Delaware First-Time Homebuyer Assistance Programs

Lindsey Root
Aug 21
8 min read

Delaware offers a range of state and local programs to help first-time homebuyers with down payments, closing costs, and education. Key statewide programs are run by the Delaware State Housing Authority (DSHA) and the state’s tax agencies; local governments (e.g. Wilmington, Dover, Sussex County) also have grant/loan programs. Many programs require income limits (often AMI-based), HUD-approved counseling, and use of approved lenders or agencies.

Below is a summary of major programs, their benefits and requirements, and how to apply.

Statewide DSHA Homeownership Programs

DSHA provides several home loan and down-payment assistance programs for low- and moderate-income Delawareans. These are available statewide through DSHA’s network of approved lenders kissyourlandlordgoodbye.comdestatehousing.com. All DSHA loan programs require at least a 620 credit score (and HUD counseling if score <660). Homebuyers apply by contacting any participating DSHA lender. Key programs include:

Smart Start Home Loan (no assistance) – A 30-year, fixed-rate first mortgage (conventional, FHA, VA or USDA) with competitive below-market interest. No extra grant or second loan. Ideal for buyers who don’t need DPA kissyourlandlordgoodbye.com.
First State Home Loan – First mortgage plus a 0%-interest second loan equal to 3–4% of the loan amount (deferred until sale or refinance) to cover down payment and closing costs. Current DSHA bonds fund a 4% assistance (was 3%)kissyourlandlordgoodbye.comdestatehousing.com. Example: on a $250,000 mortgage, 4% yields $10,000 DPA. Income and purchase-price limits apply (higher limits in targeted areas). Only first-time buyers qualify (no home ownership in past 3 years) unless using a Veteran exemption or buying in a targeted census tract kissyourlandlordgoodbye.comkissyourlandlordgoodbye.com.
“Diamond in the Rough” Loan – For buyers using an FHA 203(k) renovation loan. DSHA provides a 0%-interest second loan worth 5% of the mortgage for down payment/closing costs destatehousing.comdestatehousing.com (e.g. $12,500 on a $250,000 loan). The FHA 203(k) wraps repairs (up to ~$35K) into the mortgage, and “Diamond” adds 5% DPA. The property can be fixer-upper (allowed repairs include remodeling, painting, appliances, roof, etc.)destatehousing.comdestatehousing.com.
Home Sweet Home Program (Temporary) – A time-limited forgivable loan of $12,000 for down payment/closing costs on homes ≤$285,000 destatehousing.com. It’s a 0%-interest second loan forgiven 10% per year over 10 years (residency-based). This program was offered in late 2024 (december holidays) and may be repeated if funded destatehousing.comdestatehousing.com. The buyer still needs DSHA first mortgage and to meet income/credit requirements.
Delaware Diamonds Home Loan (Temporary) – A 0%-interest forgivable $10,000 loan for qualified essential workers (e.g. teachers, medical, first responders, veterans)destatehousing.com. Used for down payment/closing costs on any home. Forgiven 10% per year over 10 years, similar to Home Sweet Home. A list of eligible occupations is on DSHA’s site. Requires same income/credit criteria as DSHA loans destatehousing.com.
Home Again (Repeat Buyer) – For buyers who exceed income limits of the first-time “Welcome Home” program. Home Again offers a 30-year fixed loan (conventional, FHA, VA, USDA) similar to Welcome Home, plus eligibility for DSHA’s First-Time Homebuyer Tax Credit (below) even for repeat buyers kissyourlandlordgoodbye.comkissyourlandlordgoodbye.com. First State Home Loan and Smart Start options are available under Home Again.
First-Time Homebuyer Tax Credit (Federal) – A special federal income tax credit on mortgage interest. Qualified first-time buyers (no home ownership in 3 years, or in a targeted area) can claim 35% of the mortgage interest paid each year, up to $2,000 off their federal tax bill kissyourlandlordgoodbye.com. (E.g. on ~$15,800 interest paid first year, one saves $2,000.) This credit is applied at closing through the DSHA lender. Eligibility includes Delaware residency and DSHA credit/income limits kissyourlandlordgoodbye.comkissyourlandlordgoodbye.com. DSHA lenders must participate to issue this credit kissyourlandlordgoodbye.com.
Delaware First-Time Home Buyer Tax Credit (State Transfer Tax) – Delaware law reduces the Realty Transfer Tax for first-time buyers. Instead of the usual 1.25% of sale price (paid by buyer), qualified first-time buyers pay only 0.75% (a 0.5% reduction), capped at a $2,000 credit revenue.delaware.gov. To qualify, the buyer (or buyers) must never have owned a home and must occupy it within 90 days revenue.delaware.gov. The reduction is applied at closing by the attorney; if already paid, buyers can file Form RTT-FHB for a refund revenue.delaware.gov.

