Buying your first home can be both an exciting experience and an exhausting one at the same time. It can be exhausting for first time home buyers who are struggling to find the resources to secure a mortgage and pay down payment and closing costs. South Dakota residents finding themselves in this type of situation do have some recourse through a handful of state programs. These programs aim to help first time home buyers with limited resources get into their first homes.
Unfortunately, resources in South Dakota are limited when compared to other states. At the same time, the programs they do offer are somewhat different than other states in both scope and administration. This makes South Dakota one of the more unique states in securing first time home buyer assistance. If you have any questions about these programs you should talk with your real estate agent or banker.
South Dakota Housing Development Authority
The State of South Dakota administers its first time home buyer’s assistance programs and other housing programs through an agency known as the South Dakota Housing Development Authority. This self-supporting agency is funded through the sale of mortgage securities to investors. Through this arrangement the agency has secured the funds to help tens of thousands of South Dakota residents purchase their first homes. At the current time South Dakota offers one low-cost mortgage option and three down payment assistance programs.
First-time Home Buyers Loan Program
South Dakota offers a first time home buyers loan program for income eligible individuals who could afford a mortgage no other way. There are some requirements of this program that are tied to federal guidelines as well as some requirements from the state. Among those requirements is specific income eligibility as contained in federal guidelines. Income eligibility is looked at in relation to the geographical location where the home is being purchased. Along the same lines, property value is also considered by geographic location.
Furthermore, you must be a first time home buyer as defined by federal standards. Those standards define a first time home buyer as an individual who has never owned a home or, one who has not had principal ownership in a home within the three years prior to applying for the loan. The program is available with FHA, VA, and USDA Rural Development loans. If home buyers are financing more than 80% of a home's value they will be required to purchase mortgage insurance.
Down Payment Assistance Programs
As previously mentioned, South Dakota first time home buyers have three down payment assistance programs at their disposal. The first is known as the Employer Mortgage Assistance Program, or EMAP. With this assistance the home buyer is eligible for a 2% down payment assistance loan as long as he meets certain criteria and works for a participating employer. This program seeks to match government dollars with employer dollars to help qualified candidates.
The second option is known as the Loan Assistance Program (LAP). This program is accessible by anyone who is approved for one of South Dakota's low-interest first time home buyer loans. It is a 5% down payment loan secured if the applicant meets certain income eligibility requirements. However, with this loan consumers must complete a financial and homeownership counseling program prior to closing.
The third option for down payment assistance comes by way of an outright gift from the South Dakota Housing Development Authority. As a gift it need not be repaid at any time. This option, along with the other two requires a minimum out-of-pocket investment of at least $500 by the homeowner.
Additional Programs in South Dakota
There are three additional programs available in South Dakota in the Black Hills and Sioux Falls regions. These three programs have their own specific requirements which you can find by getting in touch with them. Keep in mind that funds for these programs may be limited and may not be available year-round. Also keep in mind that there may be other programs offered by municipalities and counties throughout the year. Your mortgage lender and real estate broker should always be aware of what is currently available in your area.
- Multi-County Neighborhood Housing Services of Black Hills Down Payment and Closing Costs Assistance Program (DAP)
- Multi-County Neighborhood Housing Services of Black Hills Loan Criteria Program
- Sioux Falls Homebuyers Assistance Program (HAP)