Delaware Refinance Rates & Programs 2026

Delaware homeowners benefit from no sales tax and moderate property taxes, but refinancing comes with some unique costs you should know about. Here's your complete guide to refinancing in the First State, from Wilmington to the beaches.

Current Delaware Refinance Rates

As of March 2026, Delaware homeowners are seeing these average rates:

| Loan Type | Average Rate | |-----------|--------------| | 30-Year Fixed | 6.22% | | 15-Year Fixed | 5.54% | | FHA 30-Year | 6.17% | | VA 30-Year | 5.50% |

Note: Sussex County coastal properties may carry slightly higher rates due to flood insurance requirements and limited comparable sales. Use our refinance calculator for personalized quotes.

Delaware-Specific Refinance Programs

Delaware State Housing Authority (DSHA)

DSHA provides several homeownership programs, including options for existing borrowers:

DSHA Refinance Considerations:

• If you used DSHA down payment assistance, check subordination requirements before refinancing
• Some DSHA subordinate loans must be paid off when refinancing
• Contact your servicer to understand your options

Homeownership Loan Program: While primarily for purchases, DSHA occasionally offers refinancing assistance during economic hardship periods. Check their website for current program availability.

Coastal Delaware Considerations

Sussex County coastal areas (Rehoboth Beach, Bethany Beach, Lewes, Dewey Beach) have special considerations:

• Flood insurance: Required for properties in flood zones; affects affordability calculations
• Second home/investment property: Many coastal properties are second homes or rentals, which carry higher rates (0.5%-0.75% more)
• Seasonal market: Appraisals can be challenging due to seasonal price fluctuations

VA Loans

Delaware has Dover Air Force Base. Veterans with existing VA loans can use the VA IRRRL for streamlined refinancing with no appraisal required—particularly valuable in coastal areas where appraisals are expensive.

Cost of Refinancing in Delaware

Delaware has moderate refinancing costs, but watch for the mortgage recording tax:

| Cost Item | Typical Amount | |-----------|---------------| | Lender origination fee | $0 - $2,200 | | Appraisal | $450 - $700 | | Title insurance | $700 - $1,300 | | Recording fees | $50 - $100 | | Credit report | $25 - $50 | | Delaware mortgage tax | See below | | Total typical closing costs | $4,000 - $7,500 |

Delaware's Unique Mortgage Recording Tax:

Delaware charges a mortgage recording tax even on refinances (unlike most states):

• Rate: 2.5% of the new loan amount
• Example: $400,000 loan = $10,000 in mortgage tax

However, you can claim a credit:

• If refinancing within 5 years, you get credit for tax paid on original loan
• Effectively, you only pay tax on the amount by which the new loan exceeds the old one
• Cash-out refinances pay tax on the increased amount
• Rate-and-term refinances with lower balances may owe little or no additional tax

Example:

• Original loan (2022): $450,000 → Paid $11,250 tax
• Refinance (2026): $400,000 (you paid down $50,000)
• Credit for original tax: $10,000 (proportional)
• New tax owed: $10,000 - $10,000 = $0

Work with your lender to calculate the exact tax based on your situation.

Use our break-even calculator to factor in the mortgage tax when calculating refinancing savings.

When to Refinance in Delaware

Consider refinancing if:

Rates have dropped 1.0% or more — Delaware's mortgage recording tax means you need a bigger rate drop to break even compared to other states. Run the numbers carefully, especially for cash-out refinances.

You're doing a rate-and-term refi with a lower balance — If you've paid down your mortgage significantly, the mortgage tax credit may reduce or eliminate additional tax, making refinancing more attractive.

You want to eliminate PMI — Delaware home values have been stable to rising. If you now have 20%+ equity, refinancing drops PMI and can offset the mortgage tax over time.

You're a veteran using VA IRRRL — The VA streamline refinance exempts you from Delaware's mortgage recording tax in many cases. Verify with your lender, but this is a significant advantage.

For more on when refinancing makes sense, see our complete refinancing guide.

Types of Refinance Available in Delaware

Conventional Refinance

Best for homeowners with:

• Credit score 620+ (740+ for optimal rates)
• At least 20% equity (80% LTV)
• Documented income
• Standard property types

Note: Factor in Delaware's 2.5% mortgage tax when calculating break-even.

FHA Streamline Refinance

If you currently have an FHA loan:

• No appraisal required
• Minimal documentation
• Can refinance even if underwater
• Must show net tangible benefit
• Delaware mortgage tax still applies

VA IRRRL (Streamline)

For Delaware veterans with VA loans:

• No appraisal needed
• No income verification in most cases
• 0.5% VA funding fee
• May be exempt from Delaware mortgage tax (verify with lender)

Cash-Out Refinance

Access your equity:

• Conventional: up to 80% LTV
• VA: up to 100% LTV for qualified veterans
• FHA: up to 80% LTV

Important: Cash-out refinances pay the 2.5% mortgage tax on the full new loan amount minus any credit from your original loan. Calculate carefully before proceeding.

See our cash-out refinance guide for more details.

Coastal/Second Home Refinance

For Sussex County beach properties:

• Expect higher rates (0.5%-0.75% premium for second homes)
• Flood insurance required for flood zone properties
• Maximum 80% LTV for second homes
• 6-12 months reserves required

Delaware Refinance FAQ

1. How long does refinancing take in Delaware? Typically 30-40 days from application to closing. Coastal properties may take 35-45 days due to flood certification and appraisal challenges.

2. Can I avoid Delaware's mortgage recording tax? Not entirely, but you can minimize it:

• Refinance within 5 years to get maximum credit from original tax paid
• Consider rate-and-term refinances instead of cash-out (lower tax impact)
• Veterans may be exempt with VA IRRRL (verify with lender)
• Don't refinance repeatedly—each refinance triggers new tax

3. Will my property taxes change if I refinance? No. Delaware property taxes are based on assessed value, which is reassessed periodically by county. Refinancing doesn't trigger reassessment—only property sales or major improvements do.

4. Can I refinance a beach rental property in Delaware? Yes, but expect:

• Investment property rates (0.5%-0.75% higher than primary residence)
• Maximum 75% LTV
• Rental income documentation required
• Flood insurance (affects debt-to-income ratio)
• 6-12 months reserves

5. What credit score do I need to refinance in Delaware? Minimum 580 for FHA, 620 for conventional. Best rates require 740+. Given Delaware's mortgage tax, maximizing your rate discount (through higher credit scores) is especially important.

Bottom Line

Delaware's mortgage recording tax makes refinancing more expensive than most states, but if rates have dropped 1% or more and you plan to stay in the home 3+ years, you'll likely still save money. Veterans using VA IRRRL may avoid the tax entirely—verify with your lender.

Get your Delaware refinance quote: See personalized rates here. We'll calculate the exact mortgage tax based on your original loan and help you determine if refinancing makes sense.

For more information, check out our refinance closing costs breakdown and use our refinance calculator to estimate your savings.

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About the Author: Bill McCoy is a licensed mortgage broker with 15 years of experience helping homeowners nationwide refinance. This guide reflects current 2026 market conditions and Delaware-specific regulations.