; applicants with lower scores may be accepted after home buyer counseling
• Maximum loan amount of 417,000, regardless of national loan limit

Find FHA, VA and USDA Loan Eligible Properties In Delaware

When looking to buy a property that you can use DHSA programs for, it’s important to note that the pool of homes you can choose from may be limited. Since DSHA provides assistance only to FHA, VA and USDA loan borrowers for the above mortgage program, you need to be able to qualify for one of those loans as well as meet the DSHA’s standards.

To qualify for an FHA loan, you’ll need to choose a property that aligns with the U.S. Department of Housing and Urban Development (HUD)’s minimum property standards. That means you can’t really purchase a fixer-upper, unfortunately.

To qualify for a VA loan, you have to be a veteran, eligible active service member or surviving spouse. VA loans are not available to regular civilians, except under very niche circumstances such as assuming a loan.

To qualify for a USDA loan, you need to purchase a rural property that is located in a USDA-approved area. You will also have to fall within the USDA’s income limits.

Delaware Down Payment Assistance And Closing Cost Help

Beyond mortgages with favorable rates, the DSHA also offers assistance with closing costs and down payments. If you fall within the DSHA’s income limits and credit requirements, you can potentially get a second mortgage of 2% – 5% of your total loan amount to use toward your down payment or closing costs. The loan accrues no interest and must be repaid upon the sale, refinance or transfer of the home – or when it is no longer the borrower’s primary residence.

Eligibility For The Delaware Housing Assistance Program And Preferred Plus Loans In 2022

Depending on what county you are or will be located in Delaware, the income requirements may differ. These are the current requirements by county to qualify for DSHA housing assistance in 2022.

What Is The Delaware First Time Home Buyer Tax Credit?

In addition to low interest rate options and down payment assistance, there is also other aid available to Delaware buyers, though this time not through DSHA. If you are buying your very first home and have never owned one previously, you could qualify for a tax credit offered by the Delaware Division of Revenue. This tax credit is only available to first-time buyers planning to use the home as their primary residence within 90 days of closing. The maximum benefit of this credit is $2,000. To apply, the Division of Revenue requests home buyers submit tax form 5405 directly to them.

Are There Other First-Time Home Buyer Programs Available?

In addition to Delaware specific programs, first-time home buyers can also find a variety of federal aid offered through HUD. HUD maintains a list of programs that offer grants and other resources by state on its website, so be sure to check the list before starting your house hunt to see what you may qualify for.

Where Can I Learn More About Delaware Homes For Sale?

If you’re ready to start looking at homes for sale, check out our local real estate listings broken down by county and city. If you’re still on the fence about moving, you can also consult our Rocket Homes^SM Housing Market tool, which can provide you with statistics on the state of the market in the area you’re considering if you provide the ZIP code.

The Bottom Line: Delaware Home Buyers Can Save Big On A Mortgage Loan

Though a small and often overlooked state, Delaware has plenty to offer buyers, from beautiful landscapes to plentiful opportunities for work. If you’re interested in moving to this state, there are plenty of programs here to help you seal the deal on a house, too, from down payment assistance to tax credits.

Ready to begin your homeownership journey? Get approved with Rocket Mortgage® online today and start searching for your new home.