Famous for its agriculture and for tourism hot spots (including Mount Rushmore), South Dakota has something for everyone! Increasing real estate prices can make home ownership in South Dakota difficult, however. Luckily, local and national programs exist that offer down payment assistance and grants to qualified applicants. The South Dakota Housing Development Authority is one organization that offers such programs.
If you're thinking about purchasing a home in South Dakota, you may have options to help with the down payment or closing costs. Read below to learn more about any program and see if it can help with your home purchase!
Homes Are Possible, Inc. (HAPI) offers two types of assistance, one for those in Brown County, South Dakota, and one for those in South Dakota but outside of Brown County.
HAPI Down Payment Closing Cost Assistance for those in Brown County offers a $3,500 non-forgivable loan with no interest. This loan is only paid back when your house is sold, refinanced, or the title is transferred.
For HAPI Housing Opportunity Funds, a $4,000 forgivable grant is offered to those outside of Brown County. A grant means that it does not need to be paid back as long as the conditions of the grant are met.
Homebuyer education must be completed before acceptance to either of these programs.
Income limits and other conditions may apply.
The Sioux Falls Homebuyer Assistance program was founded in 1998 and since then has helped many low and moderate-income families own homes.
As much as $5,000 is offered as a deferred-payment loan with 0% interest. This only becomes due once the property is sold or is no longer the borrower’s primary residence.
In order to qualify for this loan, an applicant must have a household annual income less than 80% of the area median income. Further, applicants must be first-time homebuyers, displaced homemakers, families living in manufactured housing, or families living in housing that cannot be rehabilitated. Individuals who apply must be able to show that they’re financially responsible by having no past-due bills or debts and having a history of paying all financial obligations in a timely manner. In the event that an application is denied due to financial irresponsibility, the applicant can reapply either six months after becoming current on all financial obligations, or six months after the first application was denied (whichever is second).
Applicants must also have a first mortgage that falls within specified criteria for this program. The maximum allowed debt-to-income ratio is 43%, and the maximum housing expense ratio is 31%. Individuals who apply also cannot have more than $10,000 in liquid assets, but must be able to put forth at least $500 towards the home purchase. Finally, the applicant must finish a homebuyer education course offered by the Homeownership Education Resource Organization.
The property being purchased using this program must be a single-family detached house with a permanent foundation in a specified target area. Furthermore, the purchase price cannot be more than $137,000. All houses must have an inspection done.
The Fixed Rate Plus Option, offered by the South Dakota Housing Development Authority, is a program to be added on to a first mortgage.
The first mortgage will have an interest rate a little bit higher due to having this program. However, as much as 3% of the loan amount will be offered as a grant that does not need to be paid back to help with the down payment and closing costs.
Applicants for this program must fall under defined income limits, which vary on location and change from year to year. Homebuyer education must also be completed.
Only primary residences are allowed, and the property cannot cost more than $300,000 (for first time homebuyers) or $366,000 (for repeat homebuyers or those in a target area) as of 2022.