The Short Answer

DSHA Down Payment Assistance in Delaware — Complete 2026 Guide

The Delaware State Housing Authority (DSHA) provides 3%–5% of the loan amount as a deferred second mortgage at 0% interest — with no monthly payments — for qualified buyers statewide.

Essential workers can receive a fully forgivable $15,000 second mortgage through the Diamond in the Rough program. All DSHA assistance can be combined with FHA, VA, USDA, and conventional loans, and can also be stacked with the federal Mortgage Credit Certificate (35% of annual interest, up to $2,000/year) and the Sussex County Housing Trust Fund.

DSHA deferred second mortgage structure Delaware
How It Works

How the DSHA Deferred Second Mortgage Works

The most common confusion: "deferred" means no monthly payments — not forgiven. Here's exactly how repayment works.

DSHA assistance is structured as a second mortgage recorded as a lien on your property. It accrues at 0% interest and requires no monthly payments. The balance is due in full when you sell the home, refinance, or when it is no longer your primary residence.

Example: You receive $15,000 in down payment assistance on a $350,000 purchase. You live in the home for 7 years, then sell. At closing, $15,000 comes off your proceeds — the same dollar amount you received, with no interest added. If you held the home for 10 years through the Diamond in the Rough program, the $15,000 would be fully forgiven.

  • 0% interest — balance never grows
  • No monthly payment — doesn't affect your debt-to-income ratio
  • Recorded as a lien — must be repaid at sale, refinance, or primary residence change
  • Can be combined with multiple DSHA programs and federal MCC
  • Diamond in the Rough: fully forgivable at 10 years of primary residence
By The Numbers

DSHA Program Key Numbers for 2026

Sussex & Kent County figures — verify current limits at destatehousing.com before applying

0 Diamond in the Rough Forgivable Amount Essential workers, forgivable at 10 years
0 Maximum DPA (Take5 Program) Of loan amount, Welcome Home only
0 Max Purchase Price Sussex & Kent non-targeted areas, 2026
0 Minimum Credit Score Below 649 requires HUD counseling
Best Program for Essential Workers

Diamond in the Rough: $15,000 Forgivable for Essential Workers

If you work in education, healthcare, first response, the military, or government — this program was built for you.

The Diamond in the Rough program provides a $15,000 second mortgage that becomes fully forgivable if the property remains your primary residence for 10 years. If you sell or refinance before 10 years, the repayment is prorated — meaning you repay less the longer you stay.

It can also be paired with an FHA 203(k) renovation loan, making it particularly valuable for buyers purchasing older homes that need work.

  • Veterans and active military
  • K–12 teachers and school staff
  • Healthcare workers (nurses, EMTs, hospital staff)
  • First responders (police, fire, paramedics)
  • Grocery store workers
  • State of Delaware government employees
Diamond in the Rough DSHA program Delaware essential workers
Maximize Your Assistance

How to Stack DSHA With Other Programs

DSHA assistance doesn't prevent you from using other programs — many buyers qualify for multiple layers of help.

DSHA + Sussex County Housing Trust Fund

The Sussex County Housing Trust Fund provides an additional soft second at 0% interest for buyers earning less than 120% AMI. Stacking this with DSHA can cover a significant portion of closing costs on top of the down payment.

DSHA + Mortgage Credit Certificate (MCC)

The federal MCC gives you a tax credit of up to 35% of annual mortgage interest ($2,000 maximum) every year you hold the mortgage. This stacks directly with DSHA down payment assistance — two separate programs, both active simultaneously.

DSHA + FHA, VA, USDA, or Conventional

DSHA programs work as a second mortgage on top of your primary loan. You apply for both through a DSHA-approved lender, who coordinates the financing package. Must use an approved lender to access DSHA programs.
Common Questions

DSHA Down Payment Assistance FAQ

No. Because the second mortgage is deferred with 0% interest and no monthly payment, it does not appear in your monthly payment at all. Your lender calculates your debt-to-income ratio based only on the first mortgage payment (principal, interest, taxes, insurance).
The DSHA second mortgage must be repaid when you refinance — it cannot remain in place through a new loan. Prorated forgiveness may apply through the Diamond in the Rough program if you've reached a qualifying period before refinancing.
DSHA programs are designed for primary residences. If you currently own another home, you may be considered a repeat buyer, which affects some program eligibility. Some programs are specifically for first-time buyers (no ownership in prior 3 years); others are available to repeat buyers.
DSHA coordinates the second mortgage through an approved lender network. The lender manages the combined first and second mortgage package and ensures proper documentation. Your TPG buyer's agent can refer you to approved lenders in the Sussex County market.
DSHA approval runs concurrently with your primary mortgage approval. The overall timeline doesn't typically extend beyond a standard mortgage closing (30–45 days from contract). The key is engaging a DSHA-approved lender early — before you make an offer.

Contact Us

We'd love to hear from you. Send us a message and we'll respond as soon as possible.

Program Eligibility Check

We'll review your income, employment type, credit score, and target price range to identify which DSHA programs you qualify for — and how much you can receive.

Stacked Assistance Estimate

See the full picture: DSHA + Sussex County Trust Fund + MCC + first mortgage — all calculated together so you know your real out-of-pocket cost to close.

DSHA-Approved Lender Referral

We'll connect you with DSHA-approved lenders we work with in the Sussex County market — lenders who know the programs and process closings efficiently.

Contact Us