Best Mortgage Lenders for First Time Home Buyers in Delaware

If you’re a first time homebuyer in Delaware, you may be feeling overwhelmed by your mortgage options. You can remove some of the stress by learning more about the mortgage process and how to find the best mortgage companies for you.

Best Mortgage Lenders in Delaware for First Time Home Buyers

Don’t get overwhelmed by the number of lender options out there! Check out our hand-picked top lenders for first time home buyers in Delaware:

1. Best for Bank Statement Loans: Angel Oak Mortgage Solutions

Angel Oak Mortgage Solutions is a full-service mortgage lender offering traditional and portfolio mortgage loans. Among their many customized loan solutions is their Bank Statement product for first time, self-employed borrowers. This loan does not require tax returns and includes a 1099 Income option for 1099 earners who are looking for their first home. 

• Loan amounts up to $3 million
• 12 or 24 months personal or business bank statements
• Two years out of bankruptcy, short sale, foreclosure, or deed-in-lieu
• Owner occupied, non-owner occupied, second homes
• 1099 option available
• 40-year fixed interest only
• Delayed financing available
• Non-warrantable condos allowed

Angel Oak Mortgage Solutions offers a wide range of loan options allowing you to obtain any mortgage as long as qualification requirements are met. You can also refinance into any of these loans after your initial purchase. The customer service team is easy to reach via email, phone or the online contact form, and you can begin your journey by searching for a local advisor right on the website.

Angel Oak is headquartered in Atlanta, Georgia and is licensed in AL, AZ #0927070, licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act, CO, CT, DE, DC, FL, GA #32379, ID, IL, IN, IA, KS, KY, LA, ME, MD, MI, MN, MS, NV, NH, licensed by the N.J. Department of Banking and Insurance, NM, NC, OH, OK, OR, PA, Rhode Island Licensed Lender, SC, TN, TX, UT, VT, VA, WA dba AOHL LLC, WI.

Rocket Mortgage® is a popular digital lender for many first time buyers. You can expect a quick and easy online application process to get preapproved for your mortgage.

This preapproval makes it easier for you to submit an offer when you find your dream home. Quicken Loans® is also well known for its positive customer service team and online resources to help you through the mortgage process.

Get started with your first home purchase at Rocket Mortgage.

The minimum credit score to be eligible is 580.

3. Best for VA Loans: Veterans United

If you’ve logged some time in the military, Veterans United’s loans will likely be the best deal. Unlike other veteran-marketed loan programs, Veterans United only accepts active duty and veteran military members.

In addition to no-down-payment loans, you’ll also eliminate the private mortgage insurance you’ll have to pay with other mortgages.

Veterans United is also more forgiving of lower credit scores. Interest rates are lower than average.

The Housing Market in Delaware: An Overview

Over the past year, home values in Delaware have been steadily increasing. Getting familiar with the housing market can help you narrow where to find the best value.

Total households: 298,736

Median list price: $250,000

3 most expensive cities in Delaware to buy a house:

• Rehoboth Beach
• Fenwick Island
• Dewey Beach

3 most affordable cities in Delaware to buy a house:

• Cheswold
• Wyoming
• Townsend

Preparing for a Mortgage

Before you start shopping for a home, there are a few factors you should consider. First, you’ll want to gather your financial documents. Reviewing these documents can help you understand how much you can afford to spend on your home purchase.

This information also helps you determine which mortgage types you may qualify for and which ones may be right for you.

The documents most lenders require include:

• Income information: You can expect lenders to ask for several documents providing information about your income. This can include W-2 forms, tax returns and pay stubs from the past 2 years. Lenders use this information to verify that you have the means to afford a mortgage.

• A list of assets: Lenders also want to see that you have assets that you can pull from if you lose your income source. You can expect to be asked to submit information about any bank accounts you have, including checking, savings, retirement and investment accounts. You can also include information about significant assets you own such as cars or other vehicles.

• Other documents: If you’re receiving money from additional sources or if you have monthly payments that are not accounted for in your other documents, lenders want to see this. If you’re divorced, for example, you’ll want to provide the court order stating the alimony or child support amounts you either pay or receive.

