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First time home buyer South Dakota information and resources to help first time home buyers with finding the right house.
In the past year, home prices have increased across the board, but the South Dakota housing market has managed to keep these rising expenses in check.
According to Zillow, home values in The Mount Rushmore State climbed by more than 6 percent over the past year, a lesser increase than the national trend.
Nonetheless, if you are a first-time homebuyer, you may need assistance accumulating the necessary funds to quit renting and begin buying.
Since 1973, the South Dakota Housing Development Authority has helped make homeownership more accessible through programs that work with conventional, FHA, VA, and USDA loans.
South Dakota Lending Options for First-Time Homebuyers
SDHDA First-Time Homebuyer Program
Appropriately, the South Dakota Housing Development Authority’s (SDHDA) program for first-time homebuyers is called the First-Time Homebuyer Program.
However, this does not necessarily have to be your first time buying a home; you simply cannot have owned a home in two years.
If you fit this description, you must also meet the following requirements to qualify for a loan with a competitive interest rate:
➣ Minimum 620 credit score
➣ A gross household income below a specific level, which changes depending on household size and desired location ($77,800 to $110,170).
➣ Complete an online or in-person homebuyer education course
In addition, the property you’re buying or constructing must meet the following requirements:
➣ Price must not exceed $275,000 ➣ If it is a manufactured or mobile home, a permanent foundation is required.
South Dakota down payment assistance
SDHDA Fixed Rate Plus
If you’re concerned about having enough money for a down payment on your first house, the SDHDA offers a second loan worth up to 3% of your first mortgage.
The Fixed Rate Plus aid is a 30-year loan with no interest or fees, so you will not incur any further costs.
The balance is due after 30 years or when the initial mortgage is paid off, whichever occurs first.
Additional South Dakota homeownership Assistance
SDHDA Tax Credit
In addition to the absence of a statewide personal income tax for South Dakota citizens, the state offers a Mortgage Credit Certificate as a potential tax benefit for first-time homebuyers (MCC).
With an MCC, a portion of your mortgage interest can be utilized as a dollar-for-dollar tax credit, so reducing your overall tax liability and allowing you to keep more cash in your bank account.
If you are purchasing a property in South Dakota for less than $275,000, the tax credit you may be qualified for depends on the size of your mortgage.
The credits range from 30% to 50%, with a maximum annual value of $2000:
or less than $120,000: A tax benefit equal to 50% of your mortgage interest payments
➣ $120,001 to $150,000: A tax credit equal to 40% of the mortgage interest paid
➣ Over $150,000: A tax credit equal to 30% of your mortgage interest paid
The eligibility requirements for this tax credit are not free. The usual charge for the MCC program is $750, however if you qualify for the SDHDA’s First-Time Homebuyer Program, your fee is lowered to $250.
Be sure to inquire if your mortgage lender charges an additional $250 fee.
Regardless of the amount paid upfront, this credit can generate significant savings over a 30-year period.
Local Programs Assisting Homebuyers
In addition to SDHDA help, there are other ways to facilitate the purchase of a home in South Dakota.
The non-profit organization GROW South Dakota, for instance, offers a down payment assistance program that can help qualified purchasers obtain loans between $5,000 and $10,500 to cover their first costs.
Homes Are Possible, Inc., a non-profit organization, offers a $4,000 down payment assistance grant program for purchases made outside of Brown County.
If you want to purchase a home in Brown County, the group may still be able to assist you, but you will have to repay the $4,000 at some point.
Additional lending Programs for first-time homebuyers
Visit HUD’s website for more information on homeownership initiatives in South Dakota, including by city and county.
First Time Home Buyer South Dakota Conclusion
Are you prepared to begin the homebuying process in South Dakota? Utilize the first-time homebuyer calculator provided by the state housing finance authority to evaluate your eligibility.
Then, you can initiate the loan process by connecting with one of the agency’s many participating banks, credit unions, or mortgage lenders.
Remember that not all institutions will provide the same interest rates and conditions, so be careful to evaluate various possibilities to discover the best deal that meets your needs.