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Delaware First-Time Homebuyer Programs for 2019

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Delaware is a small state — only three counties and a population less than 1 million — but its first-time homebuyer program offers lots of opportunities for people to find an affordable place to live.

“The First State,” as Delaware is known, is the sixth most densely populated state in the country. Its largest city is Wilmington, with a tightly packed population of about 71,000.

New Castle County, where Wilmington is located, is a quick and easy drive or train ride to Philadelphia and then on to New York City. And the oceanfront towns of Sussex County to the south have long been known as the nation’s summer capitals because of the thousands of Washington, D.C., residents who vacation there annually.

In January 2019, we researched programs for first-time homebuyers in Delaware. This included a review of the Delaware State Housing Authority website and interviews with staff. Here’s what first-time homebuyers in Delaware need to know.

Delaware first-time homebuyer programs

The Delaware State Housing Authority runs the state’s first-time homebuyer program. It is a comprehensive program, available statewide.

Eligibility for Delaware assistance

  • Borrowers must have a credit score of 620 or higher.
  • Maximum household income can be no more than $97,900.
  • Applicants with credit scores that are less than 660 must sign up for a housing counseling program.

Homeownership Loan Program


  • 30-year, fixed-rate mortgages with below-market mortgage rates
  • Down payment assistance structured as a no-interest loan worth 2% to 5% of the overall loan amount
  • Federal income tax credit of up to $2,000 per year for the duration of the loan


  • Single-family homes, townhomes, multifamily properties up to four units (with the buyer living in one) and most condominiums will be considered. Mobile and manufactured homes aren’t eligible.
  • Home to be purchased must be in Delaware and cost no more than $417,000.

How it works

The state works with a variety of mortgage lenders to underwrite low-interest mortgages for qualified buyers. Applicants should first contact a participating mortgage lender and tell them they want to participate in the program. The lender will then guide the process through choosing a qualifying property and getting approved for a mortgage.

Once approved, the homebuyer also qualifies for down payment assistance and a federal tax credit.

The state-provided down payment assistance is issued as a no-interest loan worth 2% to 5% of the loan amount and can be applied toward the down payment and/or closing costs. It must be repaid if the property is no longer your primary residence or if you sell, transfer or refinance the property.

The annual federal tax credit is effective as long as you live in the property and have a loan. The credit is calculated by multiplying the mortgage interest paid times 35%, with a maximum credit of $2,000. This only works if you have enough tax liability to cover the amount of the credit. Note that this is a tax credit, which is a lot better than a tax deduction. In this case, you receive a dollar-for-dollar savings.

Here’s an example supplied by the state of how the tax credit can work:

  • Home loan amount: $150,000
  • Sample interest rate: 4.5%
  • Approximate total interest paid in year one: $6,700.51
  • Tax credit rate: 35%
  • Annual tax credit amount: $2,345.85, calculated by multiplying the interest paid by the credit rate. However, the tax credit is limited to $2,000 per year.

If you have questions about this, it is always a good idea to consult your accountant or other tax adviser.

National first-time homebuyer programs

Besides these state-specific programs, there are a few federal and nonprofit-sponsored programs that provide low-rate mortgages, assistance with purchasing and even opportunities for sweat equity in Delaware. Habitat for Humanity is very active in the state, and the U.S. Department of Agriculture (USDA) offers lending assistance in some areas of Delaware. Here are some other good places to start looking for opportunities through these national programs.


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