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How to Find First Time Home Buyer Programs in Delaware

First Time Home Buyer Grants in Delaware 🏘️ | How to Find Delaware First Time Home Buyer Programs

Buying a home is a major milestone in life. However, high interest rates and an increase in the general cost of living have made that goal increasingly difficult for average Americans. Luckily, there are many Delaware first time home buyer programs that make affording the purchase price of a house more manageable. A first time home buyer program is a housing initiative that offers assistance to qualified residents looking to transition from being a renter into a homeowner.

First time homeowner programs can come in many different forms, including loans with favorable terms, down payment assistance, tax breaks, and more. The Delaware State Housing Authority (DSHA) has several statewide initiatives for Delaware home buyers, and you can also find several city or county-specific programs that provide additional benefits.

So, if you're looking to purchase a home but could use some additional financial assistance, here are the top programs for first time home buyers in Delaware.

First Time Home Buyer Tax Credits & Down Payment Assistance in Delaware

Many people can afford the monthly mortgage loan payment for a home yet struggle to afford the upfront expenses like the minimum down payment and closing costs. Others may have trouble affording the property taxes or private mortgage insurance.

So, there are several helpful housing programs in Delaware that can help lessen some of the financial burdens that create obstacles to homeownership. Here are the top tax credits and first time home buyer grants in Delaware.

First Time Home Buyer Tax Credit

First time home buyers in Delaware are eligible for a Federal tax credit that can help reduce your property tax bill substantially. Anyone who gets a home loan in Delaware through the Delaware State Housing Authority can write off 35% of their annual mortgage interest paid, up to $2,000 per year from their federal tax owed.

Qualified buyers for the Delaware first time home buyer tax credit must be a first time homeowner (or have not owned a home in at least three years). The property also needs to be in the state of Delaware.

To qualify for the tax credit as a first time home buyer in Delaware, the property must be your primary residence, and the buyer must complete all the necessary tax credit documents before closing. Your household income also cannot exceed the limits set by the program, which are as follows:

The maximum sales price of the property also can't exceed the following limits:

New Castle County Non Targeted Area $111,600 $128,340
Targeted Area $133,340 $156,240
Kent and Sussex County Non Targeted Area $97,700 $112,355
Targeted Area $117,240 $136,780

Home Sweet Home Program

The Home Sweet Home Program offers Delaware down payment assistance to qualifying residents. The program includes a forgivable loan with 0% interest rates of up to $12,000 to put toward the down payment amount and closing costs on a home worth $285,000 or less for first time home buyers in Delaware only.

The home must be the buyer's primary residence and every year you live in the property, the loan balance decreases by 10%. So, if you live there for ten years or more, the loan is forgiven. However, be aware that this is a temporary program with limited funding. Once the funds are depleted, the closing cost assistance program will be discontinued.

Delaware Diamonds

A Delaware Diamonds Home Loan is another good down payment assistance program in Delaware. It also offers a zero percent, forgivable loan up to $10,000 for first time home buyers in Delaware. Like the Home Sweet Home Program, the loan decreases by 10% each year that you reside in the property and will be forgiven after ten years. There are no stipulations on the property's value; however, the program is only open to those who work certain occupations.

Qualifying first time home buyers in Delaware must be employed as state employees, public and private school employees, healthcare workers in certain companies, active-duty military personnel, veterans, and first responders such as police, firefighters, and EMTs. But keep in mind that the Delaware Diamonds loan is also a temporary program that will be discontinued once the funds run out.

First State Home Loan Program

The First State Home Loan program is a zero-interest second mortgage that provides up to 4% of the final loan amount to cover down payment and closing costs for first time home buyers in Delaware. Principal payment can be deferred until the borrower decides to sell, refinance, transfer the title, or move to a new primary residence (whichever comes first).

First Time Home Buyer Loans in Delaware

In addition to down payment assistance and tax credits, several Delaware first time buyer programs come in the form of a mortgage with favorable terms. There are two major state of Delaware first time home buyer programs available.

Welcome Home Smart Start Loan

The Smart Start Home Loan is the DSHAs main Delaware mortgage assistance program for first time home buyers. Formerly known as the DSHA unassisted, it does not offer additional assistance with the down payment or closing costs.

However, it does offer competitive interest rates on a conventional loan or government programs like FHA loans, USDA loans or VA loans from a participating lender. Keep in mind that if you participate in one of the Welcome Home Delaware first time buyers program, you cannot claim the tax credit for first time home buyers in Delaware as well.

