Quick answer
Delaware first-time buyers have two kinds of help. The Delaware State Housing Authority (DSHA, also called Housing Delaware) offers Welcome Home mortgages with optional down payment and closing cost help of 3% to 5% of the loan, which has no monthly payment and is repaid when you sell, refinance, or move out, and Delaware also reduces the state transfer tax you pay at closing by up to $2,000 for first-time buyers. DSHA and the tax rules define "first-time buyer" differently, so check each one. Call The Hoesterey Group at (302) 295-9430 and we'll help you line up the right lender and ask your settlement attorney the right questions.
If you're buying your first home in Delaware, the state offers first-time buyer programs—from state mortgage programs with down payment and closing cost help that you repay when you sell or refinance, to a transfer tax reduction at closing.
Whether you're looking in Wilmington, Newark, Middletown, or anywhere in between, this guide breaks down the top programs available in 2026.
What Qualifies You as a "First-Time Buyer" in Delaware?
The three-year test below is DSHA's definition for its loan programs. You don't have to be buying your very first home ever to use them.
For DSHA's loan programs, a first-time buyer is someone who has not had an ownership interest in their primary residence at any time during the three years before signing the mortgage note. DSHA makes exceptions for qualified veterans and for homes in targeted areas, which can qualify for Welcome Home even if you are not a first-time buyer.
The state transfer tax reduction uses a stricter rule: you must never have owned residential real estate. See the transfer tax section below.
DSHA Welcome Home and Open Door
The Delaware State Housing Authority (DSHA, also called Housing Delaware) offers two 30-year fixed-rate mortgage programs: Welcome Home for first-time buyers (with exceptions) and Open Door for first-time and repeat buyers. Rates are at or below standard market rates. See DSHA's current interest rates.
Down payment and closing cost help. This help is a zero-interest second loan, not a grant. It equals a percentage of your first mortgage: First State 3% (Welcome Home and Open Door), Keys4You 4% (both programs), Take5 5% (Welcome Home only), or Diamond in the Rough 5% (Welcome Home only, for homes that qualify for an FHA 203(k) limited loan). Smart Start is a first mortgage with no down payment help. You can use only one type of down payment help. There is no monthly payment on the second loan. It comes due at the first of these: you refinance, you sell, title transfers, the home is no longer your primary residence, or 30 years from the date of the mortgage note.
Credit and education. The minimum credit score is 620. If your credit score is 659 or below, you must complete homebuyer education with a HUD-approved housing counseling agency in Delaware, and DSHA encourages all borrowers to take it. See DSHA's list of counseling agencies.
Maximum household income. Income of everyone on the mortgage counts. Limits are shown as 1–2 people / 3 or more people.
Welcome Home
- New Castle County: $122,700 / $141,105
- Kent and Sussex counties: $111,400 / $128,110
- Targeted areas in New Castle County: $147,240 / $171,780
- Targeted areas in Kent and Sussex counties: $133,680 / $155,960
Open Door
- New Castle County: $147,240 / $184,050
- Kent and Sussex counties: $133,680 / $167,100
Maximum purchase price (single-family).
- New Castle County: $659,385
- Kent and Sussex counties: $566,354
- Targeted areas in New Castle County: $805,916
- Targeted areas in Kent and Sussex counties: $692,211
Targeted areas are defined by census tract. New Castle County: 0006.02, 0019.02, 0021.00, 0023.00, 0029.00, 0030.02. Kent County: 0425.00. Sussex County: 0505.03, 0507.11. DSHA's page links to a tool for checking an address. Limits change, so check DSHA's page for the current income and price limits.
How to apply. Apply through a participating DSHA-approved lender. Find one in DSHA's lender directory, or call DSHA's homeownership team at (302) 739-4263 or toll-free at (888) 363-8808, Monday to Friday, 8:30 to 4:30.
Delaware Transfer Tax Savings for First-Time Buyers
Delaware charges a realty transfer tax when a home changes hands. The state's rate is 2.5% where the local government also charges the full 1½% local transfer tax, and 3% otherwise, and the tax is split equally between buyer and seller unless the contract says otherwise. Counties and cities can add their own transfer tax on top, so what you pay depends on where the home is.
Who qualifies. Under Delaware law, a first-time home buyer for this tax is someone who has never held a direct legal interest in residential real estate, anywhere, and who plans to live in the home as their principal residence within 90 days of closing. If you are buying with a spouse or co-buyer, none of the buyers can have ever owned residential real estate. This is stricter than DSHA's three-year rule for its loan programs (see the FAQ below), so owning a home in the past can disqualify you from the tax reduction even if you qualify for a DSHA loan.
