Prepare for your home-buying journey and secure your dream property
with these streamlined, step-by-step first-time home buyer guides.
Buying your first home is an exciting milestone, but it does require careful financial preparation. Homeownership comes with upfront costs, so knowing exactly what to expect in Delaware — where the average home value is $410,212 — is a smart first step.
First-time homebuyers can access state programs to secure home loans, down payment assistance, and tax credits. This guide provides first-time homebuyer tips and advice and a comprehensive overview of the steps to buying your first property in The First State.
What is a first-time homebuyer? You might be surprised. HUD defines a first-time homebuyer as someone who hasn’t owned a principal residence in the three years leading up to the purchase of a new home.
You also qualify as a first-time homebuyer if you are recently single or divorced and have only owned a home with a former spouse. Or if you owned a house that did not sit on a permanent foundation, such as a manufactured home.
Delaware offers many first-time homebuyer benefits, and veterans often get a waiver for the three-year rule. It’s worth taking the time to understand these rules before you seek a loan.
Buying your first home in Delaware is a big step, but you don’t have to do it alone. The Delaware State Housing Authority (DSHA) offers a range of programs designed to help you navigate high property values and manage those upfront costs. They address typical affordability barriers by offering competitive loan terms and flexible credit rules.
DSHA assistance programs fall under two umbrellas, the Welcome Home initiative and the Open Door initiative. Each of these initiatives has similar programs within them, but they have different income requirements for qualification. Both programs require a minimum credit score of 620, and first-time homebuyers with a credit score of 659 or below are typically required to participate in housing counseling to qualify.
For one- or two-person households, the income limits for the Welcome Home initiative are $122,700 in New Castle County and $111,400 in both Kent and Sussex Counties. The first-time homebuyer benefits that the Welcome Home initiative offers are:
If your annual household income exceeds the Welcome Home baseline, the DSHA has the Open Door initiative. Open Door offers the same Smart Start, First State, and Keys4You Home Loan programs to moderate-income buyers. The income limit for a one- or two-person household is $147,240 in New Castle County and $133,680 in Kent and Sussex Counties.
Among other first-time homebuyer advantages, Delaware also offers the First-Time Homebuyer Tax Credit, which allows qualified buyers to claim up to 35% of their annual mortgage interest payments as a direct federal income tax credit. This mortgage credit certificate reduces your annual tax bill dollar-for-dollar up to a maximum of $2,000 every single year. If you pay interest beyond this cap, you can still claim that remaining balance as an itemized tax deduction on your federal return.
Recommended: Delaware First-Time Home-Buying Assistance Programs
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Wondering where to start? Purchasing a home involves a series of choices, but breaking them down into a clear plan can help you avoid common mistakes. Follow these 11 steps to prepare your finances, choose your team, and close on a home you love.
Before you start browsing listings, take a moment to evaluate your finances. Reviewing your monthly income and expenses helps you establish a realistic baseline for what you can afford. Financial readiness means your budget can cover the down payment, mortgage payments, homeowners insurance, and regular maintenance fees.
Your credit score is a critical indicator for mortgage lenders, and a high credit score helps you secure a lower interest rate. Your debt-to-income (DTI) ratio will also be a factor in your borrowing rate and ability to qualify for certain government programs. It’s a good idea to stay in the new home for a while to let your equity increase through monthly payments and appreciation.
You can compare housing prices to see if rents are higher than a potential mortgage payment. Reviewing a guide on average monthly expenses for one person may help you get your finances in order.
A complete budget tracks your upfront expenses and ongoing housing costs. You can use a home affordability calculator to figure out a comfortable monthly payment range that includes your property taxes and insurance. Don’t forget to factor in homeowners association fees, moving expenses, new furniture, and landscaping needs.
The size of your down payment will depend on the purchase of your home and will affect your mortgage. It’s a good idea to use a down payment calculator to help you get an idea of what you can afford. Buyers often save enough for a down payment that is 20% of the home’s purchase price to avoid private mortgage insurance. A down payment this large also helps you qualify for a lower interest rate.
However, you do not need a massive nest egg to buy a house in this state. The minimum down payment for a conventional loan can be as low as 3% for first-time buyers. Certain government loans require zero down payment for qualified individuals. It may also be useful to check the cost of living if you relocate from another state into Delaware.
The type of mortgage loan that’s ideal for you will depend on your financial situation. You have access to multiple loan types with distinct rules and qualifications, including:
Whichever loan option you choose, the main components of your mortgage payment will be the same. The principal is the original amount you borrow, and the interest is the fee the lender charges for the loan.
Shopping around for a mortgage lender saves you money over time because interest rates vary across lenders and impact your total borrowing costs over the years. It’s advisable to request quotes for a home loan from at least three different financial institutions to compare terms.
Take the time to learn the difference between the interest rate and the annual percentage rate (APR). The interest rate tracks the cost to borrow the principal amount, and the APR includes the interest rate plus extra costs, such as lender fees and discount points.
