Delaware first-time homebuyer grants and down payment assistance (2026)

Welcome Home or Open Door: the choice that sets your options

DSHA has two first mortgages. Both are 30-year fixed-rate loans on FHA, VA, USDA Rural Development, Freddie Mac HFA Advantage or Fannie Mae HFA Preferred terms, for a primary residence anywhere in Delaware ⁠².

• Welcome Home is for first-time buyers: no ownership interest in a primary residence during the three years before the note is signed. Qualified veterans with a DD-214 are exempt, and so are buyers of homes in a targeted census tract ⁠²⁠⁴. A mobile home not permanently fixed to land does not count as ownership ⁠⁴.
• Open Door is for everyone else, mainly repeat buyers. It has higher income limits but fewer assistance options ⁠².

The two programs also count income differently. Welcome Home counts all income of everyone signing the note or mortgage, including child support, alimony, bonuses and SSI. Open Door uses only the qualifying income on the lender’s loan application (Form 1003) ⁠⁴.

Four 0% second mortgages, all due when you sell, refinance or move

Each Welcome Home or Open Door loan comes either alone (the Smart Start Home Loan) or with one of four assistance loans. You can use only one of them ⁠²:

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Example: on a $300,000 first mortgage, Take5 provides $15,000 and First State provides $9,000 ⁠².

Every assistance loan is a deferred loan, not a grant. It is a 0% second lien with a 30-year maturity and no monthly payment. The full principal is due at a refinance, sale, title transfer, or when the home stops being your primary residence, whichever comes first ⁠². DSHA does not forgive any of it over time, and it does not allow subordination. Refinancing the first mortgage therefore means paying the second off ⁠⁴. DSHA wires the money to the closing attorney on the settlement day ⁠⁴.

Diamond in the Rough is for homes that need minor repairs financed with an FHA 203(k) Limited loan. Every borrower needs a 640 score. DSHA’s 2026 lender training caps the price at $571,946 in New Castle County and $510,939 in Kent and Sussex ⁠⁴.

What each assistance level costs in interest rate

DSHA prices the first mortgage higher as the assistance grows. Rates as posted on Oct. 20, 2026 ⁠³:

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Conventional rates were 7.50% to 8.375% for Welcome Home and 7.625% to 8.50% for Open Door. Keys4You is available on Open Door only with a conventional loan ⁠³. DSHA conventional loans carry no loan-level price adjustments. Conventional borrowers at or below 80% of area median income may qualify for reduced mortgage insurance ⁠²⁠⁴. Lenders may charge an origination fee of up to 0.50% (1.00% on 203(k) Limited) and no discount points. A $150 compliance fee can appear on your Closing Disclosure ⁠².

2026 income and price limits: two tiers, three counties

Delaware’s limits do not vary within a county. New Castle County has one set, and Kent and Sussex share another. Limits rise if the home is in a targeted census tract ⁠¹⁠².

The purchase price cap for both programs is $659,385 in New Castle County and $566,354 in Kent and Sussex. In targeted tracts it is $805,916 and $692,211 ⁠². The targeted tracts are 6.02, 19.02, 21, 23, 29 and 30.02 in New Castle County, 425 in Kent and 505.03 and 507.11 in Sussex. To check an address, enter it in the FFIEC geocoder linked from DSHA’s loans page ⁠¹.

Credit, debt ratio and the counseling trigger at 659

• Credit score. The floor is 620, using the middle of three scores or the lower of two. If the loan type has a stricter minimum, that one applies ⁠².
• Debt-to-income. Loans must get an Approve/Eligible or Refer/Eligible finding from Desktop Underwriter, Loan Product Advisor or GUS. DSHA publishes no separate DTI cap for those approvals ⁠². Manual underwriting is allowed only on FHA and USDA loans. It needs a 660 score and a DTI of 43.00% or less. Conventional loans cannot be manually underwritten ⁠²⁠⁴.
• Manufactured homes. These need FHA (660 score) or USDA (640) financing and an automated approval ⁠².
• Homebuyer education. Every borrower with a score of 659 or below must finish a homeownership course at a HUD-approved counseling agency located in Delaware. The certificate goes into the file DSHA reviews ⁠²⁠⁴. DSHA lists eight agencies, including NeighborGood Partners (Newark, Dover, Georgetown), First State Community Action Agency, Interfaith Community Housing of Delaware and YWCA Delaware ⁠⁶. Buyers at 660 or above still meet whatever course rule their FHA, USDA or conventional loan has ⁠².

No mortgage credit certificate, but a transfer tax cut

DSHA’s June 2026 Program Notice and its lender training cover only first mortgages and second-lien assistance. No Delaware MCC appears in either ⁠²⁠⁴. DSHA’s lender directory still tells buyers to ask lenders about “tax credits,” so ask your loan officer to confirm in writing whether one is available ⁠⁵.

