Last Updated on August 23, 2023 by Hannah Stevens
Mortgage Assistance for Homebuyers in South Dakota
The South Dakota Housing Development Authority offers the Fixed Rate Plus Option in an effort to help people achieve their goal of homeownership. This program covers a portion or all of the closing costs and down payment for a mortgage transaction.
Fixed Rate Plus Option offers qualified applicants a down payment and closing cost assistance of up to 3% of the loan amount. Then at the loan closing, the assistance funds are given as a gift. This needs a slightly higher interest on the first mortgage, but this amount does not require repayment.
All applicants must meet specific requirements to qualify for the Fixed Rate Plus Option. They must be within the program’s maximum income limits. These, however, are subject to change each year, and vary depending on the county. The applicant must also complete a homebuyer education course, and meet financial requirements.
Homes purchased must be the primary residence of the buyer. It must also be within the maximum purchase price: $250,200 for first-time homebuyers; $305,800 for homebuyers purchasing a home in a targeted area, or repeat homebuyers.
South Dakota’s Homes Are Possible Inc. (HAPI) recognizes that potential homebuyers may be able to afford monthly payment for a new home. However, they might not have enough funds saved for the down payment. Therefore, HAPI offers a $3,500 non-forgivable loan for Down Payment/Closing Cost Assistance in Brown County. This loan is zero-interest. It must, however, be repaid to HAPI only if a borrower sells, refinances, or transfers the title to the home.
Moreover, HAPI offers Housing Opportunity Funds that are available for other South Dakota counties. This grant comes as a $3,500 forgivable grant.
Applicants must meet specific requirements for each program in order to be eligible. HAPI also requires all borrowers to attend and finish a Homebuyer Education course before closing on the property. In addition, all applicants must be within the income limits of 80% for each county’s HUD AMI.
- 1 person household: $33,250
- 2 person household: $44,300
- 3 person household: $38,238
- 4 person household: $55,350
- 5 person household: Contact HAPI
This is similar to the Down Payment first-time homebuyer assistance programs in South Carolina.
South Dakota First-Time Homebuyers Program
South Dakota residents who have never purchased a home before can choose from a variety of loan options. It is important to understand the different mortgage options.
The Federal Housing Administration insures FHA loans and protects lenders against financial risk. The 3.5% down payment requirement makes these loans a viable option to young homebuyers who don’t have the time or credit history to save for large down payments.
Conventional loans are mortgages that are not guaranteed by the government (e.g. FHA). These mortgages may have fixed or adjustable rates and require a downpayment of at least 20%. Conventional loans can also conform to Freddie Mac and Fannie Mae guidelines. These loans are “conforming” loans that any agency can back.
Access the VA Home Loans through the Veterans Affairs Department or backed by them. They are available to eligible spouses, veterans and service members. These loans have a low interest rate and are available to all qualified borrowers for no money down.
USDA-backed mortgages are provided by the USDA’s Rural Department of the United States Department of Agriculture (USDA). This department aims to create healthy, sustainable rural communities. These home loans can be used to help low- and moderate income residents get affordable housing.
Are you interested in the First-Time Homebuyer Assistance Programs in Tennessee?