Mortgage Guide for Delaware

Delaware's compact geography, absence of sales tax, and proximity to major Mid-Atlantic employment centers create a distinctive mortgage environment. Borrowers should pay close attention to the state's notably high realty transfer tax, which at a combined 4% is among the highest in the nation, while taking advantage of conforming loan limits and robust state housing authority programs.

Mortgage Numbers for Delaware

Median Home Price	$350,000
Baseline Conforming Limit	$832,750
Conforming Limit Ceiling	$832,750 (standard)
FHA Loan Limit (Baseline)	$541,287
Avg. Property Tax Rate	0.57%
Avg. Homeowners Insurance	~0.24% of home value (avg. annual premium)
Transfer Tax	4.00% (Combined state (2.5%) and county (1.5%) realty transfer tax; customarily split equally between buyer and seller )
High-Cost Counties	No

Data sources: FHFA (conforming limits), HUD (FHA limits), U.S. Census (home values), State Department of Revenue (property tax). Updated annually unless noted. Data as of 2026-02-27.

What This Means for Your Mortgage

Delaware Mortgage Market Overview

Delaware is one of the smallest states by area, yet its three counties, New Castle, Kent, and Sussex, span a wide range of housing markets. Northern New Castle County, anchored by Wilmington and its suburbs, draws commuters working in Philadelphia and across the I-95 corridor. Kent County, home to the state capital Dover and Dover Air Force Base, offers more moderate pricing. Sussex County along the coast has seen sustained demand driven by retirees and second-home buyers drawn to beach communities such as Rehoboth Beach and Lewes.

The statewide median home price sits near $350,000 , though prices in coastal Sussex County and affluent Wilmington suburbs frequently exceed that figure. All three counties fall within the standard conforming loan limit of $832,750 , meaning most buyers can finance with conventional loans without needing jumbo financing.

Transfer Taxes: A Critical Cost Factor

Delaware's realty transfer tax deserves careful attention during purchase planning. The state levies 2.5% of the property's sale price, and counties add an additional 1.5%, bringing the combined rate to 4%. By convention, this cost is typically split equally between buyer and seller, meaning each party pays approximately 2% . On a $350,000 home, that translates to roughly $7,000 per side.

This rate is substantially higher than neighboring states. Maryland's combined transfer and recordation taxes are generally lower for most transactions, and Pennsylvania's transfer tax stands at 2% (split between buyer and seller in most counties). Buyers relocating from those states should budget accordingly. First-time buyers purchasing through certain Delaware State Housing Authority programs may qualify for a partial transfer tax exemption .

Property Taxes and Insurance

Delaware's effective property tax rate of approximately 0.57% is well below the national average, partially offsetting the high transfer tax for long-term owners. The state does not impose a sales tax, which further reduces the overall cost of living. Homeowners insurance rates average around 0.24% of home value annually , among the lowest in the Mid-Atlantic region, though coastal Sussex County properties may face higher premiums due to flood and wind exposure.

Buyers financing with less than 20% down should factor in private mortgage insurance (PMI) costs. Understanding your debt-to-income ratio is essential for determining how these carrying costs affect qualification.

Loan Programs for Delaware Buyers

FHA loans remain popular among first-time buyers and those with moderate credit profiles, offering down payments as low as 3.5%. Delaware's median price falls well within FHA loan limits for all three counties.

The presence of Dover Air Force Base in Kent County makes VA loans particularly relevant. Active-duty service members, veterans, and eligible surviving spouses stationed at or near Dover AFB can purchase with no down payment and no PMI requirement. Military buyers should also explore the DSHA programs below, which can be layered with VA financing in some cases .

Rural portions of Kent and Sussex counties may qualify for USDA loans, which offer zero-down financing for income-eligible buyers in designated areas. Eligibility maps should be checked carefully, as some suburban areas near Dover and coastal towns have been excluded from USDA eligibility .

Delaware State Housing Authority Programs

The Delaware State Housing Authority (DSHA) administers several programs designed to improve access to homeownership, particularly for first-time and moderate-income buyers. DSHA programs typically offer below-market interest rates and can be combined with down payment and closing cost assistance. Income limits, purchase price caps, and homebuyer education requirements apply to all DSHA programs. Details and current availability are outlined in the programs section below.

Regional Considerations

New Castle County buyers competing in the Wilmington suburbs should expect a faster-paced market with prices that trend above the state median. Pre-approval and strong documentation are important in competitive offer situations. Kent County offers a more balanced market, with steady demand supported by the military community and state government employment. Sussex County's coastal markets can be seasonal, with inventory and pricing fluctuating between winter and summer months. Flood insurance requirements are common for properties near the coast and tidal waterways; buyers should verify flood zone designations early in the process.

Borrowers considering properties in border areas may also want to compare mortgage conditions in neighboring Maryland, New Jersey, and Pennsylvania, where tax structures and assistance programs differ significantly.

