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State Guide

First-Time Homebuyer Programs in Delaware

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Overview

Delaware first-time homebuyer assistance is led by the Delaware State Housing Authority (DSHA). DSHA runs a paired first mortgage and down payment assistance platform: the Single Family Mortgage Revenue Bond (SFMRB) program provides below-market 30-year fixed-rate first mortgages funded through tax-exempt bonds, the Preferred Plus product pairs that below-market first mortgage with built-in down payment assistance, the Welcome Home program provides up to $10,000 in down payment and closing cost assistance as a 0% interest deferred loan, and the Delaware Mortgage Credit Certificate (MCC) delivers annual federal income tax savings for the life of the loan. In Wilmington, the City of Wilmington HomeOwnership First Program provides up to $10,000, and in Dover the City of Dover Down Payment Assistance Program provides up to $7,500 - both designed to stack with DSHA financing.

Down Payment Assistance Programs

  • DSHA Single Family Mortgage Revenue Bond (SFMRB) Program. DSHA's flagship first mortgage product for first-time buyers (defined as not having owned a primary residence in the past 3 years, with waivers in targeted areas and for qualifying veterans), funded through tax-exempt mortgage revenue bonds. Available with FHA, VA, USDA-RD, or conventional underwriting through DSHA-approved lenders at a below-market 30-year fixed rate. SFMRB is the platform that DSHA's Welcome Home DPA and the Delaware MCC are layered onto for first-time buyers.
  • DSHA Preferred Plus. A DSHA first mortgage product that pairs a below-market 30-year fixed rate with built-in down payment assistance bundled into the program structure - so the borrower receives both the first mortgage pricing and the DPA in a single package rather than applying for them separately. Available with FHA, VA, USDA-RD, or conventional underwriting and compatible with city DPA programs in Wilmington and Dover for additional layered help. Preferred Plus is often the simplest path for borrowers who want both the rate discount and DPA without managing two separate approvals.
  • DSHA Welcome Home Down Payment Assistance. DSHA's standalone down payment and closing cost assistance product, paired with an SFMRB or Preferred Plus first mortgage. Provides up to $10,000 in assistance structured as a 0% interest deferred second mortgage - no monthly payment, with the full balance typically due on sale, refinance, or payoff of the first mortgage. Available to first-time buyers within DSHA's income and purchase price limits and compatible with city DPA programs in Wilmington and Dover for additional layered assistance.
  • Delaware Mortgage Credit Certificate (MCC). A DSHA-administered federal tax credit available statewide that lets qualifying first-time buyers claim a portion of their annual mortgage interest as a dollar-for-dollar federal income tax credit (the remaining interest is still deductible if the buyer itemizes). The MCC delivers savings every year for the life of the loan, not just at closing, and can be combined with SFMRB, Preferred Plus, and Welcome Home. The MCC must be issued at closing - it cannot be added retroactively after the loan closes.

Income and Purchase Price Limits

DSHA income and purchase price limits vary by county and household size, with higher limits in targeted census tracts. Income limits generally range from roughly $110,000 in Kent and Sussex counties to $130,000+ in New Castle County for 1-2 person households, with higher limits for 3+ person households and in targeted areas. Purchase price limits typically fall in the $425,000-$550,000 range across the state, with higher limits in targeted census tracts and in higher-cost New Castle County submarkets. Always confirm current DSHA income and purchase price limits with a DSHA-approved lender or at destatehousing.com before assuming eligibility.

City Programs Worth Knowing

Wilmington and Dover each run city-level down payment assistance programs designed to stack with DSHA's SFMRB or Preferred Plus first mortgage and Welcome Home DPA. Both are income restricted and require HUD-approved homebuyer education before application.

  • City of Wilmington HomeOwnership First Program. Up to $10,000 in down payment and closing cost assistance for income-qualified first-time buyers purchasing a primary residence inside City of Wilmington limits. Structured as a deferred or forgivable second mortgage with multi-year continuous owner-occupancy requirements, HUD-approved homebuyer education required, and designed to stack with DSHA's first mortgage and Welcome Home DPA. Funding cycles can exhaust mid-year - confirm availability with the City of Wilmington Department of Real Estate and Housing before applying.
  • City of Dover Down Payment Assistance Program. Up to $7,500 in down payment and closing cost assistance for income-qualified first-time buyers purchasing a primary residence inside City of Dover limits. Structured as a deferred or forgivable second mortgage with multi-year continuous owner-occupancy requirements, HUD-approved homebuyer education required, and designed to stack with DSHA financing. Confirm availability with the City of Dover Department of Planning and Inspections before applying, as funding cycles can exhaust mid-year.

Both city programs run on funding cycles that can exhaust mid-year, and homebuyer education must be completed before application - not after offer acceptance. The city agency review step extends closing timelines by several weeks beyond a standard DSHA-only closing; plan that into the front of your timeline and confirm current funding availability with the administering agency before counting on it in your offer.

FHA Loan Requirements in Delaware

FHA loans are widely used by Delaware first-time buyers and are compatible with the DSHA SFMRB program, Preferred Plus, Welcome Home DPA, the Delaware Mortgage Credit Certificate, the City of Wilmington HomeOwnership First Program, and the City of Dover Down Payment Assistance Program. FHA loan limits in Delaware use the standard single-family ceiling in Kent and Sussex counties, with higher limits in New Castle County to reflect the Philadelphia metro pricing environment.

