First-Time Homebuyer Programs in South Dakota; SDHDA Guide
Buying your first home in South Dakota is one of the most exciting and significant financial decisions you will ever make. The good news is that first-time homebuyers in Sioux Falls and across South Dakota have access to several programs designed to make homeownership more accessible, including down payment assistance, below-market interest rates, and flexible qualification guidelines.
This guide covers everything you need to know about first-time homebuyer programs in South Dakota, including the programs offered through the South Dakota Housing Development Authority (SDHDA) and how to take advantage of them when purchasing a home in Sioux Falls and the Sioux Empire.
What Is the South Dakota Housing Development Authority (SDHDA)?
The South Dakota Housing Development Authority is a state agency created to help South Dakota residents achieve homeownership. SDHDA administers several programs specifically designed for first-time homebuyers, offering financial assistance and favorable loan terms that can make a meaningful difference for buyers entering the market for the first time.
SDHDA programs are available throughout South Dakota including Sioux Falls, Harrisburg, Tea, Brandon, and communities across the state.
Who Qualifies as a First-Time Homebuyer in South Dakota?
For SDHDA program purposes, a first-time homebuyer is generally defined as someone who has not owned a primary residence in the past three years. This means that even if you have owned a home previously, you may still qualify if enough time has passed since your last purchase.
Additional eligibility requirements typically include:
Meeting household income limits based on family size and county
Purchasing a home that falls within purchase price limits set by SDHDA
Using the home as your primary residence
Completing a homebuyer education course in most cases
Meeting credit and qualification standards of the underlying loan program
SDHDA First-Time Homebuyer Programs
The Fixed Rate Plus Program
SDHDA's primary first-time homebuyer program offers a 30-year fixed rate mortgage at a below-market interest rate. This program can be combined with down payment assistance to help buyers cover upfront costs.
Key features:
Below-market fixed interest rate
Available with FHA, VA, USDA, and conventional loan options
Income and purchase price limits apply
Primary residence purchases only
Down Payment Assistance
One of the most valuable components of SDHDA's programs is down payment assistance. For many first-time buyers in Sioux Falls, saving for a down payment is the single biggest barrier to homeownership. SDHDA's assistance program helps bridge that gap.
The assistance is typically structured as a second mortgage at a low interest rate and can cover a portion of the down payment and closing costs. Specific amounts and terms vary based on the program and the borrower's situation.
The Governors House Program
The Governors House Program is a unique South Dakota initiative that provides affordable, quality homes to low-income first-time buyers through a partnership between the state and local communities. Homes are built and sold at reduced prices to eligible buyers who meet income requirements.
The Tax Credit Program (MCC)
The Mortgage Credit Certificate (MCC) program allows eligible first-time buyers to claim a federal tax credit based on a percentage of the mortgage interest paid each year. This credit reduces the buyer's federal income tax liability dollar for dollar — providing ongoing annual savings throughout the life of the loan.
How SDHDA Programs Work With Loan Types
SDHDA programs are designed to work alongside standard mortgage programs rather than replace them. Here is how they pair with the most common loan types used by first-time buyers in Sioux Falls:
SDHDA + FHA Loans
FHA loans are one of the most popular choices for first-time buyers because of their low 3.5% down payment requirement and flexible credit guidelines. Combining an FHA loan with SDHDA down payment assistance can reduce or eliminate the need for a large upfront cash investment.
SDHDA + VA Loans
Eligible veterans can combine SDHDA programs with their VA loan benefit for maximum impact. VA loans already offer zero down payment — adding SDHDA assistance can help cover closing costs and other upfront expenses.
SDHDA + USDA Loans
USDA loans offer zero down payment for eligible buyers in qualifying rural and suburban areas. For first-time buyers in communities near Sioux Falls that qualify for USDA financing, combining both programs can make homeownership extremely accessible.
SDHDA + Conventional Loans
Conventional loans with SDHDA assistance can be a strong option for first-time buyers with solid credit who want flexibility in loan structure and the ability to remove mortgage insurance over time.
Income and Purchase Price Limits
SDHDA programs have income and purchase price limits that vary by county and family size. These limits are updated periodically by SDHDA.
For buyers in Minnehaha and Lincoln County, which covers Sioux Falls, Harrisburg, Tea, and Brandon, limits are set based on the area median income and local home values.
The best way to confirm current limits and your eligibility is to speak directly with a lender who is experienced with SDHDA programs and can review your specific situation.
The Homebuyer Education Requirement
Most SDHDA programs require completion of an approved homebuyer education course before closing. These courses cover budgeting, the home-buying process, understanding your mortgage, and maintaining your home after purchase.
Courses are available online and in person and typically take a few hours to complete. The investment of time is well worth it — buyers who complete homebuyer education are consistently better prepared for the responsibilities of homeownership.
Steps to Access SDHDA Programs in Sioux Falls
Step 1: Connect With a SDHDA-Approved Lender
Not all lenders offer SDHDA programs. Working with an approved lender who is experienced with these programs is the first and most important step. Jeff Buum at Fairway Heartland is experienced with SDHDA programs and can walk you through your options.
Step 2: Review Your Eligibility
Your lender will review your income, credit, employment, and the property you are considering to confirm eligibility for SDHDA programs and identify which options are the best fit.
Step 3: Complete Homebuyer Education
Complete your required homebuyer education course early in the process so it does not delay your closing timeline.
Step 4: Get Pre-Approved
A pre-approval from Fairway Heartland gives you a clear picture of your buying power and strengthens your offer when you find the right home.
Step 5: Find Your Home
Work with a local Sioux Falls real estate agent to find a home that meets SDHDA purchase price limits and fits your lifestyle and budget.
Step 6: Close With Confidence
Jeff Buum and the Fairway Heartland team will guide you through every step from application to closing, making sure your SDHDA benefits are applied correctly and your transaction stays on track.
Why First-Time Buyers in Sioux Falls Choose Jeff Buum
Jeff Buum at Fairway Heartland has helped many first-time buyers across Sioux Falls, Harrisburg, Tea, and Brandon navigate SDHDA programs and find the right combination of loan program and assistance to make homeownership a reality.
His educator-first approach means you will understand every option available to you with no pressure and no surprises. Whether you are just starting to explore your options or ready to get pre-approved today, Jeff is ready to help you take the next step.
Schedule your free first-time homebuyer consultation with Jeff Buum today
Related Resources
Jeff Buum is a Loan Officer at Fairway Heartland, serving homebuyers in Sioux Falls, Harrisburg, Tea, Brandon, and across Southeast South Dakota. Fairway Home Mortgage NMLS #2289. Jeff Buum NMLS #400290.
