South Dakota First-Time Homebuyer Programs

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Updated on Monday, April 1, 2019

Making the leap to homeownership for the first time can be overwhelming. There are a lot of pieces to the process, from finding the perfect home, to saving up and, not least, securing financing. If you’ve never done it before, you may begin to think that owning a home is out of reach.

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Help is available, however. If you’re a South Dakota resident, you have access to a range of assistance programs for prospective first-time homebuyers through several state-level programs.

South Dakota first-time homebuyer programs

The South Dakota Housing Development Authority (SDHDA) offers several programs targeting first-time buyers, including a low-interest loan, a program that provides new-construction homes to low-income buyers, home-improvement loans and down payment assistance. In January 2019, we researched current information on first-time homebuyer programs in South Dakota, which included reviewing the SDHDA guidelines. Here’s what first-time homebuyers in South Dakota need to know.

SDHDA First-time Homebuyer Program

What is it?

  • A mortgage loan with low, fixed interest rate.
  • Can be used for new construction
  • Permits cosigner with no ownership interest in property

Requirements

  • Home price must be $250,200 or less
  • Down payment must be at least 3%
  • Homebuyer education required for first-time homeowners
  • Your income must not exceed income limits, which vary based on county and family size.

How to apply

The SDHDA website has a calculator you can use to quickly see if you might qualify for this loan. If you think that you’re eligible, look for a participating lender that can help you get the ball rolling on securing your home loan.

SDHDA Fixed Rate Plus loan

What is it?

  • A fixed-rate mortgage. Check here for current interest rates.
  • Plus, offers assistance of up to 3% of the first mortgage loan, which can be used for a down payment or closing costs.
  • Assistance is in the form of a second mortgage at a 0% interest rate, with no payments or additional fees. Loan becomes due when you sell the home or pay off the mortgage.

How to apply

Contact a qualified lender to see if you qualify. If you do, they’ll help you apply for the loan and walk you through the borrowing process.

Governor’s House Program

What is it?

The Governor’s House Program program started in 1996. It uses prison inmates who are learning a skilled trade to construct energy-efficient homes for South Dakotans who wouldn’t otherwise be able to afford them.

  • Provides new construction homes for low-income, elderly or disabled individuals
  • Prices are $49,700 for a two-bedroom home and $56,700 for a three-bedroom, plus taxes

Requirements

  • Participants pay for and provide the lot, building permit, foundation, utility hookups, floor coverings and appliances. SDHDA will provide technical assistance.
  • Household income cannot exceed $49,910 for couples or individuals, and $57,040 for families of three or more.
  • If you’re aged 62 or under, your net worth must be less than $90,000 and you must have less than $70,000 in liquid assets.
  • If you’re older than 62, your net worth must be less than $175,000 and you must have less than $100,000 in liquid assets.
  • You must occupy the home as your primary residence.

How to apply

If you think you qualify, contact the Governor’s House representative in your area to find out more.

SDHDA Grants for Grads program

What is it?

Recent graduates settling down in South Dakota may qualify for the Grants for Grads program, which provides funds to help cover a down payment and closing costs.

  • Provides 5% of the loan amount as a gift to use for a down payment or closing costs
  • Thirty-year fixed-rate mortgage
  • SDHDA will generally not charge a discount point (1% of the loan amount). SDHDA also limits fees from participating lenders

Requirements

In order to qualify, you must

  • Be a first-time homebuyer
  • Have graduated from an accredited college or university in the last 60 months
  • Occupy the home as your primary residence
  • Be buying a house for no more than $250,200
  • Meet income limits, which vary by county and family size
  • Minimum credit score is unspecified, but you do need to be “creditworthy”

How to apply

Ask a qualified lender to help you find out if you are eligible for this program.

SDHDA Tax Credit

What is it?

The SDHDA Tax Credit is a type of mortgage credit certificate (MCC) that reduces the amount of federal income tax you owe. It’s an option for all first-time homebuyers and is available with the SDHDA first-time homebuyer loan.

  • A percentage of your annual mortgage interest is used to lower your tax bill by a dollar-for-dollar amount.
  • Between 30% and 50% of your mortgage interest can apply toward the credit, depending on the size of your loan; the lower the loan amount, the higher the percentage.
  • The credit is applicable each year you live in your home.

Requirements

  • You must be a first-time homebuyer
  • You must meet income limits, which are determined by county and family size
  • Home price cannot be more than $250,200, or $305,800 if the home is located in a federally designated targeted area
  • A $750 fee applies, which can be reduced to $250 if used with SDHDA First-time Homebuyer Program. Lenders may also charge a fee of up to $250.
  • May be subject to recapture tax if home sells within nine years

How to apply

Talk to a qualified lender to see if this option is right for you. They’ll help you apply for the credit.

National assistance

In addition to state-level programs, many first-time homebuyers in South Dakota can benefit from national programs, including FHA, USDA and VA loans. For more information, check out LendingTree’s guide to national homebuying programs. (LendingTree owns MagnifyMoney.)

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