South Dakota first-time homebuyer grants and down payment assistance (2026)

Fixed Rate Plus: the 3% or 5% second mortgage you repay when you sell

The Fixed Rate Plus loan is SD Housing’s standing down payment program. It pairs a 30-year fixed first mortgage with a second mortgage equal to 3% or 5% of the first mortgage amount, at 0% interest, with no monthly payments and no extra fees ⁠⁴. It is not forgiven. The full amount is due when you sell the home, refinance, or pay off the first mortgage ⁠¹. On a $250,000 first mortgage, the 5% option is $12,500 and you owe the same $12,500 back at sale.

The help is paid for through the interest rate. On SD Housing’s rate sheet effective Sept. 29, 2026, a first-time buyer’s 30-year rate was ⁠³:

Repeat buyers pay more: 7.500% fixed and 7.750% with 5% help on government loans, 7.750% and 8.125% on conventional loans ⁠³. Rates change without notice.

Taking 5% costs half a percentage point on a government loan, so buyers with their own closing-cost cash should compare the plain Fixed Rate.

Give Me Five: 5% forgiven after five years, starting Nov. 2, 2026

On Oct. 13, 2026, SD Housing and Gov. Larry Rhoden announced Give Me Five. Unlike Fixed Rate Plus, it is forgiven rather than repaid ⁠⁵. The terms published so far:

• Amount: 5% of the first mortgage, as a second mortgage with no monthly payments.
• Forgiveness: forgiven after you have lived in the home as your primary residence for five years and met all program requirements.
• Who qualifies: first-time buyers (no home owned in the past three years) who meet the First-Time Homebuyer Program income limits and buy a primary residence in South Dakota priced at $410,000 or less.
• Status: launches Nov. 2, 2026, and SD Housing says it will run for a limited time. You apply by setting an appointment with a lender on its Give Me Five participating lender list ⁠⁵.

As of Oct. 20, 2026, SD Housing had not posted Give Me Five’s interest rate, loan types or what is owed on a sale before year five. Ask the lender before choosing it.

Who counts as first-time, and the county income table

SD Housing defines a first-time buyer as someone who has not owned a home in the past three years. A mobile home that was not on a permanent foundation does not count as a previous home. Veterans can ask the lender about SD Housing’s Veterans Waiver of the three-year rule ⁠¹. The MCC notice also exempts buyers in federally designated targeted areas ⁠⁷.

Income is annualized gross income from all sources, including overtime, bonuses and commissions, averaged over the past year and year to date ⁠⁹. The limit depends on the county where you will live and whether the household has 1-2 people or 3 or more. Counties not named in the table use the “all other counties” row ⁠².

Targeted areas are Buffalo, Jackson and Todd counties and parts of Lyman, Minnehaha, Oglala Lakota and Pennington counties. There, the price limit is $460,000 instead of $410,000 ⁠².

The $410,000 cap covers existing and new homes ⁠². Older SD Housing pages and brochures still show outdated figures, such as a $385,000 cap.

Credit, debt-to-income and education rules

Credit score. SD Housing’s minimum credit score is 620 for all of its programs, and you must still qualify with the lender ⁠⁹.

Debt-to-income. SD Housing does not publish its own DTI cap on its program pages. Your ratio is judged under the underwriting rules for the FHA, VA, USDA Rural Development or conventional loan you use, and the participating lender reviews your credit, income and debt for preapproval ⁠¹.

Down payment. SD Housing says the cash needed depends on the mortgage insurance type but usually starts around 3% of the loan, which a 3% or 5% Fixed Rate Plus loan can cover ⁠⁹.

Homebuyer education. It is required only on conventional loans (PMI insured or uninsured), and only one borrower or co-borrower must attend. FHA, VA and USDA buyers are encouraged but not required to take it ⁠⁹. SD Housing’s Homeownership Education Resource Organization (HERO) runs more than 200 free classes a year through 10 HUD-approved agencies. They include Lutheran Social Services’ Center for Financial Resources and the Sioux Empire Housing Partnership in Sioux Falls, Consumer Credit Counseling Service of the Black Hills in Rapid City, Homes Are Possible in Aberdeen, GROW South Dakota in Sisseton, and Lakota Funds, Tatanka Funds, the Cheyenne River Housing Authority and the Oglala Sioux Tribe Partnership for Housing on the reservations ⁠¹⁰.