For DSHA loan programs, apply through any DSHA‐participating mortgage lender (see DSHA Lender List) kissyourlandlordgoodbye.com. The lender will verify credit, income limits, and handle DSHA forms. DSHA’s website provides current income and purchase-price limits for each program. For example, “Welcome Home” (first-time) limits are ~$119,400 for 2-person households in New Castle (non-targeted area) kissyourlandlordgoodbye.com. Note: DSHA programs often require homeownership education or HUD-approved counseling (see below) especially if credit <660.

Local and County Programs

Wilmington First Start Homebuyer Program

The City of Wilmington offers a First Start grant (federal CDBG + city funds) to income-eligible first-time buyers of city homes. Applicants can receive up to the lesser of $15,000 or 6% of the purchase price wilmingtonde.gov. Funds cover down payment, closing costs, or can be used to “buy down” the purchase price. Requirements (Nov 2023 update): household must be at ≤80% area median income (AMI) for the CDBG portion or ≤100% AMI for city funds; the buyer must contribute at least $1,000 toward costs; the mortgage must be 30-year fixed with no origination points; and buyers must be first-time (no home in 3 years), displaced homemakers, or single parents wilmingtonde.gov. To apply, Wilmington residents dial 311 (out-of-city dial (302) 576-2620) when the program is open wilmingtonde.gov. (As of Nov 2023, applications opened Nov 13.) Funds are limited and awarded first-come.

New Castle County Down Payment & Settlement Assistance (DPS)

New Castle County’s DPS Program provides a deferred loan to cover down payment/closing costs for qualifying buyers of homes outside Wilmington. Up to $10,000 is available (minimum $1,000)newcastlede.gov. The 15-year loan is 0% interest, with the first 2 years payments deferred, then 13 years of monthly payments newcastlede.gov. Eligibility: buyers must be first-time (no home in past 3 years), have household income ≤80% of HUD AMI (see [DPS brochure] for tables), occupy the home as a principal residence, and meet standard lending DTI and credit requirements newcastlede.govnewcastlede.gov. Property must be in New Castle County (outside Wilmington) and under ~$460,000 sale price newcastlede.gov. A $500 minimum borrower cash investment is required newcastlede.gov. Application: Contact any HUD-approved housing counseling agency (see list below) to apply. Counselors will collect documents and submit to the County. More info in the DPS brochure newcastlede.govnewcastlede.gov or by calling the County (Melissa Moore, 302-395-5698).

Dover First Start (Dover, Kent County)

The City of Dover offers up to $20,000 in down payment/settlement assistance to first-time buyers of city homes. The funds are a 0%-interest second mortgage forgiven after 10 years (10% forgiven each year)cityofdover.comcityofdover.com. Qualifying buyers must: be first-time (HUD-defined), have ≥$1,000 cash (gifts allowed beyond that); obtain a 30-year fixed mortgage through a city-approved lender; complete HUD-certified homebuyer counseling before closing; maintain credit ≥620; and meet income limits (≤80% AMI for Dover cityofdover.com). The program also requires a home inspection (ASHI certifier) and repairs for any hazards cityofdover.com. Apply: Contact the Dover Community Development Office (Tracey Harvey, 302-736-7196) for application details cityofdover.com.

Sussex County Housing Trust Fund (Homebuyer Assistance)

Sussex County’s Housing Trust Fund (HTF) provides closing-cost assistance grants to homebuyers in Sussex County. Funds (federal ARPA & county) are awarded first-come. Recent rounds (summer–fall 2024) offered up to $20,000 per household sussexcountyde.gov. Buyers may use it for closing costs/settlement (no cash back to buyer). Eligibility: any household (not just first-time) earning ≤120% of Sussex AMI sussexcountyde.gov, and with ≤$15,000 in liquid assets. The home must be primary residence. Property types allowed: single-family, duplex, townhome, modular, etc sussexcountyde.gov. Closing assistance requires pre-purchase counseling: at least 8 hours with HUD-approved counselor (certificate needed)sussexcountyde.gov. Funding status: As of late 2024, round 3 funding ($20k awards) was fully committed, with lower-income awards exhausted by Dec 2024 sussexcountyde.gov. Applicants should watch the [Sussex County HTF webpage] for updates on future funding (next likely July 2025). Apply: Through a HUD-approved counselor – Sussex lists NeighborGood Partners, FSCAA, Interfaith CHD, or Neighborhood House for intake sussexcountyde.gov. Counselors gather income docs and submit applications to the County.

