Down Payment Assistance Programs in Delaware 2026: Grants, Loans & How to Qualify

Saving for a down payment is the biggest hurdle most Delaware buyers face. With the statewide median sale price near $398,585 as of April 2026 (Redfin), even an FHA loan’s 3.5% minimum runs about $13,950 before closing costs. Delaware down payment assistance programs exist to close that gap, mostly through the Delaware State Housing Authority (DSHA) and a few city and county funds.

This guide covers what is available in 2026, how much each program offers, who qualifies, and how the money is structured. One distinction matters before you start: assistance usually comes as a second mortgage, not a cash gift. Most DSHA help is a deferred loan (you pay nothing monthly, but the balance is due when you sell, refinance, or stop living in the home). A few local programs are forgivable (the balance is erased over time if you stay). True grants that never need repayment are rare. Read the terms before you sign.

All figures below were verified against official DSHA and government sources on the last-verified date shown above. Program funding can change without notice, so confirm current terms with a participating lender before you apply.

State Housing Finance Agency Programs

DSHA runs Delaware’s main homebuyer programs through participating lenders. You apply with an approved lender, not directly with the state. DSHA markets its first-time buyer products under the Welcome Home name and its repeat-buyer products under Open Door; the underlying loans are the same. Across the lineup, the standard minimum credit score is 620, and DSHA requires homebuyer education when the borrower’s score is 659 or below.

First State Home Loan (3% DPA)

The First State Home Loan pairs a DSHA first mortgage with down payment and closing-cost assistance equal to 3% of the first mortgage amount. The assistance is a 0% interest, deferred second mortgage with no monthly payments; the balance becomes due on sale, refinance, title transfer, or when the home stops being your primary residence. This is the program many lenders previously referred to as “Preferred Plus.” Minimum credit score is 620.

Keys4You Home Loan (4% DPA)

Keys4You works the same way as First State but provides a larger assistance loan of 4% of the first mortgage amount as a 0% deferred second mortgage. The higher percentage helps buyers who need more help with the down payment or closing costs. Minimum credit score is 620; education is required for scores of 659 or below.

Take5 Home Loan (5% DPA)

Take5 offers the largest standard assistance tier at 5% of the first mortgage amount, again as a 0% interest deferred second mortgage. DSHA offers Take5 through the Welcome Home (first-time buyer) track. For a $350,000 first mortgage, 5% is $17,500 toward your down payment and costs.

Diamond in the Rough (5% DPA + Renovation)

Diamond in the Rough is for buyers purchasing a home that needs work. It combines a first mortgage and renovation financing into one loan using the FHA 203(k) program, with up to $35,000 for minor improvements (kitchen updates without structural changes, interior and exterior painting, appliance and window/door replacement, and roof or gutter repair). Buyers also receive a second mortgage equal to 5% of the final loan amount for down payment and closing costs. Standard DSHA criteria apply, including the 620 minimum credit score.

Smart Start Home Loan

Smart Start is DSHA’s option for buyers who want a first mortgage with closing-cost assistance but do not need the full down payment second loan. It carries the same 620 minimum credit score and the same education requirement for scores of 659 or below. Ask a participating lender how Smart Start compares to the percentage-based DPA loans for your situation.

Delaware Diamonds (Essential Workers)

Delaware Diamonds is DSHA’s assistance program aimed at essential workers, such as educators, healthcare workers, first responders, and veterans. It has historically provided a forgivable second loan for down payment and closing costs, forgiven over a set period of owner-occupancy rather than repaid. Forgivable, worker-targeted funds like this can run out of money between funding cycles, so confirm current availability and the exact award amount with DSHA or a participating lender before counting on it.

Delaware First-Time Home Buyer Tax Credit

Separate from the loan programs above, Delaware offers a realty transfer tax reduction for qualified first-time buyers. Per the Delaware Division of Revenue, it lowers the buyer’s transfer tax rate by 0.5% (commonly from 1.25% to 0.75%), capped at $2,000 and applied to the first $400,000 of the purchase price. Your closing attorney applies the reduced rate at settlement. To qualify, you must never have held a direct legal interest in residential real estate and must occupy the home as your principal residence within 90 days of closing. Note: this is a transfer-tax benefit, not a federal Mortgage Credit Certificate (MCC); confirm whether any MCC-style federal tax credit is currently offered before relying on it.

Local and County DPA Programs

City and county programs can stack with DSHA loans in some cases. Funding is limited and rules differ, so apply early and confirm details with the administering office.

New Castle County Down Payment & Settlement (DPS) Program

New Castle County’s DPS Program helps low- and moderate-income households with down payment and settlement costs. Per the county’s official site, the maximum loan amount is $10,000, structured as a deferred loan with a 15-year repayment term: payments are deferred for the first two years and begin in year three. Contact the county’s Community Services office to confirm income limits and required buyer contribution.