Minimum requirements to qualify for an FHA loan in Delaware:

  • Credit score: 580 or higher for 3.5% down payment with standard FHA. DSHA programs typically require 620-640 or higher.
  • Down payment: 3.5% of the purchase price with a 580+ credit score. DSHA Welcome Home DPA (up to $10,000) plus a city DPA program in Wilmington (up to $10,000) or Dover (up to $7,500) can fully cover this and most closing costs.
  • Debt-to-income ratio (DTI): Generally 45% or below for DSHA (FHA itself allows up to 50% with compensating factors).
  • Employment history: Two years of consistent employment or verifiable income history.
  • Primary residence: FHA loans require owner occupancy - not eligible for investment properties or vacation homes.
  • Mortgage insurance: FHA loans require an upfront mortgage insurance premium (UFMIP) of 1.75% of the loan amount, plus an annual premium of 0.45% to 1.05%.

FHA loan limits in Delaware for 2025:

FHA loan limits in Delaware use the standard single-family limit of $524,225 in Kent and Sussex counties, with higher limits in New Castle County to reflect the Philadelphia metro pricing environment. Confirm the current FHA limit for your target county at HUD.gov.

Stacking FHA with DSHA and city DPA programs:

The most efficient structure for a Wilmington first-time buyer is an FHA-backed DSHA SFMRB or Preferred Plus first mortgage layered with Welcome Home DPA (up to $10,000) and the City of Wilmington HomeOwnership First Program (up to $10,000) - up to roughly $20,000 in combined assistance, with the Delaware MCC adding annual federal tax savings on top for the life of the loan. In Dover the comparable stack is DSHA plus Welcome Home plus the City of Dover Down Payment Assistance Program (up to $7,500) for up to roughly $17,500 in combined assistance. Borrowers who want both the rate discount and DPA in a single package should ask their lender about Preferred Plus rather than stacking SFMRB and Welcome Home separately. A DSHA-approved lender experienced with the relevant city program can confirm which combination applies to your income, credit, and target property.

How to Apply

  1. Check your credit score - 580 is the FHA minimum for 3.5% down, and DSHA typically requires 620-640 or higher.
  2. Review current DSHA income and purchase price limits for your county at destatehousing.com.
  3. Ask your DSHA-approved lender whether Preferred Plus or SFMRB + Welcome Home is the better fit - Preferred Plus bundles the rate discount and DPA in one package, while SFMRB + Welcome Home is the modular path.
  4. Ask your DSHA-approved lender whether the Delaware Mortgage Credit Certificate makes sense in your scenario - the MCC must be issued at closing and cannot be added retroactively, and it pairs with both SFMRB and Preferred Plus.
  5. If you're buying inside City of Wilmington limits, contact the City of Wilmington Department of Real Estate and Housing to confirm HomeOwnership First Program eligibility and current funding.
  6. If you're buying inside City of Dover limits, contact the City of Dover Department of Planning and Inspections to verify Down Payment Assistance Program availability and current funding.
  7. Complete a HUD-approved homebuyer education course - required by DSHA and by both city programs.
  8. Apply through your DSHA-approved lender, who will coordinate the DSHA application (SFMRB or Preferred Plus), the MCC issuance (if applicable), and any city DPA approval simultaneously.

FAQ

What's the difference between SFMRB and Preferred Plus?

SFMRB is DSHA's standalone below-market first mortgage product - the borrower applies for the first mortgage and then separately layers Welcome Home DPA on top if they need down payment help. Preferred Plus bundles the below-market first mortgage and built-in down payment assistance into a single package, which simplifies underwriting and approval. Both products carry similar pricing and use the same first mortgage underwriting (FHA, VA, USDA-RD, or conventional); the difference is structural - modular vs. bundled. Ask your DSHA-approved lender which fits your scenario better.

How does Welcome Home DPA repay?

Welcome Home is a 0% interest deferred second mortgage with no monthly payment. The full balance is typically due on sale, refinance, or payoff of the first mortgage - meaning as long as the borrower stays in the home and keeps the original DSHA first mortgage in place, there's no monthly cost beyond the first mortgage itself. Welcome Home acts like a silent second that activates only at a liquidity event.

How much assistance can I actually get in Wilmington or Dover?

In Wilmington, an eligible first-time buyer can layer DSHA Welcome Home DPA (up to $10,000) with the City of Wilmington HomeOwnership First Program (up to $10,000) for up to roughly $20,000 in combined assistance, plus the Delaware Mortgage Credit Certificate for annual federal tax savings over the life of the loan. In Dover, the comparable stack is Welcome Home (up to $10,000) plus the City of Dover Down Payment Assistance Program (up to $7,500) for up to roughly $17,500. Both city programs are income restricted and run on funding cycles - confirm availability before counting on a specific dollar amount in your offer.

What is the Delaware Mortgage Credit Certificate worth?

The MCC lets qualifying first-time buyers claim a portion of their annual mortgage interest as a dollar-for-dollar federal income tax credit, with the remaining interest still deductible if the buyer itemizes. The exact credit rate is set by DSHA and applied each year for the life of the loan, which can translate into thousands of dollars in federal tax savings over the life of a 30-year mortgage. The MCC must be issued at closing - it cannot be added retroactively - so ask your DSHA-approved lender about it during application, not after closing.

What credit score do I need for DSHA programs?

DSHA programs generally require a minimum credit score in the 620-640 range for FHA, VA, USDA, and conventional loans. FHA itself allows scores as low as 580 for 3.5% down, but DSHA's overlay is higher. If your score is between 580 and 619, a standard FHA loan is still available through non-DSHA lenders, but you would not be eligible for SFMRB, Preferred Plus, Welcome Home, or the Delaware MCC simultaneously.

How long does it take to close using DSHA plus a city DPA program?

Expect 45 to 65 days. DSHA-only closings track close to standard timelines (35-45 days), but adding the City of Wilmington or City of Dover DPA program adds a city agency review step that extends closing by 15 to 25 days. Homebuyer education should be completed before you start house hunting - not after offer acceptance - to avoid pushing the timeline further.