South Dakota Mortgage and Refinance Rates

Current mortgage rates in South Dakota

As of Friday, April 19, 2024, current mortgage interest rates in South Dakota are 7.25% for a 30-year fixed mortgage and 6.50% for a 15-year fixed mortgage.

Home prices are not mounting in The Mount Rushmore State: In fact, the current median price of $268,500, as of February 2024, represents a 4% decline year-over-year, according to ATTOM. But the median down payment has risen over 20%, and that, plus today’s higher mortgage rate environment, suggests that housing affordability is getting to be a challenge for South Dakota residents.

Refinance rates in South Dakota

While mortgage refinance rates have more than doubled since the pandemic, many South Dakota homeowners have much more tappable equity now: the average mortgage-holder gained $16,000 in 2023 alone, according to CoreLogic. With a cash-out mortgage refinance, you could take advantage of this asset to help further your financial goals.

National mortgage rates by loan type

Mortgage statistics for South Dakota

• Most popular cities: Sioux Falls, Rapid City, Aberdeen, Watertown, Brookings
• Most affordable counties (based on median home value): Carson, Walworth, Sanborn, Roberts, Spink
• Median home sales price, Feb. 2024: $268,500
• Median home value, Feb. 2024: $310,000
• Median down payment, Feb.. 2024: $38,750
• Homeownership rate, Q4 2023: 69.1%

Sources: ATTOM, U.S. Census Bureau

 Mortgage options in South Dakota

• South Dakota conventional mortgages: Conventional mortgages usually require a credit score of 620 and a debt-to-income (DTI) ratio of no more than 45 percent. You’ll need to put at least 3 percent down, but at that level, you’ll need to pay private mortgage insurance (PMI) as well.
• South Dakota FHA loans: If you have a lower credit score, a loan insured by the Federal Housing Administration (FHA) might be a better option. You can get an FHA loan with a credit score of 580 and a down payment of 3.5 percent.
• South Dakota USDA loans: South Dakota has properties eligible for loans backed by the United States Department of Agriculture (USDA). USDA loans can come with reduced interest rates and don’t require a down payment. However, you’ll need to be below area-specific income requirements.
• South Dakota VA loans: For qualifying active-duty service members, veterans and surviving spouses, a mortgage guaranteed by the Department of Veterans Affairs (VA) is an option. You’ll need to pay a funding fee, but on the flipside, VA loans don't require a down payment or mortgage insurance.

First-time homebuyer programs in South Dakota

The South Dakota Housing Development Authority (SDHDA) works with lenders in the state to offer first-time homebuyers a fixed low-interest mortgage. In order to qualify, you can’t have owned a home in the past three years. The program also imposes income limits based on household size and location, which change year to year.
The program also has a purchase price limit of $385,000 for first-time homebuyers buying existing or newly-built homes. That price limit bumps up to $460,000 for repeat homebuyers or those purchasing in targeted areas (Buffalo and Ziebach counties and parts of Oglala Lakota, Todd and Pennington counties).

Down Payment Assistance

For many borrowers, having enough money for a down payment and closing costs is the only barrier to homeownership. The SDHDA offers a program to help with this challenge: the Fixed Rate Plus loan, which provides up to 5 percent to cover closing costs or a down payment. The money is provided via a zero-percent, no-monthly-payment second mortgage, due when the first mortgage is paid off or the home is sold.

Homes Are Possible Down Payment and Closing Cost Assistance

Beyond the state’s housing authority, South Dakota is home to another organization, Homes Are Possible Inc. (HAPI), that offers down payment and closing cost support in specific parts of the state. If you qualify, you can receive a $5,000 interest-free loan. The loan must be paid back when you sell the home or otherwise pay off the mortgage or transfer the title. You’ll also need to complete a homebuyer education course and meet county-specific income limits.

GROW South Dakota Down Payment and Closing Cost Assistance

Yet another option for those who might be struggling to come up with a down payment for a home purchase, the GROW South Dakota organization provides cash for either a down payment or closing costs as a zero-percent deferred loan, ranging from $5,000 to $10,500. The money must be paid back if you refinance the home, sell it, or it is no longer your primary residence, or when the loan reaches maturity or is paid in full, whichever happens first.

As with other programs, in order to qualify, you must meet eligibility guidelines, including income limits and complete a homebuyer education course.

How to find the best mortgage rate in  South Dakota for you

When shopping for a mortgage, compare at least three loan offers — research shows this exercise can save you thousands of dollars over the life of a loan.Bankrate can help you find the best mortgage deal. Here are some basic steps to securing a loan on favorable terms:

Step 1: Strengthen your credit score

Long before you start looking for a mortgage lender or applying for a loan, give your finances a checkup, and improve your standing if needed. This means pulling your credit score and credit reports. You’re entitled to a free credit report from each of the three main reporting bureaus (Experian, Equifax and TransUnion), which you can get through AnnualCreditReport.com.

Step 2: Determine your budget

To find the right mortgage, you’ll need a good handle on how much house you can afford. That’s because a lender could qualify you for more mortgage than you need, or one that would max out your budget and leave no room for unexpected expenses.

Step 3: Know your mortgage options

There are a few different types of mortgages. Many lenders offer conventional loans that require as little as 3 percent down. FHA loans also have a low down payment threshold, while VA loans (for veterans and current military) and USDA loans (for borrowers in rural areas) have no down-payment requirement at all. 

Step 4: Compare rates and terms from several lenders

Don’t settle on the first lender you talk to — rate-shop with at least three different banks or mortgage companies. You can look to your bank or other banks, credit unions, online lenders and local independents to ensure you’re getting the best deal on rates, fees and terms.

Step 5: Get preapproved for a mortgage

As you comparison-shop, keep in mind that getting a mortgage preapproval is the only way to get accurate loan pricing for your specific situation.

Additional South Dakota mortgage resources

• South Dakota loan limits by county: Learn the conforming loan limit for your city or town.
• South Dakota mortgage lenders: Explore loan-offering institutions throughout the state
• Best Homeowners Insurance in South Dakota: Compare policies from a variety of providers.