There is a difference between prequalification vs. preapproval. Prequalification provides an informal estimate of your borrowing capacity based on unverified data. This step uses a soft credit check that does not affect your credit score and provides a rough baseline before you start house hunting. You can get prequalified with several lenders to better compare their offers.
Preapproval is a formal evaluation where a lender verifies your personal finances. To complete the mortgage preapproval process, you need to submit tax returns, bank statements, and proof of employment. A preapproval letter gives you an advantage over other buyers in competitive markets.
Sellers prefer buyers with preapproval because it shows you are a serious buyer with the guaranteed financial capacity to close the deal. It also gives you a clear understanding of your price range, helping you avoid wasting time on homes that don’t fit your budget.
Hiring a real estate agent early makes the home-buying experience easier. An agent tailors the home search to match your criteria, which saves you time because you avoid looking at unsuitable properties.
Agents represent your interests, and experienced ones may find listings that are not yet on the market. They can guide you through negotiations and handle the intricacies of complex legal paperwork.
It’s useful to do a little research into how real estate commission fees are changing. Industry norms changed after a recent legal settlement, so you’ll want to discuss compensation upfront with any agent you consider hiring.
Explore neighborhoods that you’re interested in to find an ideal location. If you have children or plan to, then consider local school districts. Location is the single factor you cannot change about a property after you purchase it, so remember proximity to work and daily commute times.
You’ll want to keep in mind structural conditions and potential damage when you’re looking at houses. Functionality is more important than cosmetic issues such as paint colors. It’s worth checking the water pressure, light fixtures, and the number of electrical outlets in each room.
By the way, this is a good time to learn your rights regarding fair housing laws. Antibias laws protect you from discrimination based on race or familial status.
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When you find the right home, your real estate agent will help you draft an offer letter. This document outlines your proposed purchase price, contingencies, a deadline for the seller’s response, and a closing timeline. Contingencies protect your deposit if a home inspection reveals massive structural problems.
Sellers can accept, reject, or counter your offer letter terms. If the seller accepts your offer, you proceed to the formal contract stage. You’ll then have to submit an earnest money deposit to show your good faith, which sits in a secure escrow account until closing, when it is applied to the purchase price.
The next step in the process is to have a professional home inspection. A home inspection includes a thorough evaluation of the property’s structure, roof, plumbing, and electrical systems. This step uncovers hidden defects before they become your responsibility.
The cost of a standard home inspection ranges between $300 and $425. This out-of-pocket expense protects your investment from potential future repairs. If you can, it’s a good idea to attend the inspection in person to ask the inspector questions directly.
Shopping around and reading online reviews can help you find a reputable professional, though your buyer’s agent will likely have a recommendation. Be sure to verify lender requirements, as some mandate specialized roof or pest reports prior to closing.
An appraisal determines the property’s fair market value, which lenders require to confirm that the home supports the loan amount. A third party selects the appraiser at random to ensure absolute objectivity.
An appraisal differs from a home inspection in that an appraisal assesses a dollar value, while a home inspection evaluates the physical condition. The appraiser visits the property, evaluates it, and compares it to recent nearby sales. The homebuyer pays the cost of the appraisal, which ranges between $300 and $600.
Closing is the final stage of the home-buying process. A few days before the appointment, you and your agent will conduct a final walk-through of the property to verify its condition has not changed.
You’ll then receive a Closing Disclosure for review at least three days before closing. This paperwork lists your final loan terms, closing costs, and exact cash needs. The escrow company handles the settlement funds and records the new deed. You sign the mortgage note and pay the closing costs. The closing agent hands you the house keys, and you celebrate your new homeownership status.
An online calculator can be a big help in comparing home equity loan rates and terms. And it’s not the only calculator you’ll find helpful during your home equity loan process:
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Congratulations — and welcome home! Now that the house is yours, use this move-in checklist to help keep your tasks organized:
Delaware has excellent programs that can help you reduce the financial barriers to homeownership. By following these steps and working with trusted local pros, you can stay on track to secure a home that fits your budget and helps you get your money right.
When buying a house for the first time, you need funds to cover the down payment and closing costs, which range from 3% to 20% of the purchase price for conventional loans. Government programs can lower this requirement to zero down payment. Closing costs typically run between 2% and 5% of the mortgage amount.
State assistance programs in Delaware require a credit score of 620 or higher to qualify, which is also the standard for conventional mortgages. For FHA options, you can qualify with a 580 score and a 3.5% down payment or 500 with a 10% down payment. Lenders often look for scores of at least 620 for VA and USDA loans.
When buying a house, start by evaluating your personal finances and securing mortgage preapproval from a lender. Then, find a real estate agent to guide your search for properties and submit an offer letter. Finally, get a home inspection, secure insurance, and attend the closing meeting.
The 30/30/3 rule for home buying advises spending under 30% of your gross income on housing costs, saving 30% of the home value in cash, and limiting the property price to three times your annual gross income. This rule may be unrealistic in today’s high-priced real estate market.
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
This article is not intended to be legal advice. Please consult an attorney for advice.Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
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