Delaware First-Time Homebuyer Programs for 2019

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Delaware residents admire the state for its breathtaking beaches, state and county parks and miles of biking and hiking trails. If you are interested in buying a home in Delaware for the first time, there are a number of homebuyer programs you may find valuable.One program offers 30-year fixed-interest conventional, Federal Housing Authority (FHA), U.S. Department of Veterans Affairs (VA) or U.S. Department of Agriculture (USDA) Rural Development (RD) mortgages at below-market rates. Another is intended to assist with down payment and closing costs. There is also a special tax credit that can help first-time homebuyers save money on their taxes.

In February 2019, we researched first-time homebuyer programs in Delaware. Let’s take a closer look at our findings.

Delaware first-time homebuyer programs

The Delaware State Housing Authority, or DSHA, offers a variety of programs to provide financial support to first-time homebuyers at low and moderate income levels. Since its inception in 1968, DSHA has been dedicated to helping Delaware residents research, rent, buy, and/or develop affordable housing options. The organization has the power to generate loans to mortgage lenders, as well as issue loans and grants to for-profit and non-profit housing sponsors.

Homeownership Loan Program

The Homeownership Loan Program is designed to provide eligible Delaware homebuyers mortgage financing at below-market interest rates. Through this program, Delawareans can land an affordable 30-year fixed conventional, FHA, VA or RD loan.

Features

The Homeownership Loan Program offers

  • Below-market interest rates.
  • Affordable 30-year fixed conventional, FHA, VA or RD mortgages.

Eligibility

To be eligible for the Homeownership Loan Program, you must meet the following requirements:

  • Have a minimum FICO credit score of 620.
  • Participate in housing counseling if your credit score is 659 or below.
  • Have a maximum household income of $97,900.
  • Purchase a house that does not exceed $417,000.

How it works

If you’re interested in the Homeownership Loan Program, begin by contacting a participating DSHA Mortgage Lender. They can inform you if you’re eligible and guide you through the application process, in the event that you are. It’s also a good idea to read the DSHA’s Homebuyers’ Information Guidebook to learn more about what the homebuying process entails.

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Preferred Plus

Preferred Plus is intended for Delawareans who require financial assistance with the down payment and closing costs associated with homeownership. Those who use the Homeownership Loan Program may take advantage of Preferred Plus, which provides a no-interest second-mortgage loan that is 2% to 5% of their overall loan amount. Once the borrower’s home is sold, transferred, refinanced or is no longer considered a primary residence, they must repay the loan.

Features

Preferred Plus offers

  • A no-interest second-mortgage loan of 2% to 5% of the homebuyer’s overall loan amount.

Eligibility

Eligibility requirements for Preferred Plus are the same as they are for the Homeownership Loan Program. To be eligible for Preferred Plus, you must

  • Have a minimum FICO credit score of 620.
  • Participate in housing counseling credit score if your credit score is 659 or below.
  • Have a maximum household income of $97,900.
  • Purchase a house that does not exceed $417,000.

How it works

If you would like to apply for Preferred Plus, reach out to a participating DSHA Mortgage Lender that can let you know whether you’re eligible for this program. If you do meet the eligibility requirements, the lender can assist you with the application process and answer any questions you may have. While you’re waiting to speak to a lender, consider checking out the DSHA’s Homebuyers’ Information Guidebook to familiarize yourself with the homebuying process.

Delaware First-Time Homebuyer Tax Credit

The Delaware First-Time Homebuyer Tax Credit was created to make homeownership more affordable to eligible homebuyers. It is a federal income-tax credit that allows certain homebuyers to claim a portion of the annual interest they pay on their mortgage as a special tax credit. Those who qualify for this program are able to pair the special tax credit with the federal tax credit as long as their home is considered their primary residence and there is a mortgage loan.

Features

The Delaware First-Time Homebuyer Tax Credit offers:

  • A special tax credit that is 35% of the mortgage interest paid, but cannot exceed $2,000 per year.

Eligibility

To be eligible for the Delaware First-Time Homebuyer Tax Credit, you must

  • Have a household income and purchase price that does not exceed the maximum limits, which can be found on this page.
  • Occupy the home as your primary residence.
  • Not have owned a home in the past three years as your primary residence, unless you are purchasing a home in a Targeted Area or using the Qualified Veteran Exemption.

How it works

Contact a DSHA lender to confirm you are eligible for the Delaware First-Time Homebuyer Tax Credit. If you are eligible, the lender will help you with the application process. Once your application has been accepted, you can expect to pay a $350 Delaware First-Time Homebuyer Tax Credit Application fee collected at closing and a 1% issuance fee based on the amount of your first mortgage loan amount.

National first-time homebuyer programs

While these first-time homebuyer programs can make it more affordable for you to purchase a home in the First State, understand that they are not the only options that may be available to you. There are also national first-time homebuyer programs that you can learn more about in LendingTree’s guide to first-time homebuyer programs. LendingTree is the parent company of MagnifyMoney.

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Anna Baluch
Anna Baluch |

Anna Baluch is a writer at MagnifyMoney. You can email Anna here