Delaware First-Time Homebuyer Tax Credit


What is the Delaware First-Time Homebuyer Tax Credit?

Delaware First-Time Homebuyer Tax Credit is a federal income tax credit designed to help make home ownership more affordable to qualified homebuyers. Homebuyers who elect to use the federal tax credit are eligible to claim a portion of the annual interest paid on their mortgage as a special tax credit. The annual amount of the credit cannot exceed $2,000 per year. The federal tax credit will be available as long as there is a mortgage loan on the property and the homebuyer occupies it as their primary residence.

The amount of the federal tax credit will be based on a percentage of the mortgage interest paid each year. The Delaware First-Time Homebuyer Tax Credit is 35% of the mortgage interest paid.


Delaware First-Time Homebuyer Tax Credit Example:

First Mortgage Amount

$150,000.00

Annual Interest Rate (30-year, fixed)

4.5%

Approximate Total Mortgage Interest Paid (Year One)

$6,700.51

Delaware First-Time Homebuyer Tax Credit Rate

35%

$2,345.85

Annual Tax Credit Amount (Subject to $2,000/year max)

$2,000.00

The homeowners who file an itemized Federal Income Tax Return can still claim the remaining Mortgage Interest Deduction ($6,700.51 - $2,000.00) of $4,700.51 when they file their Federal Income Tax Return. Delaware First-Time Homebuyer Tax Credit is a true "tax credit", reducing the amount of the credit from their total federal income tax liability, receiving a dollar for dollar savings.


Homebuyers who use the Delaware First Time Homebuyer Tax Credit may also use one of DSHA's downpayment and closing cost assistance options.
At closing, the borrowers sign a simple Delaware First-Time Homebuyer Tax Credit Closing Affidavit. That’s it!


How to Apply:

Homebuyers must apply for the DE Tax Credit through a participating lender. A list of Lenders is available here.


Am I Eligible?

  • Buyer must purchase a home within the State of Delaware.
  • Buyer(s) cannot have owned a home in the past three years as his or her primary residence unless purchasing a home in a Targeted Area or the homebuyer is utilizing the Qualified Veteran Exemption.
  • Household income and the purchase price must not exceed the maximum limits set by the Program.
  • Buyer must occupy the home as his or her primary residence.

Maximum household income for eligibility are as follows:

County

Area

1 or 2 Person Households

3 or More Person Households

New Castle

 

$81,100

$93,265

 

Targeted

$97,320

$113,540

Kent & Sussex

 

$74,400

$85,560

 

Targeted

$89,280

$104,160


Property Qualifications
To qualify, a property's purchase price cannot exceed:

County

Type of Home

1 Unit

2 Unit

3 Unit

4 Unit

Kent

$255,573

$327,186

$395,477

$491,487

New Castle

$357,831

$458,062

$553,719

$688,130

Sussex

$298,192

$391,734

$461,409

$573,426



Fees

  • $350 Delaware First-Time Homebuyer Tax Credit Application fee collected at closing, and
  • 1% Issuance fee based on the first mortgage loan amount*
  • *The 1% Issuance fee is waived for borrowers who use DSHA's Welcome Home loan.

Please note that any statements regarding tax matters cannot be relied upon by any person to avoid tax penalties. You should seek advice based on your individual circumstances from your tax advisor.


Participating Mortgage Lenders
Once you know you have met all requirements for this program, contact the lender of your choice.
Find a lender.


Request for Reissuance of Existing Tax Credit Certificates for DSHA Borrowers Refinancing Their First Mortgage

Use the attached form to apply to have your tax credit certificate reissued when you refinance your mortgage. Complete the form and submit as instructed.

Contact DSHA

Do you have questions about this program? Please contact DSHA toll-free at (888) 363-8808 or via email at ContactDSHA@DeStateHousing.com.