City of Wilmington

The City of Wilmington has historically operated a first-time buyer assistance program offering a forgivable loan toward down payment and settlement costs, forgiven over a period of owner-occupancy, with a HUD-approved counseling requirement and a minimum buyer cash contribution. Amounts and availability change with the city’s annual funding, so verify the current terms with the City of Wilmington’s housing office before applying.

Kent County (Dover) and Sussex County

Kent County (including Dover) and Sussex County buyers are generally served by the statewide DSHA programs rather than a standing countywide DPA fund. Some municipalities and nonprofits in these counties periodically offer HUD- or HOME-funded assistance. Because these vary year to year, ask a DSHA-approved lender or a local HUD-approved housing counselor what is currently open in your county.

Eligibility Comparison Table

DSHA income and sales-price limits vary by county (New Castle, Kent, Sussex) and household size and are updated periodically. Always confirm the current limit for your county and household before applying.

How to Apply for Down Payment Assistance in Delaware

1. Check your credit and budget. Most DSHA programs require a 620 minimum score. Pull your reports, fix errors, and estimate your price range with the down payment calculator and how much house tools.
2. Complete homebuyer education. DSHA requires education for credit scores of 659 or below, and several local programs require HUD-approved counseling regardless of score. Finish this early so it does not delay closing.
3. Get pre-approved with a participating lender. DSHA programs run through approved lenders, not the state directly. Start with mortgage pre-approval and ask specifically which DSHA products the lender offers.
4. Choose your program and confirm limits. With your lender, match a program (First State, Keys4You, Take5, Diamond in the Rough, or Smart Start) to your needs, and verify the current income and sales-price limits for your county.
5. Apply and close. Submit your application through the lender, layer any eligible county or city assistance, and review every second-mortgage term (deferred vs. forgivable, repayment triggers) before signing at closing.

Common Mistakes to Avoid

Treating a deferred loan like a grant

Most DSHA assistance is a deferred second mortgage, not free money. The balance comes due when you sell, refinance, or move out. Know your repayment trigger before you commit.

Assuming a program still has funding

Forgivable and worker-targeted programs (such as Delaware Diamonds and city funds) can exhaust their budgets between cycles. Confirm money is available the week you apply, not the month you started shopping.

Skipping or delaying homebuyer education

If your credit score is 659 or below, DSHA requires education, and several local programs require it outright. Buyers often leave this to the end and stall their closing. Do it first.

Missing the income or sales-price limit

DSHA limits change by county and household size and are revised periodically. A home or salary just over the line disqualifies you. Verify the current figure for your county with your lender before you write an offer.

Related Delaware Guides

• Down Payment Assistance: Complete Guide to Free Money for Home Buyers
• Delaware State Hub
• First-Time Buyers Guide
• Closing Costs Explained
• Down Payment Calculator
• Mortgage Pre-Approval
• Down Payment Cost Guide
• How Much House Can You Afford?
• Maryland Down Payment Assistance
• Pennsylvania Down Payment Assistance
• New Jersey Down Payment Assistance
• Virginia Down Payment Assistance
• All States

Frequently Asked Questions

How much down payment do I need to buy a home in Delaware?

FHA loans require a minimum of 3.5% down. On Delaware’s median sale price of about $398,585 (Redfin, April 2026), that is roughly $13,950. DSHA assistance loans can cover much of that amount, and some loan types (VA, USDA) allow $0 down for eligible buyers.

What credit score do I need for DSHA down payment assistance?

The standard minimum credit score for DSHA programs is 620. If your score is 659 or below, DSHA requires you to complete homebuyer education before closing.

Is Delaware down payment assistance a grant I never repay?

Usually not. Most DSHA assistance is a 0% interest deferred second mortgage that you repay when you sell, refinance, or stop using the home as your primary residence. Some local programs (such as the City of Wilmington’s) are forgivable over a period of owner-occupancy. Always confirm whether your specific program is deferred or forgivable.

Do I have to be a first-time buyer to get help in Delaware?

Not always. DSHA’s Welcome Home track is for first-time buyers, but its Open Door track serves repeat buyers using the same loan products. Many county and city programs, however, are first-time-buyer only. Check each program’s rule.

What counts as a first-time homebuyer in Delaware?

For Delaware’s First-Time Home Buyer Tax Credit, you must never have held a direct legal interest in residential real estate. Many assistance programs use a more common HUD-style definition: you have not owned a principal residence in the past three years. The exact definition varies by program, so confirm which one applies.

Can I combine DSHA assistance with a county or city program?

Sometimes. Layering a DSHA second mortgage with a county program like New Castle County’s DPS can be possible, but each program has its own rules on stacking. Ask your participating lender to confirm what combinations are allowed before you apply.

Sources

• Delaware State Housing Authority (DSHA) — First State, Keys4You, Take5, Diamond in the Rough, Smart Start, and Delaware Diamonds program pages
• Delaware Division of Revenue — First-Time Home Buyer realty transfer tax reduction
• New Castle County; City of Wilmington — local program terms (confirm current amounts directly)
• Redfin — Delaware statewide median sale price, April 2026
• U.S. Department of Housing and Urban Development (HUD) — FHA requirements