The SD Housing Tax Credit (MCC) and why it skips bond loans

SD Housing is restarting its Mortgage Credit Certificate, which it brands the SD Housing Tax Credit. A public notice posted Aug. 11, 2026, set $12.5 million in total credit authority and said certificates would be issued no sooner than 90 days later, on a first-come, first-served basis ⁠⁷. The credit rate can be 10% to 50% of yearly mortgage interest. Above 20%, the credit is capped at $2,000 a year, and unused credit can be carried forward three years. SD Housing had not published the rate it will use ⁠⁶⁠⁷.

The MCC has the same three-year, $410,000 ($460,000 targeted) and county income rules as the First-Time Homebuyer Program. Under its notice, income counts every household member age 18 or older ⁠⁷. It cannot be paired with a loan funded by tax-exempt bonds, including SD Housing’s own. SD Housing’s rate sheet prices MCC loans in the same column as Repeat Homebuyer loans, 7.500% fixed on a government loan in late September 2026 ⁠³⁠⁷. The fee is $250, and the certificate must be issued at or before closing ⁠³⁠⁶. If you sell within nine years, federal recapture tax may apply ⁠⁷.

Repeat buyers and manufactured homes

The Repeat Homebuyer Loan Program is for buyers who have owned a home recently, or first-time buyers over the county limit. It offers the same 3% or 5% Fixed Rate Plus assistance with no first-time rule and no recapture tax. Limits are $124,080 for 1-2 people, $144,760 for 3 or more, a $460,000 price cap and a 620 credit score ⁠²⁠⁸⁠⁹. It cannot be used with the MCC or to refinance ⁠⁹.

The Manufactured Housing Downpayment Program (MHDP) (term sheet updated July 10, 2026) covers manufactured homes on rented or leased land, or homes not permanently attached to land the buyer owns. It pays up to 50% of the lender’s minimum down payment, capped at $10,000 ⁠¹⁴, as a 0% deferred loan with the same term as the first loan. It is forgiven when the home is paid off if the original buyer still lives there. It must be repaid on sale, transfer, cash-out refinance, default or move-out. Income may not exceed 120% of the county or state AMI, whichever is higher ⁠¹¹.

Local help in the Black Hills, Aberdeen and Sioux Falls

• NeighborWorks Dakota Home Resources (Deadwood). It offers Down Payment and Closing Costs Loan Programs in two forms: deferred loans with no payments and no interest, and payable loans with interest. Income can be up to 115% of county AMI, or up to 150% for first responders, teachers, firefighters and police. Amounts are not published; call 605-578-1401 ⁠¹².
• Homes Are Possible, Inc. (Aberdeen). Its Closing Cost Assistance is a $5,000 non-forgivable, interest-free loan repaid when you sell, take a cash-out refinance or transfer title. Income must be at or below 80% of HUD AMI for the county, and you must finish HAPI’s homebuyer course before closing. Its current application form is for Brown County ⁠¹³.
• City of Sioux Falls. On Oct. 20, 2026, the city’s housing page listed no general down payment program. Its programs were repair loans, rental rehabilitation and the Neighborhood Revitalization Program, which sells renovated homes to owner-occupants at or below 80% of AMI ($66,500 for one person to $125,350 for eight, effective June 1, 2026) ⁠¹⁵. In Sioux Falls, SD Housing’s Fixed Rate Plus and Give Me Five are the main sources of help.

Getting an SD Housing loan through a participating lender

1. Check the county limit

   Find your county on the May 30, 2026 income table and confirm the home will cost $410,000 or less, or $460,000 in a targeted area ⁠².

2. Pick a participating lender

   Search SD Housing’s Find a Lender directory by city or county. For Give Me Five after Nov. 2, 2026, use a lender on its Give Me Five list. You do not need an account at that bank ⁠⁵⁠⁹.

3. Take a HERO class if you need one

   It is required for conventional loans, and HERO classes are free in person, one-on-one or online ⁠⁹⁠¹⁰.

4. Bring income and asset papers

   Expect pay stubs, recent tax returns or W-2s, bank statements, employment details and permission to pull credit. MCC applicants also need a signed purchase agreement and the MCC forms ⁠¹⁠⁶.

5. Choose the assistance level

   Compare Fixed Rate, Fixed Rate Plus 3% or 5%, and Give Me Five, and ask whether an MCC makes sense instead of a bond loan ⁠³⁠⁵⁠⁷.

6. Close and keep the second-mortgage note

   Keep the second-mortgage papers and any MCC, because they set what you owe if you sell or refinance and the MCC must be claimed each year on IRS Form 8396 ⁠⁴⁠⁶.

If one lender declines you, try another participating lender, or work with a HERO counselor before reapplying ⁠¹⁰. Questions go to SD Housing at 605-773-3181 or 1-800-540-4241. Other South Dakota guides are on the South Dakota page, and other states’ programs are on the first-time homebuyer grants page.