Buying a Home in Delaware
Delaware punches above its weight in housing affordability — property taxes rank among the lowest in the country, there's no state sales tax, and a median home price around $398,000 puts ownership within reach for many buyers who've been priced out of neighboring Maryland or New Jersey. The catch is closing costs. The state's realty transfer tax, at 4% of the sale price, makes Delaware's upfront buying costs some of the steepest in the nation. Understanding exactly where your money goes is the difference between a smooth closing and an unpleasant surprise.
This guide covers the numbers that matter: property tax rates by county, how the transfer tax actually works for first-time buyers, the Delaware State Housing Authority programs currently accepting applications, and a sample payment based on a realistic purchase scenario for 2026.
Delaware Property Taxes
Delaware's average effective property tax rate sits at roughly 0.50% of assessed home value — one of the lowest rates in the country, according to the Tax Foundation. To put that in perspective: a homeowner paying 0.50% on a $398,000 home owes about $1,990 per year, or $166 a month added to their mortgage payment through escrow. That same home in New Jersey at the national high of 2.49% would cost $9,900 annually.
County-level rates vary meaningfully within the state:
| County | Approx. Effective Rate | Annual Tax on $398,000 Home (estimate) | Monthly Escrow (estimate) |
|---|---|---|---|
| New Castle County | ~0.55% | ~$2,189 | ~$182 |
| Kent County | ~0.47% | ~$1,871 | ~$156 |
| Sussex County | ~0.27% | ~$1,075 | ~$90 |
All figures are estimates based on Tax Foundation and county assessor data. Your actual tax bill depends on your property's assessed value and any exemptions applied. Source: Tax Foundation Property Tax Data.
Sussex County's low rate reflects both its rural character and historically lagged assessments — though Delaware counties have been undertaking reassessments that may affect future bills. Kent County completed a reassessment in 2024. If you're buying in an area that recently reassessed, confirm the new assessed value with the county assessor before budgeting your escrow payment.
Homestead Exemption: Delaware offers a Senior School Property Tax Credit and a Senior Property Tax Deferral program for qualifying homeowners 65 and older. Buyers below retirement age may still find additional exemptions through their county assessor's office. Check Delaware Division of Revenue for current eligibility details.
Closing Costs & Realty Transfer Tax in Delaware
Expect total buyer closing costs of roughly 4–6% of the purchase price in Delaware. The single largest line item — and the one that catches buyers off guard — is the realty transfer tax.
How the 4% Transfer Tax Works
Delaware charges a combined realty transfer tax of 4% on most residential sales: 2.5% goes to the state and 1.5% to the county or municipality. By default, this is split evenly between buyer and seller (2% each), but the purchase contract can negotiate a different allocation.
On a $398,000 purchase, the total transfer tax comes to $15,920 — with the buyer responsible for $7,960 at the standard 50/50 split.
First-Time Buyer Reduction
First-time buyers — defined as anyone who has never held an ownership interest in residential property — qualify for a 0.5% reduction on their share of the state transfer tax. In practical terms, this reduces the buyer's rate from 1.25% to 0.75% on the first $400,000 of value, with the reduction capped at $2,000.
On a $398,000 purchase, that's a $1,990 reduction — nearly the full cap. It doesn't eliminate the transfer tax burden, but it does put real money back in a first-timer's pocket at closing.
| Cost Item | Typical Range | Notes |
|---|---|---|
| Realty Transfer Tax (buyer's share) | ~2% of price | First-time buyer rate: ~0.75% on first $400K |
| Lender origination fees | 0.5%–1% of loan | Varies by lender |
| Title insurance & search | $800–$1,500 | Required by most lenders |
| Home inspection | $350–$550 | Paid before closing |
| Recording fees | $100–$300 | County-dependent |
| Prepaid interest / escrow setup | $1,000–$3,000 | Depends on closing date and rate |
Estimates based on Houzeo and LodeStar 2024–2025 closing cost data for Delaware. Your Loan Estimate will list exact figures.
No Sales Tax: Delaware is one of five states with no sales tax. That means no sales tax on furniture, appliances, or building materials purchased after closing — a genuine long-term savings advantage over neighboring Pennsylvania (6%) or Maryland (6%).
