HOME BUYING TIPS

Could South Dakota Housing Help Cover Your Down Payment or Closing Costs?

A buyer can be financially ready for a monthly mortgage payment and still feel stuck when the upfront costs arrive. The down payment is only one part of the cash needed. Closing costs, prepaid insurance, taxes, inspections, and moving expenses can make the first step feel larger than expected.

South Dakota Housing offers mortgage programs that may help eligible buyers with both down payment and closing costs. The important part is understanding how the assistance works, who may qualify, and what must eventually be repaid.

What the Fixed Rate Plus Options Provide

Under the South Dakota Housing Fixed Rate Plus program, qualifying buyers may choose assistance equal to 3% or 5% of the first mortgage loan amount. The assistance is structured as a separate second mortgage with a 0% interest rate and no monthly payments.

This is not the same as free money. The second mortgage generally becomes due when the home is sold, the first mortgage is refinanced or paid off, or another repayment event listed in the loan documents occurs. Buyers should have their participating lender explain the exact repayment terms before choosing an option.

What 3% or 5% Can Mean

For a $300,000 first mortgage, 3% equals $9,000 and 5% equals $15,000. Depending on the transaction, that assistance may be applied toward eligible down-payment or closing-cost needs. The exact amount available to the buyer and how it may be used must be confirmed by the lender.

The assistance options may carry a different first-mortgage interest rate than the standard program. That is why buyers should compare the upfront benefit with the long-term monthly payment and total borrowing cost instead of looking only at the amount received at closing.

Who May Qualify?

Program eligibility is not based on one factor. Income limits, purchase-price limits, credit qualifications, occupancy requirements, property eligibility, and lender underwriting all matter. South Dakota Housing currently describes a first-time buyer as someone who has not owned a home during the previous three years, subject to the program rules and exceptions.

The current first-time homebuyer page lists a maximum purchase price of $410,000, but program limits and rates can change. Buyers should verify the current figures with a participating South Dakota Housing lender before shopping based on a specific limit.

Start With the Lender, Not the House

The best time to explore assistance is before touring homes seriously. A participating lender can review income, credit, debts, available funds, and the target price range. That review helps the buyer understand whether the program fits and how assistance affects the maximum payment.

Preapproval also keeps the home search realistic. It is disappointing to find the right property and only then learn that the price, property type, or financing does not fit the chosen program.

Bottom Line

Down-payment and closing-cost assistance can reduce the upfront barrier for an eligible South Dakota buyer, but it is still financing with rules and a future repayment obligation. Compare the 3% and 5% options, confirm current eligibility, and understand the payment before deciding. Reach ou to us at timrealtor.com/contact-us.