Homebuyer Education & Counseling

Most Delaware homebuyer programs require or highly recommend HUD-approved housing counseling and education. Delaware has several non-profit counseling agencies that offer first-time homebuyer workshops, one-on-one counseling, credit/budgeting help, and assistance with grant applications. These include:

YWCA Delaware (Newark/Wilmington) – Offers an online eHome America homebuyer education course ($150) plus mandatory one-on-one counseling. Upon completion, clients get a certificate needed for many programs ehomeamerica.orgehomeamerica.org. The YWCA’s HUD-certified counselors also coach clients on credit and document preparation. (Phone: 302-224-4060, Newark or Wilmington office.)
Neighborhood House, Inc. (Wilmington) – HUD-certified counselors provide individual counseling and host first-time homebuyer workshops. They help buyers navigate saving, credit, mortgages, and program requirements neighborhoodhse.org. (Phone: 302-656-1230, Wilmington.)
NeighborGood Partners (Dover) – A HUD-approved agency offering homeownership counseling and an 8-hour orientation (via eHome America). Counselors help borrowers become mortgage-ready and provide online homebuyer education neighborgoodpartners.org. (Phone: 302-678-9400.)
First State Community Action Agency (Georgetown, statewide) – Provides housing counseling and workshops across Delaware destatehousing.com. Offices in Georgetown, Dover, New Castle (see contact info).
Housing Opportunities of Northern Delaware (Wilmington) – Offers counseling on homebuying and foreclosure prevention (part of DSHA’s network)destatehousing.com.
Interfaith Community Housing (Wilmington/Dover) – HUD-approved counseling for pre-purchase and foreclosure prevention destatehousing.com.
Clarifi, Inc. (Wilmington/Philadelphia) – HUD-certified counselors serving Delaware for credit repair, pre-purchase advice, foreclosure intervention destatehousing.com.
Telamon, Inc. (Millsboro) – Provides homebuyer education and counseling in southern Delaware destatehousing.com.

Typically, buyers meet with a counselor for a series of sessions (group workshop + one-on-one review) to cover budgeting, credit, mortgage terms, and program criteria. Many programs (Sussex, Dover, DSHA for low-credit clients) require completing an approved 8–10 hour education course before closing. For example, the Dover and Sussex programs explicitly mandate HUD counseling cityofdover.comsussexcountyde.gov. To start, contact one of the agencies above (most have no income limit) to enroll in homebuyer education.

Where to find counselors: A full list of HUD-approved agencies in Delaware is on DSHA’s website destatehousing.com. The U.S. Department of HUD also provides a locator (800-569-4287 or HUD housing counselor search).

Important Details & Resources

Eligibility: Most programs require the home to be the buyer’s primary residence and impose income and purchase-price limits that vary by location (e.g., Wilmington/Dover have city limits). Check each program’s specific limits on official sites or contact the administering agency.
Applications: Statewide programs (DSHA loans/tax credit) go through participating lenders (see DSHA website or kissyourlandlordgoodbye.com)kissyourlandlordgoodbye.comkissyourlandlordgoodbye.com. Local programs often require contacting the municipality or county office (Wilmington 311, Dover CD office, Sussex HUD counselor).
Deadlines/Funds: Local funding (Wilmington, Sussex, etc.) can be limited and time-sensitive. For example, Wilmington’s $500k in First Start funds and Sussex’s ARPA funds were allocated by end of 2024. Applicants should apply early and check official websites for announcements of new funding rounds.
Contacts/Links: Official program details and applications are on government sites. Key links include:
- DSHA (State Housing Authority): destatehousing.com or kissyourlandlordgoodbye.com – see “Loan Products” and “Buying A Home” sections kissyourlandlordgoodbye.comkissyourlandlordgoodbye.com.
- Wilmington City: “Real Estate & Housing” department pages (via Wilmington DE) and city news releases wilmingtonde.gov.
- New Castle County: Down Payment & Settlement Assistance page (NewCastleDE.gov)newcastlede.gov.
- City of Dover: Community Development forms (example PDF in Dover directory)cityofdover.comcityofdover.com.
- Sussex County: Housing Trust Fund page (SussexCountyDE.gov)sussexcountyde.govsussexcountyde.gov.
- Delaware Division of Revenue: First-Time Home Buyer Tax Credit info revenue.delaware.gov.

Sources: Authoritative program materials from DSHA and Delaware state/local governments kissyourlandlordgoodbye.comdestatehousing.comcityofdover.comsussexcountyde.gov, including DSHA press releases and county housing pages.