FHA vs Conventional Loans in Delaware: Minimizing Cash-to-Close With a 2% Transfer Tax — Hen & Harbor
Updated October 2026
On a $350,000 Delaware purchase, the difference between a 3% conventional down payment and a 3.5% FHA down payment is $1,750. The standard buyer transfer-tax share is $7,000. That makes transfer-tax eligibility and closing-cost funding just as important as the advertised minimum down payment.
Compare the same purchase with the same assumptions
This example assumes an eligible 3%-down conventional program, minimum FHA down payment eligibility, and the customary equal division of Delaware's 4.0% realty transfer tax.
| Cash item | Conventional | FHA |
|---|---|---|
| Down payment | $10,500 | $12,250 |
| Standard buyer transfer tax | $7,000 | $7,000 |
| Subtotal before other costs | $17,500 | $19,250 |
| Eligible first-time transfer-tax savings | $2,625 | $2,625 |
| Adjusted subtotal | $14,875 | $16,625 |
These subtotals exclude attorney fees, title charges, appraisal, prepaid insurance, escrow deposits, and other lender charges. FHA's upfront mortgage insurance can generally be financed, increasing the balance rather than eliminating its cost.
Delaware's tax consists of 2.5% state and 1.5% county or municipal tax. The first-time buyer reduction applies to the buyer's state share: 0.75% on up to $400,000 of purchase price. Confirm qualification with the Delaware Division of Revenue.
Look beyond the down payment
For 2026, the baseline conforming limit is $832,750 throughout New Castle, Kent, and Sussex counties. FHA's national floor is $541,287, while New Castle has an elevated Philadelphia-Camden-Wilmington metropolitan-area limit. Check the applicable county and unit count through HUD FHA Mortgage Limits.
Conventional pricing and private mortgage insurance depend heavily on credit, loan-to-value, and the selected program. Conventional PMI may eventually be canceled under applicable rules. FHA annual mortgage insurance follows different duration rules, so compare the projected ownership period rather than just month one.
Build an actual funds-to-close plan
Ask whether DSHA Welcome Home, Home Sweet Home, or First-Time Homebuyer Down Payment Assistance fits the proposed loan. Eligible assistance may provide a 3% to 5% interest-free second loan, but repayment terms and approved combinations matter.
Seller credits can cover permitted closing expenses within program limits; they generally cannot replace the required down payment. Delaware's mandatory attorney closing also deserves its own budget line.
Use Hen & Harbor's closing cost estimator alongside the monthly payment calculator. Compare both loans using identical insurance, reassessed property taxes, seller credits, and closing dates before choosing the lower-cash option.
Editorial Methodology & Primary Sources
Verification date: Not recorded; check the primary source and lender timestamp before relying on an estimate.
Rate comparisons use participating lender feeds, not a whole-market survey or guaranteed offers. Freddie Mac PMMS is a market benchmark, not a personalized quote. Calculator models rely on published regulatory formulas and disclosed assumptions rather than fabricated first-person loan testing.
Monthly principal and interest use the amortization formula P × r / (1 − (1 + r)−n), where r is the monthly note rate and n is the number of payments; at zero interest use P / n. PITI adds monthly property taxes and homeowners insurance; PMI is separate. APR includes applicable finance charges under Regulation Z and is not the note rate used for payments. Compare lender Loan Estimates for actual APR and fees.
- Consumer Financial Protection Bureau (CFPB) — Loan Estimates, APR and borrower disclosures; Regulation Z.
- U.S. Department of Housing and Urban Development (HUD / FHA) — FHA program guidance.
- U.S. Department of Veterans Affairs (VA) — VA loan eligibility and benefits.
- Freddie Mac Primary Mortgage Market Survey (PMMS) — published rate benchmarks.
- U.S. Census state tax collections — state property tax benchmarks; confirm parcel-specific assessments and exemptions with the state revenue department and local assessor.
- Delaware State Housing Authority — state housing finance and property tax authority.
- Delaware Division of Revenue — state housing finance and property tax authority.
The payment snapshot uses illustrative annual taxes of 1% of home price, $1,200 insurance and 0.5% PMI below 20% down, not verified local quotes. Other calculators disclose their inputs and assumptions. Published guidance and lender feeds may change independently; confirm current program rules, taxes and offers before a decision.