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Now that the housing market is finally calming down after the pandemic, buyers are facing a new challenge: Soaring mortgage rates.
In Delaware, the average 30-year fixed mortgage rate is 5.49% — up from 2021's historic lows. This raises the average monthly mortgage payment to $1,641 (assuming a 20% down payment at the median home value).
But buying a home in Delaware is still possible, even for first-time home buyers. Many markets are seeing frequent price drops and fewer offers, giving motivated buyers the upper hand in negotiating for the best price.
In this guide, you’ll learn how to buy a house in Delaware with confidence no matter what the market brings. Learn why you can trust our advice.
Whether you're actively house hunting or just starting to browse homes on Zillow, it's never too early to find a great local realtor to guide you on your search. An experienced agent can help you navigate a tricky housing market, explore your financial options, and negotiate the best deal possible.
Best of all, hiring a real estate agent comes at no extra cost to you — since the seller typically pays both their listing agent and your buyer's agent.
Ready to find a great local realtor, but not sure where to start? The best (and easiest!) option is to try a free agent matching service like Clever Real Estate. Answer a few simple questions about your home buying goals, and Clever will match you with hand-picked agents from Keller Williams, RE/MAX, and other top brokerages in your area. Find a top local agent and make your home buying dreams a reality today!
Step 1: Save for a down payment
🔑 Key takeaway:
Your down payment can be less than 20% of the purchase price — $72,331 for the typical home in Delaware — but you'll have to purchase mortgage insurance and pay more interest over the life of your loan.
Your down payment is the first part of your home's purchase price that you pay at closing. Your mortgage lender will pay the remaining balance.
Typically, mortgage lenders in Delaware want you to contribute 20% of the purchase price as a down payment. That would be $72,331 for a $361,656 home — the typical home value in Delaware.
However, you have options to lower your down payment amount.
Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).
Minimum down payment (%)
Down payment ($)
Based on typical home values from Zillow (August 2022)
But making a down payment of less than 20% comes with some risks.
First, because you're borrowing more money, you'll have a higher monthly payment and pay more in interest over the life of your loan.
Based on home values from Zillow (August 2022) and a 5.49% interest rate for a 30-year loan.
Second, you may have to purchase mortgage insurance.
Conventional loans require private mortgage insurance (PMI) until your loan balance reaches 80% of the purchase price. FHA loans, on the other hand, require a mortgage insurance premium (MIP) for the life of your loans.
Mortgage insurance costs around 1% of your mortgage balance annually. However, rates vary based on your down payment and credit score. Typically, your mortgage insurance payment is added to your mortgage payment each month.
VA loans don't charge mortgage insurance. Instead, you'll pay a VA loan funding fee at closing, which can range from 1.4% to 3.6% of the purchase price.
» READ MORE: Everything you need to know about low-income home loans
Delaware down payment assistance programs
Delaware offers several down payment assistance programs to help first-time and low-income homebuyers. Although each program has its own eligibility requirements, here are a few good resources to check out:
DSHA Preferred Plus Program
The Delaware State Housing Authority (DSHA) offers its Preferred Plus program to borrowers who were approved for a DSHA Homeownership Loan. The program helps participants pay for the down payment and closing costs with a second loan. This loan accrues no interest and can include 2-5% of the total loan amount.
The program is not limited to first-time homebuyers, but participants must have a credit score of at least 620. Maximum household income limits apply and vary by county.
Dream Maker Down Payment Program
Primary Residential Mortgage, Inc. (PRMI) provides down payment assistance through its Dream Maker Down Payment Program. Financial help comes as a second mortgage of up to 3.5% of the total purchase price, and this mortgage is forgivable if the borrower makes less than 115% of the average median income for the region. If the borrower earns above the 115% average median income, they can choose between a 10-year second mortgage with 0% interest or a 30-year second mortgage with 5% interest.
This program is only available for homebuyers purchasing a primary residence with an FHA loan. Those with VA, USDA, or conventional loans don't qualify. Eligible borrowers must also have a credit score of 620 or higher.
DPA Advantage Grant Program
PRMI also offers the DPA Advantage Grant Program for buyers with FHA loans. The grant can provide up to 6.5% of the purchase price in forgivable grant money. 3% of the funds would go towards the down payment, and the remaining 3.5% can help cover closing costs.
To be eligible, you must have a minimum credit score of 620 and complete a homebuyer counseling class approved by HUD. You'll also need to meet at least one of the following requirements:
- You're a first-time homebuyer.
- Your household income is under 140% of the county median income.
