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South Dakota First-Time Homebuyer Programs

Buying your first home can be an overwhelming experience — from searching for the right property to handling the sizable upfront costs, there’s a lot to manage.

Fortunately, there is help available. If you’re looking for your first home in South Dakota, there are several state programs available to help you achieve your goals.

In this guide, we will cover:

South Dakota first-time homebuyer programs

First-time homebuyer programs are offered through the South Dakota Housing Development Authority, which uses a mix of housing bonds, tax credits and other federal and state funding for programs that provide mortgage and down payment help, construction and rehabilitation money and more. Other agencies and nonprofits also provide various forms of assistance for homebuyers in South Dakota.

In January 2019, we researched the most current information on first-time homebuyer programs in South Dakota, which included reviewing guidelines from the South Dakota Housing Development Authority and other agencies. Here’s what first-time homebuyers in South Dakota need to know.

Eligibility for South Dakota assistance

Eligible borrowers must meet program-specific requirements, such as income limits, credit score minimums and purchase price limits. Programs specifically for first-time buyers require the borrower to have not owned a home in the past three years. Read on for more details on the many programs available to South Dakotans.

You can check current mortgage rates for your area here.

First-Time Homebuyer Program

Features

  • Low-interest mortgage loans
  • Cash assistance
  • Borrowers may also qualify for veterans waivers

Eligibility

  • Income limits may apply based on county location; see more details here.
  • Purchase price must be lower than $250,200.
  • Buyers must not have owned a home over the past three years.
  • Mobile home does not count as prior homeownership.

How it works

You can use this calculator to see if you may be eligible for this program. In order to formally ensure your eligibility and get started on the application process, you must contact a participating lender.

Fixed Rate Plus Down Payment Assistance

Features

  • Buyers may receive up to 3% of the total purchase amount to help with mortgage down payment and closing costs
  • Zero-interest second mortgage with no payments or fees

Eligibility

  • Borrowers are advised to ask their individual lenders for requirements.

How it works

Borrowers should ask their lenders for further details and eligibility requirements. You can go here for further information on down payment assistance.

Governor’s House Program

Features

  • Provides affordable housing to income-qualified residents

Eligibility

  • Income limits apply: Household income of less than $49,910 for couples or individuals and $57,040 for families of three or more.
  • Net worth limits apply: Families and individuals who are 62 or older must have a net worth of less than $175,000 and less than $100,000 in liquid assets; families and individuals under the age of 62 must have a net worth of less than $90,000 and less than $70,000 in liquid assets.
  • Purchase price limits apply: House price must not exceed $49,700 plus excise and sales tax for a two-bedroom and $56,700 plus excise and sales tax for a three-bedroom.
  • Home must be buyer’s only residence.
  • Homebuyers must provide the lot, foundation, floor coverings and appliances, handle utility hookups and fees and purchase the building permit.

How it works

Properties are built by prison inmates through the Governor’s Inmate Training Program. Homes may be clustered in a community or placed individually. You should contact your area representative for more information on how to apply for this program.

HERO Housing Program

Features

  • Provides free homeowner education resources
    • Classes address personal money management, budgeting for a home, the financing and loan process, the significance of a credit score, shopping for a home, predatory lending and homeowner responsibilities, among other topics.

Eligibility

  • These classes are suitable for all prospective homeowners seeking to advance their understanding of the homebuying process.

How it works

A South Dakota Housing Development Authority affiliate, HERO functions under the umbrella of the SDHDA Board of Commissioners and is also supported by Citi Foundation and HUD. You can read more about the program on their website.

Mortgage credit certificate (MCC)

Features

  • Tax credit

Eligibility

  • Sales price limits apply: Maximum sales price must not exceed $250,000 or, if home is in a federally designated targeted area, $305,800.
  • Income limits apply.
  • First-time homebuyers who have not owned a home in the previous three years may be eligible.

How it works

The MCC provides more disposable income and ensures a percentage of a borrower’s mortgage interest can be used as a dollar-for-dollar tax reduction. The remaining interest paid is still eligible for a home mortgage interest deduction. To get started, contact a participating lender for an application and interview.

City of Sioux Falls Homebuyers Assistance Program

Features

  • Down payment assistance
  • Closing cost assistance

Eligibility

  • Income limits apply: Gross household income must not exceed 80% of the area median.
  • Debt-to-income ratio is limited to 43% or less.
  • Housing expense ratio is limited to 31% of total household income.
  • Sales price is limited to $137,000.
  • Applicants must not have owned a home in the previous three years.
  • Borrowers must be creditworthy and able to obtain a commercial mortgage.
  • Cash assets at time of closing must not exceed $10,000.
  • Applicants must contribute at least $500 toward the transaction.
  • Homebuyer education class is required.
  • Eligible properties are located within the designated program area and are single-family detached homes affixed to a permanent foundation.
  • Inspection is required; deficiencies must be corrected within 60 days of closing.
  • Serious health and safety deficiencies must be corrected prior to closing.
  • Rentals are ineligible unless there is proof that the last tenant voluntarily vacated the property.

How it Works

Check the income limits to see if you may qualify for this program. You can then call the Community Development Office for a prescreening and to make an appointment. More information is available here.

Grow South Dakota NeighborhoodLift Program

Features

  • 5-year forgivable loan of $7,500 for owner-occupied properties
  • Funds may be used for closing costs, down payments or required out-of-pocket investments
  • Additional benefits available for military, first responders and teachers
  • Repayment immediately due if property is no longer owner-occupied

Eligibility

  • Not limited to first-time homebuyers
  • Income limits vary by household size and occupation
  • Approved lender list here
  • Short-sale properties eligible
  • Homeownership education class required

How it works

Grow South Dakota is a nonprofit organization that offers various forms of assistance to renters and homebuyers, including educational material, home energy audits and assistance securing mortgages. To get started with NeighborhoodLift, buyers should create an account online and then complete a quiz to determine whether they are eligible for assistance. If you are eligible, the next step will be to upload documents from an approved lender. You can find one here, and you can get started on your application here.

Homes Are Possible, Inc.

Features

  • $3,500 down payment/closing cost assistance, which may be repaid interest-free when a home is sold, title is transferred or a cash-back refinance is taken
  • Service area: Beadle, Buffalo, Campbell, Clark, Codington, Davison, Day, Deuel, Edmunds, Faulk, Grant, Hand, Hughes, Hyde, Jerauld, Marshall, McPherson, Potter, Roberts, Sanborn, Spink, Stanley, Sully and Walworth counties; not available in Brown County
  • Limited number of housing rehabilitation and repair grants are also available in the service area
    • Qualified borrowers must not make more than 80% of the intended home area median, as per rules set by the U.S. Department of Housing and Urban Development
    • Grant maximum is $5,000 minus filing fees and comes with a mortgage that is forgiven at a rate of 20% annually
    • Acceptable expenses include flooring, electrical systems, entry steps/ramp, insulation, smoke detectors, and plumbing systems; unacceptable expenses include tools, landscaping, window coverings, luxury or recreational items or cosmetic changes

Eligibility

  • Income limits apply and are dependent upon location and household size.
  • Homebuyer education course is required.

How it works

Homes Are Possible was founded in 1999 to provide housing assistance to low- to moderate-income South Dakota residents. You can contact them through their website or call:

Local: 605-225-HAPI (4274)

Toll Free: 888-224-4274

National first-time homebuyer programs

There are several national programs available for first-time homebuyers. Agencies offering such assistance include the FHA, Fannie Mae and Freddie Mac, the USDA and the VA. Check out our guide to national first-time homebuyer programs.

 

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