30-Year Fixed Mortgage at Below-Market Rate

SDHDA’s flagship program provides a 30-year fixed-rate mortgage at a rate below what’s available through conventional lenders. Rates fluctuate with the bond market but are typically 0.25%–0.75% below current conventional rates — which on a $300,000 loan translates to $40–$130 per month in savings.

• Purchase price limit: $410,000
• Minimum credit score: 620
• Income limits: Vary by county and household size — check sdhda.org for current figures
• First-time buyer requirement: Must not have owned a home in the past 3 years (exceptions for targeted areas and veterans)
• Homebuyer education: Required — must complete a certified course before closing
• Property types: Single-family homes, condos, townhomes, certain manufactured homes

3% or 5% of Loan Amount — Zero Interest, No Monthly Payment

SDHDA’s DPA program provides either 3% or 5% of the first mortgage loan amount as a second mortgage at 0% interest with no monthly payments. The funds are due only when you sell the home, refinance, or pay off the first mortgage.

• Amount: 3% or 5% of your first mortgage loan amount
• Interest rate: 0% — no interest accrues
• Monthly payment: None — $0/month added to your housing costs
• Repayment: Due upon sale, refinance, or payoff of first mortgage
• On a $300,000 loan: That’s $9,000 (3%) or $15,000 (5%) toward your down payment and closing costs
• Can cover: Down payment, closing costs, or both

In practical terms, a buyer using the 5% DPA on a $310,000 purchase price would receive $15,500 toward their down payment and closing costs — with zero monthly payment attached to that assistance.

Up to 5% of Loan Amount as a Grant — Not a Loan

Graduates who completed an accredited two-year, four-year, or graduate degree within the past five years may qualify for up to 5% of their loan amount as a grant — meaning it never needs to be repaid. This is real money that disappears from your closing costs entirely.

• Grant amount: Up to 5% of the first mortgage loan amount
• Repayment: None — this is a grant, not a loan
• Eligible degrees: Associates, bachelor’s, master’s, doctoral, or professional degree from an accredited institution
• Graduation window: Degree completed within the past 5 years
• Purchase price limit: $385,000
• Income limits: Same as First-Time Homebuyer Program

South Dakota has invested in this program specifically to retain graduates who might otherwise leave for larger markets. If you graduated from USD, SDSU, Augustana, or any other accredited institution within the last five years and are buying in Sioux Falls, this program was designed for you.

Below-Market Rate Available Even If You’ve Owned Before

The Repeat Homebuyer Program extends SDHDA’s below-market rate mortgage to buyers who have previously owned a home — as long as they meet the income and purchase price limits. It can also be combined with the DPA program.

• Income limits: Under $122,640 (1–2 person household) or $143,080 (3+ person household)
• Purchase price limit: $460,000
• Minimum credit score: 620
• Can combine with DPA: Yes — access both the below-market rate and down payment assistance
• Homebuyer education: Required

Up to $2,000/Year Federal Tax Credit for the Life of Your Loan

The MCC is a federal tax credit — not a deduction — equal to 30% of your annual mortgage interest paid, up to $2,000 per year. A tax credit is a dollar-for-dollar reduction in what you owe the IRS. On a $300,000 mortgage at 6.5%, your first year’s interest is approximately $19,200. 30% of that is $5,760, capped at $2,000. That’s $2,000 off your federal tax bill, every year, for as long as you live in the home.

• Credit amount: 30% of annual mortgage interest paid, max $2,000/year
• Duration: For the life of the loan, as long as the home is your primary residence
• Type: Federal tax credit (dollar-for-dollar reduction, not a deduction)
• Fee: $750 as a standalone certificate, $250 when combined with an SDHDA first mortgage
• 10-year value: Up to $20,000 in tax credits over a decade