Current mortgage rates in South Dakota

As of Thursday, November 30, 2023, current mortgage interest rates in South Dakota are 7.82% for a 30-year fixed mortgage and 7.02% for a 15-year fixed mortgage.

With higher rates and rising home prices, your buying power might be limited. That’s why it’s even more important to consider at least three different mortgage offers when shopping for rates.

Refinance rates in South Dakota

Mortgage purchase rates are hovering near their recent peak. You might notice some refinance rates today are even higher. Still, you could tap your home equity with a cash-out refinance to renovate or pay for other expenses. If you don’t want to refinance, you might look into a home equity line of credit (HELOC) instead.

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. In 2023, the income limit for a two-person household in Minnehaha County (Sioux Falls), for example, is $96,000.

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.

Additional South Dakota mortgage resources

• South Dakota first-time homebuyer resources
• South Dakota loan limits by county
• South Dakota mortgage lenders

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

When shopping around for a mortgage for your South Dakota home, it’s best to compare at least three offers. This might include a loan with your bank or credit union and one of the major online lenders available nationwide. You might also consider working with a mortgage broker, who can help connect you with loan offers tailored to your needs.