- You qualify as a "hometown hero" for being a first responder, educator, healthcare professional, civil servant, or military personnel.
U.S. Department of Housing and Urban Development
Delaware's list of alternative programs and resources is available from HUD here.
Step 2: Find a great real estate agent in Delaware
🔑 Key takeaway:
Interview multiple agents to find one who knows your target neighborhoods, has experience in your price range, and communicates well.
Your real estate agent will be your main ally during the home buying process. Besides finding and showing you properties, your agent will help you make offers, negotiate contracts, and navigate the closing process. Plus, they can recommend other service providers like title companies and inspectors to help you buy your home in Delaware.
Don't rush into choosing an agent. Instead, take the time to research and interview multiple real estate agents who have experience in the neighborhoods you're interested in. You should pay attention to a realtor's:
- Years of experience
- Number of transactions in the last year (the more the better!)
- Experience in your price range
- Overall review score
- Individual reviews and complaints
Step 3: Get preapproved for a mortgage
🔑 Key takeaway:
Once you're preapproved for a mortgage, it's imperative that your financial situation doesn't change. If your credit drops, it can derail the process and keep you from closing on your house.
Here are some easy ways to ensure your credit doesn't change after you receive your preapproval letter:
- Avoid opening new credit accounts
- Don't close any accounts that have been open for a long time
- Make all of your credit card payments on time
» LEARN MORE: What factors do mortgage lenders consider?
A mortgage preapproval letter is an offer to lend you up to a certain amount of money to purchase a home. It shows sellers that you are a serious buyer who is financially qualified to make an offer on a home.
Most sellers in Delaware will require preapproval before showing you their home.
You don't have to decide on one lender right now. In fact, you should compare interest rates and preapproval amounts from several lenders to make sure you're getting the absolute best terms when you buy your Delaware home.
Step 4: Choose the right location
🔑 Key takeaway:
Search for neighborhoods where:
- Home prices are within your price range
- Home values are on the rise
- The local amenities support your lifestyle
Currently, the typical home value in Delaware is $361,656, but don't worry if that doesn't perfectly match your budget. Home prices vary dramatically from city to city and even from neighborhood to neighborhood!
Also, look at past home value trends. This will give you an idea of how much your home's value could go up over the next few years.
To give you an idea of how appreciation could impact what your house is worth in the future, consider these examples from three neighborhoods in Newark:
Home value appreciation in Newark
Step 5: Start house hunting in Delaware
🔑 Key takeaway:
Delaware’s inventory has swelled considerably in the past year, so there will be a lot of homes to choose from. Let your real estate agent know what exactly you’re looking for — they can filter out all the listings and come up with a list of houses that will fit your needs. However, given the spike in prices, you may either have to be flexible with your budget or more loose on your requirements.
Searching for homes in Delaware is the fun part of the home buying process! You'll get to look at a variety of homes and discover what you really want in a home.
Make a list of everything you want in a home and prioritize them. At the top of the list should be the items that are most important to you. This will help you separate your "must-haves" from your "nice-to-haves."
Your agent can help you understand if your wants are realistic for your budget and favorite neighborhoods or if you need to rethink what you're looking for.
Look at current housing inventory
The timing of your house hunt in Delaware can have a big impact on your number of options. For example, in Delaware, October has historically seen the most homes for sale. Searching in this season could give you more options and a greater likelihood of finding your dream home.
On the other hand, December gives you the fewest choices in Delaware. Historically, there are 49.5% fewer homes for sale than during Delaware's peak season.
Housing inventory in Delaware by season
New listings per month
Based on data from Realtor.com (October 2022)
Step 6: Make an offer
🔑 Key takeaway:
Trends in Delaware vary greatly across local markets — city areas will typically be more aggressive, while rural markets move a bit slower. It’s best to consult with your agent before making an offer and follow their advice on negotiating. They know your local area’s trends and will give you the best advice regarding your approach.
Once you find a Delaware house you love, it's time to make an offer. Your real estate agent will help you write a compelling offer that gives you the best shot of convincing the homeowner to sell to you.
Currently, in Delaware, homes stay on the market for 88 days before going under contract. However, every market goes through seasonal changes. During busier months, homes get snatched up more quickly than others.
Historically, Delaware homes sell fastest in May, where the average property is only on the market for 77 days. If your home search falls around this time, you should be prepared to move quickly and potentially make offers on several homes before yours is accepted.
On the other hand, if you buy in February, you have a bit more time to search. Homes typically stay on the market 22 days longer than Delaware's annual average.
