Overview
Delaware is one of the more attainable East Coast markets, with a statewide median home price of roughly $398,000 in 2026 — a relief compared to neighboring Maryland and New Jersey. The first-time buyer's friend here is the Delaware State Housing Authority (DSHA), which rebranded and expanded its single-family lending in April 2026 under the Delaware Mortgage Program. The distinctive advantage in Delaware is the tax picture: there's no state sales tax and property taxes are among the lowest in the country, so more of your budget can go toward the home itself rather than carrying costs.
DSHA's flagship is a tiered down payment assistance menu paired with its first mortgage. Depending on the option you choose, you can get 3% (First State Home Loan), 4% (Keys4You), or 5% (Take5) of your first mortgage amount toward your down payment and closing costs. Crucially, these are deferred, zero-interest second mortgages — not grants and not forgivable. You make no monthly payments, but the balance comes due when you sell, refinance, or pay off the first mortgage. First-time buyers (no ownership in three years) qualify through the Welcome Home track; repeat buyers can still use the Open Door track. Income limits run roughly $108,000-$137,000 depending on county and household size.
State Programs
First State Home Loan (Down Payment Assistance)
Deferred 0% interest second mortgageKeys4You Home Loan (Down Payment Assistance)
Deferred 0% interest second mortgageTake5 Home Loan (Down Payment Assistance)
Deferred 0% interest second mortgageDelaware Homebuyer Tax Credit (Mortgage Credit Certificate)
Federal income tax credit on mortgage interestFederal Programs Available in Delaware
These nationwide programs can be combined with Delaware state assistance for maximum benefit.
FHA Loan Program
Low down payment mortgageVA Home Loan
Zero down payment mortgageUSDA Rural Development Loan
Zero down payment mortgageTips for First-Time Buyers in Delaware
Beyond the down payment loans, DSHA also offers a Delaware Homebuyer Tax Credit (an MCC) that lets you claim a federal tax credit for a portion of the mortgage interest you pay each year — a benefit that stacks with the down payment assistance and keeps working for as long as you hold the loan. There are also worthwhile local layers: New Castle County runs a modest down payment program (an interest-free loan repaid over several years), and the City of Dover has offered a forgivable second loan for owner-occupants. Always confirm current funding and terms directly with the county or city housing office.
Delaware's tax landscape is a genuine selling point. It does levy a graduated state income tax, but the rates top out at 6.6% — and the first $2,000 of taxable income is taxed at 0%. The bigger story is property tax: the effective rate is about 0.53% of home value, well under the 0.9% national average. On a $398,000 home, that's roughly $2,100 a year, or about $175 a month — a fraction of what you'd pay in Texas or New Jersey. Combine that with zero sales tax on your furniture and appliances, and Delaware quietly delivers one of the lowest overall cost-of-homeownership profiles on the Eastern Seaboard.
Geographically, central and northern Delaware draw demand from Wilmington job centers and from Dover Air Force Base, which makes VA financing especially relevant for the many service members and veterans buying near Dover — and a VA loan pairs cleanly with DSHA assistance. Your practical next steps: get pre-qualified with a DSHA-participating lender, complete the required DSHA homebuyer education course (it unlocks the assistance and genuinely sharpens your budget), and consider sitting down with a HUD-approved housing counselor. Start at destatehousing.com to confirm current programs, income limits, and whether funds are still available for the cycle you're buying in.
Frequently Asked Questions
For educational purposes only -- not financial or tax advice. Program details, eligibility requirements, and benefit amounts are subject to change. Verify all information directly with the administering agency before applying. Last verified: June 15, 2026.