Miles of beautiful beaches and friendly coastal towns (and no sales tax!) make Delaware a great place to call home. Residents also enjoy the state’s delicious local seafood and fun festivals.
If you’re searching for a home in Delaware, remember to shop around and compare mortgage rates. What may seem like a small difference could add up to thousands of dollars over the course of a 15-year or 30-year mortgage.
- Mortgage debt in Delaware
- Types of home loans
- Conforming loan limits in Delaware
- First-time homebuyer programs in Delaware
- Mortgage refinance rates in Delaware
Mortgage debt in Delaware
Credit Karma members with mortgages in Delaware had average mortgage debt of $200,858 in 2020 and an average monthly mortgage payment of $1,272.
That puts Delaware above average for mortgage debt and a bit below average for monthly mortgage payments compared to Credit Karma members across the U.S. in 2020.
Types of home loans
If you choose to finance your dream home, you might be overwhelmed with the number of mortgage loan options out there. Here are some of the more common mortgage types Delaware homeowners may consider.
Conventional loans in Delaware
Conventional loans are mortgages that aren’t part of government programs. These loans tend to be good for people with solid credit and a down payment of at least 3% to 5%.
Delaware FHA loans
FHA loans are a good option for first-time homebuyers to explore — particularly if your credit is less than perfect. That’s because you may be able to qualify with credit scores as low as 580 with a 3.5% down payment or 500 with a down payment of 10%. This FICO® score requirement is the FHA minimum standard. In general, additional lender credit score requirements may apply.
The FHA loan limit in 2023 is generally $472,030 for a one-unit property, but it can reach as high as $1,089,300 depending on where you live.
One area in Delaware has higher limits:
- Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
You can find the exact limit by county on the U.S. Department of Housing and Urban Development website.
VA loans in Delaware
If you’re an eligible veteran or service member comparing mortgage rates in Delaware, a VA loan can be attractive since down payments and mortgage insurance aren’t typically required and you may be able to qualify even if you don’t have great credit.
Similar to FHA loans, VA loans are insured by the government but issued by private lenders.
Conforming loan limits in Delaware
Conforming loans are a type of home loan that meets certain loan limits set by the Federal Housing Finance Agency. This means they can be bought by Fannie Mae and Freddie Mac, government-sponsored enterprises that guarantee mortgages.
Loans that exceed conforming loan limits are known as jumbo loans. Lenders often consider these loans riskier than conforming loans.
All of Delaware’s counties have a conforming loan limit of $548,250 in 2021.
First-time homebuyer programs in Delaware
If you’re hoping to buy your first home, there may be some assistance programs available to you in Delaware.
- DSHA Homeownership Loan Program — Offered by the Delaware State Housing Authority, this program offers conventional and government-backed loans with low interest rates for loans up to $417,000. To qualify, you need a credit score of at least 620, and you need to fall under the maximum household income limits. If your credit score is less than 659, you must participate in housing counseling.
- DSHA Preferred Plus — This program offers down payment and closing cost assistance in the form of a no-interest second mortgage. You can receive 2% to 5% of your overall loan amount. To be eligible, you need to meet the requirements of the DSHA Homeownership Loan program.
- First-Time Homebuyer Tax Credit — You can receive a federal tax credit of up to 35% of your annual mortgage interest, up to $2,000. To qualify, you must be a first-time homebuyer and meet household income purchase price limits, which vary by county.
Mortgage refinance rates in Delaware
If you’re thinking about refinancing your mortgage, keep a few things in mind.
- Break-even cost — Once you know the closing costs for your refinance, you can use any savings on your monthly mortgage payment to calculate how long it will take you to recoup that investment and “break even.”
- Cash-out refinance — Have you accumulated equity in your home that you’d like to convert to cash? A cash-out refinance lets you refinance your home for more than what you owe and get cash in return. But remember that you’ll owe the full amount plus interest and the equity in your home will be less if you sell in the future.
- Loan term — You also may want to either shorten or extend your loan term. For instance, if you have a 30-year mortgage, you may want to convert it to a 15-year loan. Keep in mind that reducing your term likely means you’re paying more each month — but less in interest over time. Lengthening your loan term may mean you pay less each month, but more interest over the course of the mortgage.