First-Time Home Buyer Programs in Delaware 2026

· ✓ Last verified Oct 1, 2026 · March 6, 2026 · by AskDoss Editorial Team ·Home Buying · 5 min read

The Delaware State Housing Authority (DSHA) runs the state’s first-time buyer loan, Welcome Home, through participating lenders. It is a 30-year fixed first mortgage with county income and price limits and a 620 credit minimum. It can carry a zero-interest deferred second mortgage of 3%, 4% or 5% of the first mortgage amount.

Since April 2026, DSHA’s loans have been sold under the name Delaware Mortgage Program, which replaced the old “Kiss Your Landlord Goodbye” brand. First-time buyers use Welcome Home. Repeat buyers, and anyone who does not qualify for Welcome Home, use Open Door. What each second mortgage pays is covered on the Delaware down payment assistance page; what follows is who gets into Welcome Home, the 2026 limits, the counseling trigger and a state tax break with a stricter first-time test.

Welcome Home or Open Door: the three-year test

DSHA’s Program Notice, effective June 8, 2026, defines first-time homebuyers as “those who have not had an ownership interest in their primary residence at any time during the three-year period ending on the date of the execution of the note”. The clock runs to the day you sign the note. Two groups can use Welcome Home even if they owned a home recently:

  • Qualified veterans. Under the Welcome Home mortgagor’s affidavit, that means a veteran as defined in 38 U.S.C. § 101 who has not already had a bond-financed mortgage under the veteran exception, with a DD 214 showing discharge “under conditions other than dishonorable.”
  • Buyers in targeted areas. These are specific census tracts: 0006.02, 0019.02, 0021.00, 0023.00, 0029.00 and 0030.02 in New Castle County, 0425.00 in Kent, and 0505.03 and 0507.11 in Sussex.

Everyone else uses Open Door, which DSHA says is for “both first-time and repeat buyers.” The practical difference is in the second mortgages. Take5 (5%) and Diamond in the Rough (5%) are “for the Welcome Home Loan Program only”. Open Door offers Smart Start, First State (3%) and Keys4You (4%).

DSHA income and price limits for 2026

Limit New Castle County Kent & Sussex
Welcome Home income, 1-2 people $122,700 $111,400
Welcome Home income, 3 or more $141,105 $128,110
Welcome Home income in a targeted area, 1-2 / 3+ $147,240 / $171,780 $133,680 / $155,960
Open Door income, 1-2 / 3+ $147,240 / $184,050 $133,680 / $167,100
Purchase price, single-family (1 unit) $659,385 $566,354
Purchase price in a targeted area $805,916 $692,211

The two tracks count income differently. For Welcome Home, “All income for those on the Note and/or Mortgage will be considered”. For Open Door, DSHA uses the qualifying income on the lender’s loan application (form 1003). Open Door’s caps are also higher in both county groups.

What the Welcome Home first mortgage looks like

  • A 30-year fixed, level-payment loan, which can be conventional, FHA, VA or USDA. DSHA says it is available “anywhere in the state of Delaware” for a primary residence.
  • No prepayment penalty. The lender may charge an origination fee of up to 0.50% (up to 1.00% on an FHA 203(k) Limited loan), and the discount fee is 0.00%.
  • Homes of 1 to 4 units (DSHA’s notice puts an asterisk on 4-unit homes), attached or detached. The conventional HFA Advantage 97% option is limited to 1-unit homes.
  • You must move in within 60 days of closing. On the affidavit, you swear that no more than 15% of the home will be used for business.
  • You may use only one type of DSHA second mortgage.

Credit scores and the counseling rule

The minimum is a 620 FICO: the middle of three scores, the lower of two, or your only score. Some loans need more. A manufactured home must be financed with FHA (660) or USDA (640). Manually underwritten FHA and USDA loans need 660 and a debt-to-income ratio of 43.00% or less. Diamond in the Rough, which uses the FHA 203(k) Limited program, needs 640.

Housing counseling is required only at a lower score: “All borrowers with a FICO score at or below 659 must complete a home ownership education course through a HUD-approved Housing Counseling Agency located in the State of Delaware.” At 660 or above, DSHA itself does not require the course, but it tells lenders to apply the education rules of the specific loan product (FHA, VA, USDA and so on). DSHA lists approved counselors on its housing counselors page.

The second mortgages are deferred, not forgiven

First State, Keys4You, Take5 and Diamond in the Rough are all 0% second liens. DSHA’s notice says principal is “deferred until one of the following events: refinance, sale, transfer of title, the property is no longer the borrower(s) primary residence, or 30 years from the date of the Mortgage Note (whichever comes first).” There is no monthly payment, and DSHA’s terms contain no forgiveness schedule: principal “will be repayable” at those events. DSHA funds the second loan at closing.

The first-time buyer transfer tax break uses a different test

Separately from DSHA, Delaware law cuts the buyer’s share of the realty transfer tax for a first-time home buyer. Under 30 Del. C. § 5402(c), the buyer’s portion “shall be reduced by an amount equal to ½ percent multiplied by the lesser of the value of the property or $400,000”. The reduction is capped at $2,000, which is ½% of $400,000. It does not reduce the seller’s share.

The definition in § 5401 is much stricter than DSHA’s. You must be someone “who has at no time held any direct legal interest in residential real estate, wherever located”. Where spouses or co-buyers purchase together, neither may ever have held such an interest. You must also plan to occupy the home within 90 days. A buyer who sold a house four years ago can pass DSHA’s three-year test but not this one. Local transfer tax is covered in Delaware closing costs.

Recapture on a Welcome Home loan

Welcome Home loans are “financed with tax-exempt bond funds.” The affidavit, revised 06/01/2026, warns that selling or transferring the home “within the first 9 years” can bring a federal recapture tax, which “may not exceed, in any event, 50% of the gain”. You may owe less or nothing if your income at the sale is below a prescribed amount, or if the transfer results from your death. Keep that page with your closing papers.

Finding a DSHA lender

DSHA posts a Top 10 Lenders page and an Other Participating Lenders list. The Delaware Mortgage Program fact sheet says complete files are reviewed “within three business days.” Run the payment on a DSHA first mortgage plus a deferred second with the mortgage calculator, and read about pre-approval before you choose a lender.

Delaware first-time buyer questions

I owned a condo until 2024. Can I use Welcome Home?

Not unless you are a qualified veteran or you buy in one of the listed targeted census tracts, because DSHA counts three years back from the day you sign the note. Open Door is the DSHA option otherwise.

Is Take5 forgiven if I stay long enough?

No. It is a 0% deferred second mortgage. You repay it when you refinance, sell, transfer title or move out, or at 30 years, whichever comes first.

Do I have to take a homebuyer class?

Only if your FICO score is 659 or below, as far as DSHA’s own rule goes. Your loan type may add its own requirement.

What is the most I can pay in Sussex County with a DSHA loan?

$566,354 for a single-family home, or $692,211 in Sussex’s targeted tracts 0505.03 and 0507.11.

Does the $2,000 transfer tax break come from DSHA?

No. It is a state tax reduction under 30 Del. C. § 5402(c). It applies to your share of the tax, whichever loan you use, if you have never owned residential real estate.

More on buying in Delaware

buydelawarefirst-time-buyershow-to