South Dakota First-Time Homebuyer Assistance Programs

Although they’ve risen slightly in the last year, home prices are relatively reasonable in South Dakota: The median sales price was $315,000 as of January 2025, according to Redfin. (That’s more than $80,000 below the national median sale price of $396,900, according to the National Association of Realtors.)

Still, if you’re a first-time homebuyer in the state, you might need help. One of the best resources for new buyers is the South Dakota Housing Development Authority (SDHDA), which has been helping to make homeownership more affordable since 1973.

South Dakota first-time homebuyer programs

SDHDA First-Time Homebuyer Program

The SDHDA offers a program called the First-Time Homebuyer Program. However, this doesn’t have to actually be your first time purchasing a property — you simply can’t have owned a home in the last three years. If that description fits you, you may be able to qualify for a loan with a competitive interest rate, as long as the house you buy costs no more than $385,000.

• Requirements
  

  • Minimum credit score of 620
  • Must meeting household income limits, which vary based on your household size and where you want to live
  • Cannot exceed purchase price limits ($385,000 for first-time buyers)
  • Must complete a homebuyer education course (if you’re taking out a conventional mortgage)

• Pros and cons
  

  Pros

  • Competitive loan rates
  • Can be used to finance improvements and repairs
  • Open to mobile homes on a permanent foundation
  • Over 200 participating lenders

  Cons

  • Must complete interview with application

GROW South Dakota’s Direct Loan Program

GROW South Dakota, a private nonprofit, provides home loans to help residents buy or build a home in the state. Loan amounts vary based on several factors, such as your income, credit history and debt obligations, but are typically $300,000 or less.

While GROW South Dakota doesn’t publish specific credit score or income requirements, those factors are considered as part of your application.

• Requirements
  

  • Credit score requirements vary by lender
  • Must have an appraisal on the home you’re hoping to buy
  • Must complete a homeowner education course
  • Must purchase a primary residence

• Pros and cons
  

  Pros

  • No maximum income limits
  • Three-day response time on eligibility decision

  Cons

  • Deposit required for the cost of the appraisal
  • $300,000 maximum loan amount

South Dakota down payment assistance and grants

SDHDA Fixed Rate Plus

If you’re concerned about coming up with the initial money to put down for your first home, the SDHDA offers a second loan worth up to 5 percent of your first mortgage. The Fixed Rate Plus assistance is a zero percent 30-year loan, so you won’t pay any additional interest or fees.

• Pros and cons
  

  Pros

  • Can be used for down payment and closing cost assistance
  • Repayment deferred until you sell the home
  • Has zero interest

  Cons

  • Must repay funds if you sell the home

GROW South Dakota Down Payment and Closing Cost Assistance

GROW South Dakota is another organization that offers down payment assistance in South Dakota. Its Down Payment and Closing Cost Assistance program provides loans between $5,000 and $7,500 to help qualified buyers afford a down payment or closing costs.

• Pros and cons
  

  Pros

  • Can be used toward down payment and closing costs
  • Comes with deferred repayment
  • Has zero interest

  Cons

  • Limited availability (funds not available at time of this writing)
  • Must repay the funds if you refinance or sell the home or when you pay off the loan

Homes Are Possible, Inc. Down Payment/Closing Cost Loan

If you live in Northeast South Dakota, you might be eligible for a $5,000 loan from the nonprofit Homes Are Possible, Inc. (HAPI) to help with your down payment or closing costs. The loan does not have interest, but you’ll need to repay it when you sell your home, do a cash-out refinance or transfer the title.

• Requirements
  

  • Earn a maximum of 80 percent of the area median income in your county
  • Pass the organization’s homebuyer education course
  • Purchase a home on a permanent foundation (not a mobile home)
  • Reside in the home you’re buying

• Pros and cons
  

  Pros

  • Up to $5,000 toward closing costs
  • Comes with deferred repayment
  • Has zero interest

  Cons

  • $250 administration fee
  • Can only be used toward closing costs

Other South Dakota homebuyer assistance programs

SDHDA Tax Credit

In addition to the absence of a statewide personal income tax for South Dakota residents, the state has another potential tax perk for first-time homebuyers: a mortgage credit certificate (MCC). With an MCC, a portion of your mortgage interest can be used as a dollar-for-dollar tax credit, which lowers your overall tax bill and keeps extra money in your bank account.

If the home you’re buying in South Dakota costs less than $385,000 or $460,000 in a target area, here’s a rundown of the tax credit you could be eligible for, based on the amount of your mortgage.

• $150,000 or less: A tax credit of 50 percent of your mortgage interest
• $150,001 to $250,000: A tax credit of 40 percent of your mortgage interest
• More than $250,000: A tax credit of 30 percent of your mortgage interest

Overall, the credits can total up to $2,000 per year.

Qualifying for this tax credit does come with costs. The MCC program comes with a standard fee of $750, but if you’re taking advantage of the SDHDA’s First-Time Homebuyer Program, you’re in luck: Your fee will only be $250. Be sure to ask your mortgage lender if they charge an additional $250 fee, too.

Regardless of how much you pay upfront, though, this credit can create meaningful savings over a 30-year period.

Other South Dakota first-time homebuyer loans

As a first-time homebuyer in South Dakota, you could also consider applying for one of the following government-backed loans, which are often easier to qualify for than conventional loans.

• FHA loans: Insured by the Federal Housing Administration, FHA loans are ideal for borrowers with average or below-average credit scores. You can qualify for one of these loans with a score as low as 500 (but you’ll need to make a 10 percent down payment). If your score is 580 or higher, you can put just 3.5 percent down on your home purchase.

• VA loans: You may be eligible for a VA loan if you’re an active-duty service member, veteran or surviving spouse. This loan option does not require you to make a down payment or pay for mortgage insurance and often comes with competitive interest rates.

• USDA loans: If you meet income criteria and plan to buy a house in a designated rural area, you might qualify for a USDA loan. Guaranteed by the U.S. Department of Agriculture, these loans don’t require a down payment and have competitive interest rates for low-income borrowers.

Get started

Ready to become a homeowner in the Mount Rushmore State? First, take the SDHDA’s first-time homebuyer quiz, which can help you determine your eligibility for first-time homebuyer programs in South Dakota.

Then, you can connect with one of the agency’s many participating banks, credit unions or mortgage lenders to start the loan application process. Read reviews of mortgage lenders in South Dakota for a better idea of how borrowers rate their overall customer experience.

Remember that interest rates and terms will vary across institutions, so be sure to compare South Dakota mortgage rates to find the best offer that fits your needs. Don’t forget to factor in the cost of homeowners insurance when estimating the cost of homeownership.

• Explore other first-time homebuyer programs by state