There is a 620 minimum credit score required to qualify. However, for first time home buyers in Delaware with bad credit scores, the Delaware State Housing Authority will connect you with a financial counselor who will help you increase your chances of qualifying. There is an income limit based on the county and size of your household:

New Castle County Non-Targeted Areas $111,600 $128,340
Targeted Areas $133,340 $156,240
Kent & Sussex Counties Non-Targeted Areas $97,700 $112,355
Targeted Areas $117,240 $136,780

Home Again

Home Again is another program that offers mortgage help in Delaware to first time and repeat home buyers. It also offers a Smart Start unassisted mortgage loan with the same terms as the Welcome Home program. However, the income and credit requirements for first time home buyers in Delaware are higher, which may be helpful for first time home buyers in Delaware who don't qualify for the Welcome Home program because they make too much money.

Applicants living in New Castle County with a one or two-person household can't make more than $137,280, while households with three or more people cannot exceed $171,600. In Kent and Sussex County, the limit is $117,240 for one to two-person households and $146,550 for three or more.

You must have a 620 minimum credit score, but those with credit scores below 649 must agree to attend financial counseling on how to buy a house in Delaware. One major benefit of using one of the Home Again programs is that you can still claim the tax credit.

First Time Home Buyer Programs in Kent County

The DHSA is in charge of all state of Delaware first time home buyers programs. However, you may want to consider other county and city-specific programs that provide additional support and closing cost assistance to qualified applicants. Here are a few of the top local first time home buyer programs in Delaware.

Dover First Start Program

The City of Dover offers the First Start Program, which is intended to help low-income borrowers afford the down payments and settlement costs associated with buying a home.

The payment assistance program offers assistance up to $20,000 in the form of a zero-interest, forgivable loan for first time home buyers in Delaware. The loan is forgivable after 10 years if the borrower continues to live in the property as their primary residence. However, the city of Dover will put a lien on the home for the loan amount, and if the home is sold, transferred, or ceases to be used as the applicant's primary residence, the amount is due immediately.

Applicants need to be first time home buyers in Delaware purchasing a primary residence to qualify for the down payment program. They also need a minimum credit score of 620 or higher and at least $1,000 in savings. They must also complete a HUD-approved housing counseling course, and their income cannot exceed 80% of the median income based on family size for the city of Dover. The income limits include:

1 Person 2 People 3 People 4 People
$36,250 $41,400 $46,600 $51,750
5 People 6 People 7 People 8 People
$55,900 $60,050 $64,200 $68,350

Kent County Community Development Office, 555 S Bay Rd #117, Dover, DE 19901 (302) 744-2480

New Castle County Down Payment and Settlement Assistance Programs

New Castle County also offers a Down Payment and Settlement Assistance Program. Applicants can receive between $1,000 and $10,000 to help with the down payment and closing costs. You must be a first time home buyer in Delaware purchasing a primary residence that cannot exceed the value set annually by the Federal Housing Administration. The program is only available to applicants purchasing a home in New Castle County outside the City of Wilmington.

The funds are available at a zero percent, 15-year loan split into two segments. Payment is deferred for the first two years but optional if the borrower wants to pay it off sooner. Monthly payments are required for the remaining 13 years, and the principal must be paid in full if you sell the property or transfer ownership.

The borrower's debt-to-income ratio cannot exceed 52%, and they must make a minimum cash contribution of $500. Total household income also cannot exceed 80% of the median in the county, as determined by HUD. The income limits are:

1 Person 2 People 3 People 4 People
$62,500 $71,400 $80,350 $89,250
5 People 6 People 7 People 8 People
$96,400 $103,550 $110,700 $117,850

New Castle County Department of Community Services, 77 Reads Way, New Castle, DE 19720 (302) 395-5600

Delaware First Time Home Buyers FAQs

Who is considered a first time home buyer in Delaware?

A first time home buyer in Delaware is anyone who has never owned a home before or has not owned a property in at least three years.

Do You Have to Pay Back Down Payment Assistance in Delaware?

Many of the down payment assistance programs offered by the DSHA are forgivable after ten years, but you will be required to pay them back if you plan to move before then.

Are First Time Home Buyer Programs Worth It?

In most cases, Delaware first time home buyer programs are worth it. The application process is fairly straightforward, and you can get favorable loan terms and forgivable grants that can greatly reduce the upfront expenses required at closing. However, it depends on your needs and the terms of the loan programs.

Thinking of buying a home in Delaware? After you take advantage of one of these helpful programs, you’ll need someone to help you move in. The reliable crew of Delaware movers at First Rate Movers is happy to help with affordable rates and fast service. Call (302) 703-9981 for a free, custom moving quote.

Brian Tustin
Brian Tustin is the owner of First-Rate Movers™. Brian has over 20 years of experience in the Hospitality Industry in addition to he and his teams combined 30+ years of experience in the moving and relocation services niche. Since 2016 First-Rate Movers™ has served 1000's of residents here in Delavere and is honored to continue serving our community with the absolute best experience for anyone moving in and around Delaware.
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