Although they’ve risen slightly in the last year, home prices are relatively reasonable in South Dakota: The average home is valued at $286,054 as of Jan. 2024, according to online realty firm Zillow. (That’s about $100,000 below the national median sale price of $382,600, 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 with programs that work in conjunction with conventional, FHA, VA and USDA loans.

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’ll need to satisfy a few other conditions to qualify for a loan with a competitive interest rate:

There are a few conditions that the property you’re buying or building will need to satisfy, too:

To apply, contact a participating lender.

GROW South Dakota’s Direct Loan Program

GROW South Dakota, a Sisseton-based 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. You’ll also need to:

  • Have an appraisal on the home you’re hoping to buy
  • Complete a homeowner education course

For more specific eligibility criteria, call GROW South Dakota at 605-698-7654. If you’re interested in the program, you can start your application on the organization’s online portal.

South Dakota down payment assistance

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.

For eligibility requirements and application information, reach out to a participating lender.

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 $10,500 to help qualified buyers afford a down payment or closing costs. To participate, you must:

  • Receive a mortgage from an approved lender
  • Meet certain income requirements (specific requirements vary by program)
  • Take a homeowner education course

You’ll need to repay the funds if you refinance, sell or move out of the home or when you pay off your mortgage.

To begin your application, you’ll need to create an account in GROW South Dakota’s online portal.

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. To qualify, you must:

  • 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

Contact HAPI by phone (605-225-4274) or email ( to learn more or apply for the program.

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.
  • 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, use the SDHDA’s first-time homebuyer calculator, 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 get the loan process started. Remember that interest rates and terms will not be the same across all institutions, so be sure to compare multiple options to find the best offer that fits your needs.