Delaware is a small state that punches above its weight for first-time buyers, and a lot of that comes down to two words: no sales tax. There’s no state sales tax on anything here, which quietly leaves more room in your monthly budget than people expect. The state is basically three moods stacked north to south. Up top is Wilmington and the rest of New Castle County — the most urban corner, closest to Philadelphia, with rowhomes, suburbs, and the widest range of price points. In the middle sits Kent County around Dover, the state capital, where things get more rural, more affordable, and slower-paced. And down south is Sussex County: the beach country of Rehoboth, Lewes, and Bethany, plus a lot of farmland and small towns. Coastal Sussex can get pricey near the water and much gentler a few miles inland.
Here’s the honest framing before we go further: this guide walks you through the real programs, who runs them, and where the tradeoffs hide. Delaware’s homebuyer help mostly runs through one agency, and the specific program names and dollar amounts get updated regularly — sometimes a couple of times a year — so treat the figures here as a map, not a contract, and confirm the current numbers with a state-approved lender before you count on them. If you want the big-picture version of how buying works anywhere, our first-time buyer guide is the companion piece to this one.
The headline program: Delaware State Housing Authority
Almost every “first-time buyer program in Delaware” you’ll hear about traces back to one place: the Delaware State Housing Authority, or DSHA. Think of DSHA as the state’s homeownership engine. It doesn’t hand you cash directly or act as your bank at the branch level — instead it sets up special mortgage programs and down payment help, then delivers them through a network of approved private lenders. You apply through one of those lenders, not through the agency itself. DSHA refreshes its lineup periodically (it did a notable rebrand in early 2026), so the exact program names below may shift, but the structure has stayed consistent for years.
The first mortgage (DSHA’s home loan)
The foundation is a DSHA first mortgage — a standard 30-year fixed-rate loan, but originated under the state program so it can be paired with the state’s down payment help. In the current lineup this is split into two tracks. The main first-time-buyer track (currently branded “Welcome Home”) is for buyers who haven’t owned a primary home in the last three years and who fall under the standard income limits. A second track (currently “Open Door”) exists for people who don’t fit that box — either because they’ve owned recently, or because their income runs a little higher than the first-time limits allow. Both are ordinary 30-year fixed loans underneath; the difference is who qualifies and which limits apply. The rate is set by the program, and because it’s a fixed 30-year loan, your principal-and-interest payment won’t move for the life of the loan.
Down payment and closing-cost assistance
This is the part most people are actually after. When you take a DSHA first mortgage, you can layer on a down payment assistance loan — usually described as a percentage of your loan amount (recent versions have run in the 3% to 5% range) delivered as a zero-interest second mortgage with no monthly payment. In plain English: the state lends you the money for your down payment and closing costs as a separate, silent loan that sits behind your main mortgage. You don’t pay interest on it, and you don’t make monthly payments toward it. Depending on the specific program, that second loan is either repaid later — typically when you sell, refinance, or pay off the first mortgage — or, in some versions, forgiven over time if you stay in the home. That distinction matters a lot, so ask your lender point-blank: “Is this DPA repayable or forgivable, and if repayable, when is it due?”
A quick honesty note: down payment assistance is genuinely powerful for getting you in the door, but a repayable second loan is still a loan. It reduces your equity and it comes due eventually. That’s not a reason to skip it — for most first-time buyers it’s the difference between buying now and buying in three years — but go in clear-eyed. We break down how these work in general terms on our down payment assistance page.
A note on the old tax credit (MCC)
You’ll still see older guides talk about the Delaware First-Time Homebuyer Tax Credit — a Mortgage Credit Certificate, or MCC, that let buyers claim a share of their annual mortgage interest (up to 35%, capped at a set dollar amount per year) as a direct credit against their federal taxes. Here’s the current reality: that MCC program stopped accepting new applications in 2025. If you already have an MCC from a prior purchase, it generally continues for the life of that loan, but it’s no longer available to new buyers. DSHA’s framing is that the value of that benefit shifted into lower program interest rates and expanded down payment help instead. So if a lender promises you a Delaware MCC today, slow down and confirm — the benefit you actually want now lives in the first mortgage and DPA, not a certificate.
Income and purchase-price limits
Because these are subsidized programs, they come with ceilings on both your household income and the price of the home. Both are set by county and get updated fairly often — recent limits ran roughly in the $108,000–$137,000 range for household income depending on county and household size (with higher allowances for the “Open Door” track), and purchase-price caps well into the $500,000s. Two things drive the number: which county you’re buying in (New Castle limits run higher than Kent and Sussex), and whether the home is in a “targeted area,” which is a specific census tract where the limits are loosened to encourage investment. Don’t try to eyeball whether you qualify from these ranges — the exact current figures are the ones your lender pulls the day you apply.
