South Dakota Housing
As a first time homebuyer, you have an exciting journey ahead. We understand the experience of applying for your first mortgage loan and making your way through the housing market can be overwhelming. We want your first home purchase experience to be a good one.
The First‐time Homebuyer Program provides low interest mortgage loans to eligible homebuyers purchasing a home in the State of South Dakota. There are several interest rate and program options available.
- Government versus Conventional - Interest rates are usually quoted in terms of "Government" or "Conventional." "Government type loans are those that are either insured or guaranteed by an entity of the federal government where as "Conventional" type loans either have private mortgage insurance (PMI) or with a 20% downpayment are not insured at all. The insurance or guarantee protects the mortgage holder against loss due to non-payment or foreclosure of your loan. There is a cost to you and your Participating Lender that will explain each type and help you choose which one is best for you.
- Fixed Rate Plus - The "Fixed Rate Plus" rate option provides downpayment and closing cost assistance (3% of the loan amount as a gift at the loan closing). This gift is never repaid! It does require a slightly higher interest rate.
- Tax Credit (MCC) - "Tax Credit" refers to the interest rate option that allows you, through a Mortgage Credit Certificate (MCC), to convert some of your mortgage interest into a tax credit each year. This "Tax Credit" is a dollar-for-dollar reduction in your tax bill and the remaining interest paid is still eligible for the home mortgage interest deduction.