Fixing Up a Delaware Home: The "Diamond in the Rough" 203(k) Program

Finding the perfect move-in-ready home in Delaware can be challenging in a tight market. If you find a property that needs modernization, a new roof, or significant repairs, you don't need a massive cash reserve to buy it. The Diamond in the Rough Down Payment Assistance program, paired with an FHA 203(k) Limited loan, allows you to finance both the home purchase and the renovations in one easy step.

How the Program Works

Available exclusively under DSHA's Welcome Home program, the Diamond in the Rough initiative provides a generous 5% down payment assistance based on your final first mortgage loan amount.

• 0% Interest: The assistance is structured as a second lien with a 0% interest rate and a 30-year maturity date.
• Deferred Payments: You do not make any monthly payments on this assistance loan; the principal is only due if you refinance, sell, transfer the title, or move out of the home.

Program Requirements

To utilize this program, all borrowers must have a minimum credit score of 640 and the property must meet standard FHA 203(k) Limited guidelines. Additionally, the total cost of acquiring the property and the rehabilitation amount cannot exceed DSHA's established purchase price limits for the county where the home is located.

Why Consider a "Diamond in the Rough"?

In competitive markets, homes that need work can offer better pricing and less competition. By using the FHA 203(k) Limited loan together with Diamond in the Rough assistance, you can:

• Purchase a home that needs updates or repairs without paying out of pocket for the work up front
• Roll eligible repair and renovation costs into your mortgage
• Improve the property's value and functionality while keeping your payment manageable

If you're open to a fixer-upper and want to stay in Delaware, this combination can be a powerful path to owning a home that truly fits your needs.