First-Time Buyer & Down Payment Assistance Programs
The Delaware State Housing Authority (DSHA) consolidated and rebranded its lending programs in April 2026 under the umbrella name Delaware Mortgage Program. The programs below are the active options as of this writing — verify current rates and eligibility at destatehousing.com, DSHA's official site.
Welcome Home (First-Time Buyers)
DSHA's flagship first mortgage for buyers who haven't owned a primary residence in the past three years. Welcome Home offers a 30-year fixed rate set below prevailing market rates and is designed to pair with one of the down payment assistance options below. Income and purchase price limits apply and vary by household size and county.
Open Door (All Buyers)
The Open Door loan serves both first-time and repeat buyers on the same below-market fixed-rate structure. If you owned a home recently and don't qualify for Welcome Home, Open Door keeps DSHA assistance accessible. It pairs with First State Home Loan and Keys4You, but not Take5.
Down Payment Assistance Options
| Program | Assistance Amount | Compatible With |
|---|---|---|
| First State Home Loan | 3% of first mortgage amount | Welcome Home & Open Door |
| Keys4You | 4% of first mortgage amount | Welcome Home & Open Door |
| Take5 | 5% of first mortgage amount | Welcome Home only |
| Home Sweet Home | Up to $12,000 | Eligible buyers; income limits apply |
The DPA funds typically come as a second mortgage at 0% interest, deferred until you sell, refinance, or pay off the first mortgage. On a $360,000 first mortgage, Keys4You would provide $14,400 toward your down payment and closing costs — enough to cover a meaningful share of the transfer tax and get to the table with less cash out of pocket.
Buyers with credit scores below 660 applying for Welcome Home or Open Door generally need to complete a housing counseling course. DSHA's website lists approved counseling agencies statewide.
Official Source: All DSHA program details, current interest rates, income limits, and participating lender lists are at destatehousing.com. Program terms change, so confirm directly before making any financing decisions.
Sample Monthly Payment in Delaware
The figures below are estimates built around a typical 2026 Delaware purchase. Your actual payment will differ based on your rate, credit score, county, insurance quotes, and HOA situation.
| Scenario Assumption | Value |
|---|---|
| Purchase price (estimate — statewide median) | $398,000 |
| Down payment | 5% ($19,900) |
| Loan amount | $378,100 |
| Interest rate (30-yr fixed, estimate) | 6.875% |
| Loan term | 30 years |
| Payment Component | Monthly Amount (estimate) |
|---|---|
| Principal & Interest | ~$2,485 |
| Property taxes (0.50% rate, New Castle County) | ~$166 |
| Homeowners insurance | ~$110 |
| PMI (with 5% down, ~0.6% rate) | ~$189 |
| Total estimated PITI + PMI | ~$2,950/month |
All figures are estimates for illustrative purposes only. PMI drops off once you reach 20% equity. Sussex County buyers would see a lower property tax component (roughly $90/month). Use the calculator above to enter your actual numbers.
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Use the Full Mortgage Calculator →Frequently Asked Questions
What is the property tax rate in Delaware?
Delaware's average effective property tax rate is approximately 0.50% of a home's assessed value, one of the lowest in the country (Tax Foundation). Rates vary by county: New Castle County runs around 0.55%, while Sussex County averages closer to 0.27%. Delaware also offers homestead exemptions that can reduce your taxable assessment further.
Who pays the transfer tax in Delaware — buyer or seller?
By law, Delaware's 4% realty transfer tax is split equally: 2% from the buyer and 2% from the seller (combining state and county portions totaling 4%). In practice, the split is negotiable in the purchase contract. First-time buyers who have never held an ownership interest in residential property qualify for a 0.5% reduction on their share, capped at $2,000 on the first $400,000 of value.
What DSHA programs are available for first-time buyers in Delaware?
The Delaware State Housing Authority (DSHA) runs the Delaware Mortgage Program, which includes the Welcome Home loan for first-time buyers and the Open Door loan for all buyers. Down payment assistance options include First State Home Loan (3%), Keys4You (4%), and Take5 (5%, available on Welcome Home only). The Home Sweet Home program offers up to $12,000 in assistance for eligible buyers. Full program details and eligibility requirements are at destatehousing.com.
Does Delaware have a sales tax that affects home purchases?
No. Delaware has no state sales tax — one of only five states without one. This benefits buyers on building materials, appliances, and furnishings after closing. The primary tax to budget for in a Delaware home purchase is the realty transfer tax, not a sales tax.