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Diamond in the Rough Home Loan

Delaware State Housing Authority (DSHA) · Delaware

Last verified
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Assistance

5%

Of the purchase price, as the program sets it

Price cap

$617,241

Highest purchase price the program allows

Repayment

Deferred

No payments until the home is sold or refinanced

What is Diamond in the Rough Home Loan?

Diamond in the Rough Home Loan is a deferred second loan for homebuyers in Delaware, administered by Delaware State Housing Authority (DSHA).

  • Diamond in the Rough combines an FHA 203(k) Limited renovation mortgage (purchase price plus minor renovations up to $35,000 in a single loan) with a DSHA 5% second loan for down payment and closing cost assistance. The 0%-interest, no-monthly-payment second loan is deferred until refinance, sale, transfer of title, or the home ceasing to be the primary residence. It lets buyers purchase homes needing minor repairs and complete the work after closing.
  • 5% of first mortgage as down payment/closing cost assistance.
  • Finances minor renovations up to $35,000 in one mortgage.
  • 0% interest, no monthly payment on DPA second loan.
  • Deferred repayment until sale/refinance/transfer/non-occupancy.
  • Combines purchase + repairs (kitchen, paint, appliances, windows/doors, roof/gutters, pool repairs).
  • Funding comes from DSHA funds (table-funded at closing by DSHA); first mortgage is FHA 203(k) Limited.

How much assistance does it provide?

Diamond in the Rough Home Loan provides assistance worth 5% of the purchase price, as set by the program.

  • Amounts are the program's published maximums, not an offer — Delaware State Housing Authority (DSHA) determines any individual award.

Do you have to pay it back?

Diamond in the Rough Home Loan is deferred, so no payments are due until the home is sold, refinanced, or the first mortgage is paid off.

  • Repayment is triggered by Principal deferred (no monthly payment) and becomes repayable upon the earliest of: refinance, sale of home, transfer of title, or the property is no longer the borrower's primary residence. 30-year maturity.
  • The assistance is recorded in Second lien position.
  • Forgiveness and repayment terms are set by the program and can change — confirm them on the official program page before applying.

Who qualifies?

Diamond in the Rough Home Loan is open to first-time homebuyers and buyers who will live in the home as their primary residence.

The program requires

  • First-time homebuyer — with exceptions: Offered under the Welcome Home program (first-time homebuyers). Qualified Veterans and targeted-area purchases are exempt from the first-time-homebuyer requirement. Not available under Open Door.
  • The home is occupied as a primary residence
  • On credit: Minimum FICO 640 (FHA 203(k) Limited requirement). Borrowers with FICO 659 or below must complete homeownership education through a Delaware HUD-approved housing counseling agency. All borrowers and the subject property must meet FHA 203(k) Limited guidelines.
  • Residency: Property must be located in Delaware and used as the borrower's primary residence.
  • Welcome Home program only (first-time buyers, with veteran/targeted-area exceptions). Must qualify for FHA 203(k) Limited (min FICO 640); borrower and property must meet FHA 203(k) Limited guidelines. Borrower may use only one DPA second loan program. Renovations limited to minor, non-structural work up to $35,000. DTI, max household size, max liquid assets, min contribution, HOA, and acreage limits not specified on official sources reviewed.

The program excludes

  • New construction
  • Purchases above the $617,241 price cap

These are the program's own published rules, not a decision about any individual — the administering agency and a lender determine who actually qualifies.

What are the income limits?

Diamond in the Rough Home Loan sets its income limit as follows: Welcome Home limits (by household size): New Castle County $119,400 (1-2 person) / $137,310 (3+ person); Kent & Sussex $108,800 (1-2) / $125,120 (3+). Targeted-area Welcome Home limits: New Castle $143,280 / $167,160; Kent & Sussex $130,560 / $152,320. Income counted for those on the note and/or mortgage only.

  • The limit applies to total household income, not only the borrower’s.
  • Area median income figures are published by HUD and updated annually, so check the current table for the county before relying on a number.

What kind of home can it be used for?

Diamond in the Rough Home Loan caps the purchase price at $617,241.

  • Eligible property types include Single-family detached, Townhouse/row house/patio home (attached), and 1-4 unit dwellings (per FHA 203(k) Limited guidelines).
  • New construction is not eligible.

Is there eligibility for specific groups?

Diamond in the Rough Home Loan names veterans among the groups it serves.

  • Being named here means the program mentions the group, not that membership alone qualifies an applicant — the rest of the eligibility rules still apply.

Where does it apply?

Diamond in the Rough Home Loan serves buyers purchasing anywhere in Delaware.

  • The program targets specific areas: Federally designated targeted-area census tracts qualify for higher income and purchase-price limits and waive the first-time-homebuyer requirement. Tracts: New Castle 0006.02, 0019.02, 0021.00, 0023.00, 0029.00, 0030.02; Kent 0425.00; Sussex 0505.03, 0507.11.
  • Targeted neighborhoods: Census tracts: New Castle 0006.02, 0019.02, 0021.00, 0023.00, 0029.00, 0030.02; Kent 0425.00; Sussex 0505.03, 0507.11.

How do you apply?

Applications for Diamond in the Rough Home Loan go through Delaware State Housing Authority (DSHA), which publishes the current terms and the application steps on its own site.

  1. Contact Delaware State Housing Authority (DSHA) to reserve funds

    Funds are reserved through First-come, first-served via DSHA Mitas online reservation system (https://mitas.destatehousing.com); 60-day reservation/rate-lock period., and are subject to availability.

  2. Work with a lender who handles the program

    Hey Prescott is not a lender and does not accept applications; this page describes the program so a buyer can take it to a lender or housing counselor.

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