Last Updated on August 7, 2022 by Danielle McDonald
Mortgage Assistance for Homebuyers in Delaware
Delaware State Housing Authority created a tax credit program to incentivize and help first-time homebuyers afford their first home.
Delaware offers a tax credit that makes homebuying affordable for first-time buyers. Residents may claim a portion of their annual interest on the mortgage (35% of the interest) as an additional federal tax credit up to $2,000 per year. This tax credit can also be used in conjunction with closing cost and down payment assistance programs offered by participating lenders.
Individuals must buy a home in Delaware in order to be eligible for the tax credit. They must also be first-time homebuyers, meaning they have not owned a house for three years. However, there is an exception for those who are purchasing a house in a Targeted Area or utilizing the Qualified Veteran Exemption. Moreover, the maximum income of the household and the price of the home must not exceed these limits mandated by the program.
New Castle County Non-Targeted Areas
- 1 or 2-person household: $90,100
- 3 or more person household: $103,615
New Castle County Targeted Areas
- 1 or 2-person household: $108,120
- 3 or more person household: $126,140
Kent and Sussex Counties Non-Targeted Areas
- 1 or 2-person household: $78,900
- 3 or more person household: $90,735
Kent and Sussex Counties Targeted Areas
- 1 or 2-person household: $94,680
- 3 or more person household: $110,460
The Delaware State Authority provides affordable home loans and assistance with down payments to eligible residents. This is an effort to encourage them to buy homes rather than stay in rented apartments for many years.
DSHA mortgages are fixed-rate, 30-year loans with interest rates at or lower than the standard market rate for eligible buyers. These loans work in standard mortgage programs, such as conventional, VA, FHA, and USDA. Every applicant with a DSHA Homeownership Loan can utilize the flexible, and customizable Preferred Plus assistance. This assistance provides a second mortgage loan of 2% to 5% of the total loan amount without interest. These funds can then be used for the down payment or closing costs. However, the loan must be repaid when the property is sold, transferred, refinanced, or if it is no longer the borrower’s primary residence.
- The maximum household income need to be at or lower than the following limitations:
- New Castle County, 1 – 2 people: $113,400; 3 or more persons: $141,750
- Kent & Sussex County, 1 – 2 people: $99,600; 3 or more persons: $124,500
- Minimum credit score: 620; housing counseling is required for applicants with credit scores of or below 659.
- Maximum loan amount: $417,000; no maximum purchase price
The New Castle County Department of Community Services offers the Down Payment Settlement Program to first-time homebuyers in an effort to help them achieve their goal of homeownership. This program is a deferred loan to help cover the down payment and closing/settlement costs of buying a home.
The Down Payment Settlement loan amount is at least $1,000, and at most $5,000. A housing counselor determines the amount each borrower receives. The 8-year loan term is divided into two segments: Period 1, consists of the initial 3 years which is the deferral period. It is where 3% simple interest accrues and payments are optional. Period 2, the remaining 5 years. It is when payments every month are required. Moreover, all interest is forgiven if the loan is paid off in full within Period 1. The loan needs to be fully repaid, however, if property is sold or transferred.
All applicants must meet a specific set of requirements to qualify for the Down Payment Settlement Program. This program is only for first-time homebuyers. Therefore, applicants who have owned a principal residence for the past three years are not eligible. They must also contribute at least $500 cash.
The buyer must live in the purchased property as their primary residence for the entire term of the loan. Moreover, the Down Payment Settlement Program is open to all properties located in New Castle County, outside of Wilmington. Maximum purchase price for a single dwelling structure for this program is $379,500.
Each applicant must have an annual household income of at or below 80% of the New Castle County’s area median income. The limits adjust for family size according to HUD Guidelines. In addition, the applicants must complete a New Castle County and HUD approved Homeownership Education Program.
- 1 person household: $45,450
- 2 person household: $51,950
- 3 person household: $58,450
- 4 person household: $64,900
- 5 person household: $70,100
- 6 person household: $75,300
- 7 person household: $80,500
- 8 person household: $85,700
This programme similar to the down payment First-Time Homebuyer Assistance Programs in Connecticut.
The New Castle County Department of Community Services created the ReVaMP program to encourage homeownership and increase sales of vacant property. ReVaMP stands for “Remediating Vacancies Making Progress.”
ReVaMP assists individuals through covering the down payment and closing costs for vacant homes in New Castle’s designated areas. The funds are deferred loans of up to $5,000, with zero interest in a 5-year term. Furthermore, the entire amount of the loan is forgiven, provided that borrower lives in the house for 5 years.
This program is not exclusive for first-time homebuyers, unlike other down payment assistance programs. All applicants, however, must meet certain requirements in order to qualify for the ReVaMP program. The annual income of the borrower’s household must also be at or below 120% of the New Castle County’s area median income (limits listed below). In addition, all applicants must attend and finish a Homeownership Education program at an HUD approved New Castle housing counseling agency.
The maximum selling price for eligible properties is $379,500. They must also be located within the program’s designated areas, including the following Census Tracts: 101.01, 101.04, 103.00, 105.02, 107.02, 120.00, 121.00, 122.00, 123.00, 124.00, 125.00, 127.00, 129.00, 130.00, 132.00, 134.00, 136.07, 136.09, 138.00, 139.02, 140.00, 141.00, 147.03, 147.05, 148.08, 149.02, 149.03, 149.05, 150.00, 151.00, 152.00, 154.00, 155.00, 158.00, 159.00, and 164.04.
- 1 person household: $67,560
- 2 person household: $77,160
- 3 person household: $86,760
- 4 person household: $96,360
- 5 person household: $104,160
- 6 person household: $111,840
- 7 person household: $119,520
- 8 person household: $127,200
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