Homebuyer Programs in Delaware

DSHA Homeownership Loan Program Delaware State Housing Authority · Low-Interest Second First-time and repeat buyers meeting income and purchase price limits. Offers 30-year fixed-rate mortgages at competitive rates through participating lenders. Homebuyer education required. Official Program Page → Last verified: 2026-02-27

DSHA Preferred Plus Second Mortgage Delaware State Housing Authority · Forgivable Loan Second mortgage up to 2-5% of the home price for down payment and closing cost assistance. Available to borrowers using a DSHA first mortgage. May be forgivable after a compliance period . Official Program Page → Last verified: 2026-02-27

DSHA Welcome Home Grant Delaware State Housing Authority · Grant Grant funds for down payment and closing cost assistance, typically paired with a DSHA first mortgage. Does not require repayment. Income and purchase price limits apply. Official Program Page → Last verified: 2026-02-27

DSHA Homeownership Voucher Program Delaware State Housing Authority · Down Payment Assistance Allows Housing Choice Voucher holders to apply their subsidy toward a mortgage payment instead of rent. Participants must complete homebuyer counseling and meet program requirements. Official Program Page → Last verified: 2026-02-27

New Castle County First-Time Homebuyer Assistance New Castle County Department of Community Development · Forgivable Loan Down payment and closing cost assistance for income-eligible first-time buyers purchasing in New Castle County. Funds typically structured as a forgivable loan with residency requirement. Official Program Page → Last verified: 2026-02-27

Wilmington Homeownership Assistance Program City of Wilmington · Down Payment Assistance Down payment assistance for qualifying buyers purchasing within Wilmington city limits. Income restrictions and homebuyer education requirements apply. Official Program Page → Last verified: 2026-02-27

Calculate Your Delaware Mortgage

Delaware Monthly Payment Calculator Estimate your monthly mortgage payment using Delaware's 0.57% property tax rate and 0.24% insurance rate. Delaware Home Affordability Calculator Determine how much home you can afford based on your income, debts, and Delaware-specific tax and insurance costs. Delaware Closing Cost Calculator Calculate your estimated closing costs including Delaware's 4% combined realty transfer tax. Delaware DTI Calculator Check whether your debt-to-income ratio meets qualification thresholds for Delaware home purchases. Delaware PMI Calculator Estimate private mortgage insurance costs for Delaware purchases with less than 20% down. Delaware Down Payment Comparison Compare how different down payment amounts affect your monthly costs and PMI requirements on a Delaware home.

Frequently Asked Questions

What is the transfer tax on a home purchase in Delaware?

Delaware's combined realty transfer tax is 4% of the sale price, consisting of a 2.5% state tax and a 1.5% county tax. This is typically split equally between the buyer and seller, so each party pays approximately 2%. On a $350,000 home, that amounts to roughly $7,000 per side. This rate is among the highest in the nation and should be factored into closing cost budgets early in the purchase process.

Are there first-time homebuyer programs in Delaware?

Yes. The Delaware State Housing Authority (DSHA) offers several programs including below-market-rate first mortgages, the Preferred Plus second mortgage for down payment assistance, and the Welcome Home Grant. Local programs are also available through New Castle County and the City of Wilmington. Most programs require homebuyer education, and income and purchase price limits apply.

What is the conforming loan limit in Delaware?

The conforming loan limit for all three Delaware counties (New Castle, Kent, and Sussex) is $832,750 for 2025. Delaware has no high-cost county designations, so the standard limit applies statewide. Loans exceeding this amount require jumbo financing, which typically involves stricter qualification requirements and potentially higher interest rates.

Do I need flood insurance for a home in Delaware?

Flood insurance is required by lenders for properties located in FEMA-designated Special Flood Hazard Areas. In Delaware, this is most common in Sussex County's coastal areas, along tidal waterways, and in low-lying portions of New Castle County near the Delaware River. Buyers should check FEMA flood maps for their specific property. Even properties outside high-risk zones can benefit from flood coverage, as standard homeowners insurance does not cover flood damage.

Can I use a VA loan in Delaware?

Yes. VA loans are available to eligible active-duty service members, veterans, National Guard and Reserve members, and surviving spouses throughout Delaware. Dover Air Force Base in Kent County is a significant military installation, and many buyers in the Dover area utilize VA financing. VA loans offer no down payment, no PMI, and competitive interest rates. VA loans can potentially be combined with certain DSHA assistance programs.

How do Delaware property taxes compare to neighboring states?

Delaware's effective property tax rate of approximately 0.57% is lower than the national average and significantly lower than New Jersey (which has among the highest property tax rates nationally) and Pennsylvania (which varies widely by county but often exceeds 1%). Maryland's effective rate is generally comparable to or slightly higher than Delaware's. Combined with the absence of a state sales tax, Delaware's overall tax burden on homeowners is moderate, though the high transfer tax increases upfront purchase costs.

Are USDA loans available in Delaware?

USDA loans are available in eligible rural areas of Delaware, primarily in portions of Kent and Sussex counties. These loans offer zero-down financing for income-eligible buyers. However, more densely populated areas near Dover, Wilmington, and coastal resort towns are generally excluded. Buyers should check the USDA eligibility map for their specific property address, as boundaries are periodically updated.