How the reduction works. The state takes 0.5% off the rate on the buyer's share, applied to the sale price up to $400,000. According to the Delaware Division of Revenue, for most buyers that moves the buyer's rate from 1.25% to 0.75%, and the savings are capped at $2,000. For example, on a $400,000 purchase the buyer's 1.25% state share is $5,000; at 0.75% it is $3,000, a $2,000 difference. On a price above $400,000 the reduction is still $2,000. This reduction does not change the seller's share.
County tax. Delaware law also says counties that charge their own transfer tax must exempt first-time home buyers on at least the first $400,000 of value for property in unincorporated areas. City and town transfer taxes are set by each municipality, so ask whether one applies to the home you're buying.
How it shows up at settlement. It isn't something you apply for in advance. The Division of Revenue says it may be claimed at closing, and the attorney handling your purchase reflects the reduced rate on the form prepared and signed at closing. Tell your settlement attorney early that you are a first-time buyer, and ask them to confirm that the reduction is on your paperwork. If you bought your first home after August 1, 2017 and paid the full rate, the Division says you may be able to request a refund using Form RTT-FHB (taxpayer assistance: (302) 577-8783).
This is general information, not legal or tax advice. Your settlement attorney can confirm exactly what applies to your purchase.
Getting Pre-Approved: Your First Step
Before you start touring homes, getting pre-approved is key.
Most lenders will ask for:
- Last two years of tax returns (W-2s and/or 1099s)
- Recent pay stubs (typically the last 30 days)
- Bank statements (last 2–3 months for all accounts)
- Photo ID
- Social Security number for a credit check
Pre-approval usually takes 24–48 hours and gives you a clear budget. It also makes your offer much stronger when you find the right home.
How The Hoesterey Group Helps First-Time Buyers
We specialize in helping first-time buyers navigate the process from start to finish.
Our team will:
- Connect you with DSHA-approved lenders who can maximize your available assistance
- Walk you through each program and help you line up DSHA down payment help and the transfer tax reduction
- Tour homes with you and help you evaluate neighborhoods, schools, and commute
- Negotiate on your behalf to secure the best price and terms
- Guide you through closing so there are no surprises
Buying your first home should feel exciting—not overwhelming. That's exactly what we're here to help you do.
Ready to explore your options? Contact us for a free consultation.
Frequently Asked Questions
Who is a first-time buyer in Delaware?
It depends on the program. For the state transfer tax reduction, Delaware law says you must never have held a direct legal interest in residential real estate anywhere, and you must plan to live in the home as your main residence within 90 days of closing. For DSHA's Welcome Home mortgage, a first-time buyer is someone who has not owned their primary residence in the three years before signing the mortgage note. DSHA also makes exceptions for qualified veterans and for homes in designated targeted areas. Ask your lender and settlement attorney which definition applies to you.
Is there a first-time buyer transfer tax exemption in Delaware?
Yes, in two parts. The state reduces the buyer's transfer tax rate by 0.5% on up to $400,000 of the price, a savings of up to $2,000, and counties that charge their own transfer tax must exempt first-time buyers on up to $400,000 in unincorporated areas. It is claimed at closing through your settlement attorney. Confirm the details for your address with your settlement attorney.
What grants or down payment help can Delaware first-time buyers get?
DSHA's Delaware Mortgage Program offers zero-interest second mortgages for down payment and closing costs: 3% (First State), 4% (Keys4You) or 5% (Take5, or Diamond in the Rough for homes needing minor repairs) of the first mortgage amount. These are loans, not grants, but there is no monthly payment, and it comes due when you sell, refinance, transfer title, stop living there, or after 30 years. You need a minimum credit score of 620, and income and purchase price limits apply. If your credit score is 659 or below, you must complete homebuyer education with a HUD-approved counseling agency. Programs and limits change, so check DSHA or a participating lender for current terms.
How do I start?
Start by talking to a participating DSHA lender about your credit, income and which loan fits. You can find them in DSHA's lender directory or call DSHA's homeownership team at (302) 739-4263. If you're newer to the process, a free or low-cost housing counselor can help you get ready. Then tell your settlement attorney you're a first-time buyer so the transfer tax reduction is on your closing paperwork. The Hoesterey Group can walk you through each step: use the contact form on this page or call (302) 295-9430.