Lenders also consider your credit report when reviewing your mortgage application. Your lender will want to see that you make your payments to other lenders on time. Lenders also look at how much debt you currently owe. Your credit report includes your credit score, which lenders use to determine your eligibility for its mortgage products. Lenders also use your credit score to decide the mortgage rate you qualify for. 

Once you have gathered your information, you are prepared to get a purchase quote and apply for a mortgage preapproval. 

Mortgage Options

When exploring the best lenders for first time buyers, you’ll want to consider the mortgage types that they offer. The most common mortgage types you should familiarize yourself with are:

Conventional: Conventional mortgages have fewer requirements than other mortgage types. Lenders directly offer these mortgages; they are not backed or guaranteed by the federal government. Conventional mortgages are offered in many mortgage terms, including fixed and adjustable interest rates and a repayment period that can vary from anywhere between 10 and 30 years.

FHA: FHA mortgages are offered by the Federal Housing Administration as part of their mortgage insurance program. The benefits of FHA mortgages include minimum down payment requirements as low as 3.5%.

USDA: USDA mortgages are offered by the U.S. Department of Agriculture for home purchases in qualified rural areas. To qualify for a USDA loan, you will need to meet certain income requirements and the home you are purchasing must be your primary residence.

VA: VA loans are offered by the U.S. Department of Veterans Affairs to make homeownership more accessible to military members and their families. To qualify, you must meet service requirements set by the Department of Veterans Affairs. The benefits of VA loans include the ability to finance 100% of your home purchase.

Jumbo: This mortgage type exists to finance mortgages that exceed the maximum financing limits set by the Federal Finance Housing Agency. Most lenders require higher credit scores and incomes for jumbo mortgages to accommodate the higher mortgage payments.

First Time Home Buyer Programs in Delaware

There are several programs available to first time homebuyers in Delaware. Some of the most popular are:

Delaware Mortgage Credit Certificate Program: The Delaware State Housing Authority (DSHA) offers a tax credit program for first time buyers. Through this program, you may be eligible for a tax credit of up to $2,000 per year for every year you have your mortgage. You must enroll in this program during the mortgage process before you buy your first home.

Down Payment Assistance Programs: These programs are available to first time homebuyers who need help making a down payment on their home. Several programs are available across Delaware and each county will have its own offerings. It’s a good idea to call any down payment assistance program that you are interested in to see if they can help you.

FHA 203k Rehab Loan: If you’re interested in buying a home as a fixer-upper, this program may be able to help you. It is designed to lend money to first time buyers to purchase a home and make necessary repairs and updates in one loan. You will still need to have a down payment for this loan program. It is also important to take not just the purchase price into consideration but both the purchase and renovation costs.

Current Mortgage Rates in Delaware

As part of the home buying process, you’ll want to familiarize yourself with the current mortgage rates in Delaware. Mortgage rates are the interest rate that you pay each month along with your principal mortgage payments. Fixed rates will be set when you finalize your loan and your rate will remain the same throughout the lifetime of your mortgage. 

Adjustable rates will fluctuate throughout the lifetime of your mortgage. Mortgage rates change depending on the current economy and housing market. If the economy is strong and there’s competition in the housing market, you can expect to see mortgage rates increase. If there is not as much competition, mortgage rates may decrease. 

Benzinga is committed to monitoring current mortgage rates and updates this chart regularly to reflect the most recent data.

Closing a Mortgage

When you’ve selected your first home, you will submit an offer to the seller. If the seller accepts your offer, you will move into the negotiation phase and the closing process.

First, you will arrange a home inspection and appraisal. This gives you information about the current condition of the home and what the value of the home is. You can then negotiate with the seller to decide what repairs you want to have done before the home becomes yours.

You then work with your lender to finalize your financing. Closing documents will be drawn up for you and the seller to sign, and a closing date will be set. Your down payment and closing costs will be due during this time. 

A few days before your closing date, you will perform a final walkthrough of your home. This allows you to confirm that the home is in the condition that you agreed to in your closing documents. When your closing date arrives, you will officially become the owner of your new home.

Your Next Steps

Now that you’re a little more familiar with the mortgage process, you’re well on your way to buying your first home! Select a couple of mortgage types that you’re interested in exploring, and contact a few lenders that you might like to work with.

Each lender will have a loan officer ready to answer your questions and help you find the right mortgage product for you.