Delaware First-Time Homebuyer Tax Credit (MCC)

When the Delaware MCC was active, a buyer purchasing a $290,000 home in Dover with a 30-year fixed-rate mortgage at 6.5% interest would pay approximately $18,200 in mortgage interest during the first year. The MCC tax credit of 35% of that interest would equal $6,370, but the annual cap limited the credit to $2,000 per year.

That $2,000 annual tax credit translated to roughly $167 per month in additional disposable income. Over the life of a 30-year mortgage, the cumulative tax credit could have totaled up to $60,000, though the actual amount would decrease over time as the mortgage balance and interest payments declined.

This program has been discontinued. Delaware buyers seeking assistance should instead look at DSHA's current programs: the First State Home Loan provides 3% of the first mortgage as a zero-interest deferred second mortgage (approximately $8,400 on a $290,000 purchase), which delivers upfront savings rather than the MCC's ongoing annual benefit.

When the Delaware MCC was active, it could be combined with DSHA first mortgage programs and down payment assistance. The MCC was specifically designed to layer on top of other assistance because it provided an annual tax credit rather than upfront money, meaning it did not compete with DPA programs for subordinate lien position. A buyer could have used the MCC alongside the DSHA First State Home Loan DPA or the Delaware Diamonds Home Loan for both upfront and ongoing savings.

Since the MCC program appears to have been discontinued, this stacking information is historical. Current Delaware buyers should explore combining DSHA's available DPA products. For example, the Keys4You Home Loan (4% deferred second mortgage) can be paired with a DSHA Smart Start first mortgage, and eligible essential workers may be able to add the Delaware Diamonds program.

Buyers who want ongoing tax benefits similar to the MCC should consult a tax professional about the standard mortgage interest deduction available on federal tax returns, which provides some of the same benefit the MCC offered, though as a deduction rather than a dollar-for-dollar credit.

When the Delaware MCC was active, its greatest advantage was the ongoing annual tax savings that lasted the life of the mortgage. A $2,000 annual credit over 30 years could total up to $60,000 in cumulative savings, far exceeding the value of most one-time DPA programs. The MCC also stacked well with other DSHA programs because it operated as a tax benefit rather than a subordinate lien, meaning buyers could receive both upfront DPA and ongoing annual credits.

The program's main limitations were that it only benefited buyers with sufficient federal tax liability (the credit was non-refundable, so buyers who owed less than $2,000 in federal taxes could not use the full credit) and it required enrollment before closing with no retroactive option. As of 2026, the program appears discontinued. Delaware buyers seeking assistance should explore DSHA's current Welcome Home or Open Door programs, which provide immediate upfront assistance. Buyers who valued the MCC's ongoing tax benefit should consult a tax professional about maximizing the standard mortgage interest deduction on their federal returns.