Average time homes spend on market in Delaware
Based on data from Realtor.com (October 2022)
» LEARN MORE: What should an offer include?
Step 7: Inspections and appraisals
Inspections and appraisals are an opportunity for you to better evaluate the home's condition and value before officially purchasing it. You may have an opportunity after this step to renegotiate the terms of your contract with the seller if something unexpected pops up.
🔑 Key takeaway:
- Inspections: A licensed professional checks the house for any unseen, unexpected, or potential issues.
- Appraisals: An appraiser hired by your lender examines the house to determine how much it's worth.
Home inspections in Delaware
Having your Delaware home inspected by a licensed inspector gives you peace of mind about the condition of the property before you commit thousands of dollars to purchase it.
Your inspector should check out the following parts of the property:
- Electrical system
- HVAC system
If the home has a septic system, you should also pay for a septic inspection to make sure it doesn't have any problems that wouldn't be covered in a typical home inspection.
Delaware requires sellers to disclose most major issues and concerns to interested buyers. Most problems with a property can be found during a general home inspection, but it's still a good idea to do some additional tests just to be safe. Here are a few inspections all buyers should consider before closing:
- Radon testing: If it's been a year or more since the seller last tested the property for radon, it's highly recommended to get a test as soon as possible. Delaware residents can sign up to get a free radon test kit here.
- Termite inspection: Some loans require borrowers to get termite and pest inspections prior to closing on a home. However, getting a pest inspection is a wise move to ensure your family's safety and comfort in a new home.
Appraisals determine the value of the property. If you're using a mortgage to buy your new home, your lender will order an appraisal to make sure the home is worth the money that it's loaning you.
» LEARN: 3 options for buyers after a low appraisal
Step 8: Close on your new home!
🔑 Key takeaway:
Before you close on your new home, you and your agent will do a final walkthrough of the property to ensure that it's still in the expected condition.
Closing on your Delaware home requires you to complete the required paperwork and settle the closing costs. You'll meet at a title company to streamline this process and transfer the title into your name.
On the closing date, expect to review and sign several essential documents. It's recommended to study these papers ahead of time so you won't be surprised with anything on closing day.
Some of the most important documents you'll be asked to sign will include:
- Your final loan application
- The deed
- The mortgage note
After signing, you’ll pay all of your closing costs. Simply pay the total amount to your title company, and they will distribute the payments accordingly.
For homebuyers, closing costs can be divided into four categories:
- Prepaid costs: Ongoing homeownership fees that are paid up front. Mortgage lenders sometimes require buyers to pay for their homeowners insurance or property taxes ahead of time.
- Lender fees: Service fees paid to your mortgage lender for originating and underwriting your loan.
- Title and escrow charges: Service charges paid to your title company for their research, documentation, and closing day assistance.
- Other closing costs: Miscellaneous costs that vary by individual. Other closing costs may cover a pest inspection, disaster certification, real estate attorney services, or other services.
Buyers in Delaware typically pay 3–5% of the purchase price in closing costs. For a $361,700 home — the typical home value in Delaware — that's between $10,851 and $18,085!
Frequently asked questions
In Delaware it's required for a real estate attorney to be part of every home sale. While your agent can make recommendations, remember you get to make the final decision. Interview lawyers before hiring them to make sure they have the experience you need.
- Save for down payment
- Get pre-approved for a mortgage
- Choose your preferred Delaware neighborhoods
- Partner with the right real estate agent in Delaware
- Go house hunting
- Make a strong offer
- Inspections and appraisals
- Do a final walkthrough and close
Yes, but it isn't restricted to first-time buyers. The Delaware State Housing Authority (DSHA) can provide you with a 30-year, fixed-rate loan of up to $417,000. The program additionally offers down payment and closing cost assistance for eligible participants.
To qualify, borrowers must have a minimum credit score of 620. Those with a credit score below 659 are required to complete housing counseling. Maximum income limits apply and vary by county.
Why trust us?
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Our team of industry-leading researchers are committed to making homeownership more accessible by educating buyers through guides like this one. We've spent thousands of hours analyzing publicly available data, surveying consumers, and interviewing industry experts. Our research has been featured in The New York Times, Business Insider, Inman, Housing Wire, and many more.
Federal Reserve. "Housing Market Tightness During COVID-19: Increased Demand or Reduced Supply?." Accessed October 11, 2022. Updated July 08, 2021.
Consumer Protection Financial Bureau. "The Fed is raising interest rates. What does that mean for borrowers and savers?." Accessed October 11, 2022. Updated March 17, 2022.