Eligibility basics
- First-time status: generally means you haven’t owned your primary residence in the past three years — so a lot of “not technically first-time” buyers still qualify. The separate Open Door track exists for people who don’t meet this.
- Primary residence: the home has to be the one you live in, not a rental or vacation place.
- Credit and income: you still need to qualify for the underlying mortgage on normal terms. The state help sits on top of a real loan approval.
- The property: must fall under the county purchase-price cap and meet standard condition requirements for the loan type.
Homebuyer education
DSHA expects buyers using its programs to complete homebuyer education, and it becomes a firm requirement in certain situations — most commonly if your credit score is on the lower side (recent rules have triggered it below a 660 score), where roughly 8 hours of HUD-approved housing counseling is required before you close. Even when it’s not strictly required, it’s worth doing. These sessions walk you through budgeting, the closing process, and what to expect as a new owner, and they’re usually free or low-cost. Your lender or DSHA can point you to an approved counseling provider or a Delaware First-Time Homebuyer seminar.
Which loan is right for you?
DSHA’s help layers on top of a regular mortgage — so you still pick a loan type underneath. The four main options behave the same in Delaware as anywhere, but a couple have a real Delaware angle worth knowing.
FHA loans
FHA is the classic first-time-buyer workhorse: low down payment (as little as 3.5% down) and more forgiving credit requirements, backed by the Federal Housing Administration. The tradeoff is mortgage insurance you’ll pay for the life of the loan in most cases. It pairs cleanly with DSHA down payment help and is a common combo across all three counties. More detail on our FHA loan page.
USDA loans
This is the sleeper hit in Delaware. USDA loans offer zero down payment for homes in eligible rural areas — and much of Kent and Sussex Counties qualifies, along with plenty of small towns you wouldn’t necessarily think of as “rural.” If you’re buying inland in southern Delaware, run your address through the USDA eligibility map before assuming you need a down payment at all. There are income limits, and the home has to be in a mapped area, but for the right buyer it’s the cheapest way into a house. See our USDA loan page for how it works.
VA loans
If you’re a veteran, active-duty service member, or an eligible surviving spouse, a VA loan is usually the best deal on the board: zero down payment, no monthly mortgage insurance, and competitive rates. Delaware has a sizable military-connected community, particularly around Dover Air Force Base, and VA loans can be combined with DSHA assistance for closing costs.
Conventional loans
A conventional loan (not government-backed) can go as low as 3% down for first-time buyers with decent credit, and its big advantage is that the mortgage insurance drops off automatically once you reach 20% equity — unlike FHA. If your credit is strong, this often ends up cheaper over time. DSHA runs conventional options within its programs too, so it’s not an either/or with the state help.
What homes cost and what you’ll need
Beyond the down payment, the number that surprises new buyers is closing costs. Budget roughly 2% to 5% of the purchase price for the pile of one-time fees at settlement — lender charges, title insurance, appraisal, and prepaid items like the first chunk of property taxes and homeowners insurance. On a $350,000 home that’s somewhere in the ballpark of $7,000 to $17,500. The good news: DSHA’s down payment assistance can be applied to closing costs too, not just the down payment, which is exactly why that second loan is so useful.
Now the Delaware-specific quirk, and it cuts both ways. On the plus side, Delaware has famously low property taxes — among the lowest effective rates in the country — so your ongoing yearly tax bill as an owner tends to be gentle. On the minus side, Delaware has a relatively high realty transfer tax, which is a one-time tax charged when the property changes hands. Statewide it commonly runs around 4% of the price, typically split between buyer and seller, so the buyer’s share is often about 2%. That’s a meaningful line item at closing.
Here’s the break that softens it: Delaware gives qualifying first-time buyers a reduction on the state portion of that transfer tax — a 0.5% cut on the first $400,000 of the home’s value, which can save up to around $2,000 at settlement. To qualify you generally must have never held an ownership interest in residential real estate and must intend to live in the home as your primary residence. It’s applied right at closing, so make sure your settlement agent and lender know you’re a first-time buyer and are claiming it — it’s not always automatic.
The buying process in Delaware
Buying here follows the same rhythm as most states, with one important recent change to how you’ll work with a real estate agent. As of August 17, 2024, a national settlement involving the National Association of Realtors changed the rules. Two things you’ll feel directly: first, before an agent can even tour homes with you, you’ll sign a written buyer agreement that spells out how that agent gets paid and how much. Second, buyer-agent commissions are no longer posted on the MLS (the shared listing database), which means how much the seller is willing to contribute toward your agent’s fee is now negotiated deal by deal rather than assumed. In practice, this means the cost of your agent is something you’ll discuss openly and can negotiate — a good thing, but only if you know it’s happening. We explain it in plain terms on our NAR settlement explained page, and how to pick someone good on our finding a real estate agent guide.