The benefit Delaware law does guarantee is a realty transfer tax reduction for first-time buyers. The buyer’s half of the state realty transfer tax is cut by 0.5% of the price, on up to $400,000 of value. That saves up to $2,000 at settlement, with no income or price limit ⁠⁹. The legal definition is stricter than DSHA’s: you must never have held a direct legal interest in residential real estate anywhere. You must also move into the home within 90 days, or within 90 days of the certificate of occupancy for new construction ⁠⁹. A Welcome Home buyer who owned a home five years ago gets the DSHA loan but not the tax cut.

Wilmington and Sussex County money you can add to a DSHA loan

DSHA allows other down payment programs to be layered on its 3%, 4% and 5% loans ⁠⁴. The two largest local programs we could verify:

• Wilmington First Start Homebuyer Program. Accepting applications as of Oct. 20, 2026. For this round the city put $300,000 of CDBG money (buyers up to 80% of median income) and $200,000 of city money (up to 100%) into the program ⁠¹⁰. Assistance is the lesser of $15,000 or 6% of the price, and you must put in at least $1,000 of your own, not gifts ⁠¹⁰. The down payment portion is a 0% loan forgiven 10% a year over 10 years. The closing cost portion is a grant ⁠¹¹. You must not have owned a home in three years, unless you are a single parent or displaced homemaker. You also need 8 hours of HUD-certified counseling ⁠¹⁰⁠¹¹. Income limits effective June 1, 2026 for four people are $98,150 (80%) and $122,700 (100%). The home must be a single-family house inside city limits; condos are excluded ⁠¹⁰⁠¹¹. Only a lender or housing counselor can apply, through the city’s Neighborly portal. Allow 4-6 weeks ⁠¹¹.
• Wilmington Education Workforce Down Payment and Settlement Assistance. Created by Ord. 25-033 for full-time staff at Wilmington public and charter schools. It offers up to $15,000 or 6% as a forgivable loan, fully forgiven after 10 years. It cannot be combined with First Start, and funds are subject to availability ⁠¹².
• Sussex County Housing Trust Fund Direct Homebuyer Assistance. Round 5 funding opened July 1, 2026 and is first-come until exhausted ⁠¹³. It pays $20,000 toward settlement costs as a 0% soft second, repayable on a prorated basis only if you sell or transfer. It is satisfied after 10 years ⁠¹³. Household income must be below 120% of the Sussex median: $86,760 for one person, $123,840 for four and $163,560 for eight (effective May 1, 2026). Liquid assets can be at most $15,000, and repeat buyers qualify ⁠¹³.

New Castle County also publishes a Down Payment Settlement brochure dated June 1, 2026. Its website blocked our access, so we could not verify its terms.

From loan officer to settlement: the DSHA sequence

1. Pick a participating lender

   Choose from about 38 lenders on Housing Delaware’s Find a Lender page, or use DSHA’s “Connect with a loan officer” form. For Diamond in the Rough, choose a lender marked FHA 203k Limited ⁠⁵.

2. Get prequalified for the right program

   Your loan officer checks first-time status, income against the June 8, 2026 limits, and your score ⁠².

3. Book counseling early if you are at 659 or below

   Contact a HUD-approved Delaware agency on DSHA’s list. Do this before you sign a contract if you also want Wilmington or Sussex money, since those need 8 hours ⁠⁶⁠¹⁰⁠¹³.

4. Gather documents

   You need pay stubs covering the last 30 days, two years of W-2s and the latest signed federal return for everyone on the note or mortgage. Add two years of returns if you are self-employed, plus all bank statements, a DD-214 if you are a veteran, and the Welcome Home or Open Door Mortgagor’s Affidavit signed at application ⁠⁴.

5. Lock the rate

   The lender reserves your loan in Mitas, which locks the rate for 60 days from reservation to purchase. You may switch programs once, at the higher of the two rates ⁠².

6. Wait for DSHA’s compliance review

   DSHA commits to reviewing a complete file within three business days and conditions within one. Denials usually mean the income limit, price limit or first-time rule was missed ⁠⁴.

7. Close and keep the second-mortgage papers

   The assistance is funded at the settlement table. Keep the note: you will need the payoff figure from DSHA when you sell or refinance ⁠².

If your reservation expires or is canceled, the loan cannot be reserved again for 60 days, and it gets the rate in effect at that time ⁠². For questions, call DSHA at (302) 739-4263 ⁠¹. Other states are compared on the first-time homebuyer grants page, and more Delaware guides are on the Delaware page.