Here’s the rough order of operations from here:
- Get pre-approved with a DSHA-approved lender so you know your real budget and can move fast on an offer.
- Complete homebuyer education if your program or credit profile requires it — do it early so it’s not a last-minute scramble.
- Sign a buyer agreement and start touring homes with your agent.
- Make an offer, negotiate, and go under contract.
- Home inspection and appraisal — your inspection protects you; the appraisal protects the lender.
- Finalize the loan and DPA, then head to settlement, where you sign, pay closing costs (minus your transfer-tax break), and get the keys.
For a full walkthrough of each stage, see our home buying process guide.
Delaware first-time buyer FAQ
Who counts as a first-time buyer in Delaware?
For most DSHA programs, “first-time buyer” means you haven’t owned your primary home in the last three years — not that you’ve literally never owned. So if you sold a home four years ago, or owned one a while back and have been renting since, you may well qualify again. And even if you don’t meet that test, DSHA’s Open Door track is built specifically for repeat and higher-income buyers, so you’re not automatically shut out.
How much down payment help can I actually get?
DSHA’s down payment assistance is typically framed as a percentage of your loan amount — recent programs have offered somewhere in the 3% to 5% range — delivered as a zero-interest second loan with no monthly payment. The exact percentage and dollar cap depend on the specific program you use and get updated periodically, so get the current figure from an approved lender. Crucially, ask whether that second loan is repayable (due when you sell or refinance) or forgivable over time, because that changes the long-term math.
Do I get a break on Delaware’s transfer tax?
Yes, and it’s worth claiming. Qualifying first-time buyers get a 0.5% reduction on the state portion of the realty transfer tax, applied to the first $400,000 of the purchase price — a savings of up to roughly $2,000 at closing. You generally must have never owned residential real estate and must plan to live in the home. It’s applied at settlement, so tell your lender and settlement agent up front that you’re a first-time buyer claiming the reduction, since it isn’t always applied automatically.
Whatever happened to the Delaware mortgage tax credit (MCC)?
The old Mortgage Credit Certificate, which let buyers claim a chunk of their annual mortgage interest as a federal tax credit, stopped accepting new applications in 2025. If you have an existing MCC from a past purchase it generally still runs for the life of that loan, but new buyers can’t get one. DSHA’s position is that the benefit was folded into better program rates and expanded down payment help. Bottom line: don’t build your plan around a Delaware MCC today — confirm what’s currently available with your lender.
Can I buy at the beach with these programs?
You can use DSHA programs anywhere in Delaware, including Sussex County — but the program has to be for your primary residence, not a vacation rental, and the home has to fall under the county purchase-price cap. Near the Rehoboth and Lewes waterfront, prices often blow past those caps and past income limits too. Move a few miles inland, though, and coastal Sussex gets much more attainable — and a lot of that inland area may even qualify for a zero-down USDA loan.
Do I have to take a homebuyer class?
Sometimes required, always a good idea. DSHA requires homebuyer education in certain cases — most notably when your credit score is lower (recent rules trigger it under 660), where about 8 hours of HUD-approved counseling is needed before closing. Even when it’s optional, the class is usually free or cheap and demystifies the whole closing process. Ask your lender whether your situation requires it, and schedule it early so it never holds up your closing date.
Ready to keep going? Compare help in other states on our state programs hub, or start with the fundamentals in our first-time buyer guide.
Sources: Delaware State Housing Authority (destatehousing.com) for program structure, income and purchase-price limits, and homebuyer education requirements; the U.S. Department of Housing and Urban Development (HUD) for FHA loan and counseling guidance; the U.S. Department of Agriculture (USDA) for rural loan eligibility; the National Association of Realtors (NAR) for the August 2024 settlement changes; and the Delaware Division of Revenue for the first-time buyer realty transfer tax reduction. Program names, dollar amounts, and limits change regularly — confirm current details with a DSHA-approved lender before relying on them. Last reviewed July 2026.
More Delaware first-time buyer resources
Ready to go deeper? Our complete guide to Delaware first-time home buyer programs breaks down every state loan, down payment assistance option, and tax credit available to first-time buyers here.
First-time home buyer grants in Delaware
Looking specifically for grant money? Our guide to first-time home buyer grants in Delaware covers which programs are true grants, which are forgivable, and the truth about the widely advertised federal grant.