Homebuyers Assistance Program
This program provides financial assistance to low- and moderate-income households for assistance with the down payment and closing costs.
Since the program’s inception in 1998 through May 2010, Community Development has provided loans to more than 680 first-time homebuyers that purchased houses within the city limits of Sioux Falls. In July 2007, the Homebuyers Assistance Program began providing additional assistance as financial incentive for households to purchase properties within the core neighborhoods of Sioux Falls.
What are the household eligibility requirements?
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Gross household income may not exceed
80 percent of the median family income. This is defined as income of all household members from all sources before taxes and withholding. Child support is included in this calculation.
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Applicants cannot have owned a home in the previous three years. Exceptions are permitted for displaced homemakers, households living in manufactured housing, and households living in housing not feasible for rehabilitation.
- Applicants must be current with their financial obligations, and have a history of being financially responsible. Applications will not be approved if there has been any outstanding delinquent financial obligation within three months of the application submittal. Financial obligations include but are not limited to judgments, county aid liens, accounts that have gone to collections, child support payments, loans, and credit cards. Applicants that have been disapproved because of a delinquent financial obligation may reapply three months after satisfying the delinquent obligation, or three months after denial of the first application, whichever occurs later.
- Applicants must be able to obtain from a commercial lender a fixed-rate first mortgage. The interest rate of the first mortgage cannot be more than 1.5 percentage points above the current fixed rate of South Dakota Housing’s First-Time Homebuyer Program. For the purposes of this policy, South Dakota Housing’s step-rate option is acceptable. The applicant’s total debt ratio is limited to 43 percent of their income and their housing expense ratio is limited to 31 percent of their income.
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Cash assets at the time of closing may not exceed ten percent of the purchase price of the property.
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The applicant shall pay a minimum of $500 toward the transaction. This amount may be greater depending on the income of the applicant, the amount of the first mortgage loan, and the amount of the property to be purchased.
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Applicants shall successfully complete homebuyer education provided by a Homeownership Education Resource Organization (HERO) as defined by South Dakota Housing Development Authority. The two HEROs in Sioux Falls are Lutheran Social Services’
Housing Resource Center and
Sioux Empire Housing Partnership.
What are the property eligibility requirements?
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The property selected must be located within the city limits of Sioux Falls.
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The property selected must be a single-family detached home affixed to a permanent foundation. Mobile homes, townhouses, condominiums, duplexes, twin homes, etc. are ineligible.
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Properties must be inspected by an
independent home inspection business licensed or registered by the State of South Dakota. It is the applicant’s responsibility to correct any deficiencies found during the inspection within 60 days after the loan closing. Serious health and safety deficiencies must be corrected prior to the loan closing.
- Properties constructed prior to 1978 must pass a visual assessment for deteriorated paint conducted by a visual assessment professional. Any house failing the visual assessment is ineligible unless corrective actions are undertaken. Corrective actions include an EPA-certified worker or supervisor stabilizing the deteriorated paint, and an EPA-certified risk assessor satisfactorily clearing that stabilization.
- Total purchase price cannot exceed $135,000.
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Properties used as rental properties in the last twelve months are ineligible unless the seller can provide proof that the last tenant vacated the property voluntarily.
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Contracts for Deed are ineligible.
What is the maximum amount of assistance?
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A
sliding scale based upon income is used to determine the maximum amount of assistance a household may receive. All income from all sources for all adult household members is included in this calculation.
Standard Program
- The maximum amount any household can receive is $6,000.
Incentive Area
- The maximum amount any household can receive is $12,000.
What are the terms of the loan?
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If the property is sold or the buyer discontinues occupancy within five years from the date of purchase, the entire loan will be subject to 1 percent interest for each full year or fraction thereof remaining on this five-year period.
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Seventy-five percent of the assistance is provided as a deferred loan. If the property is sold or the buyer discontinues occupancy after five years from the date of purchase, this deferred loan will be paid back without interest.
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Twenty-five percent of the assistance is provided as a loan that is forgiven after the household occupies the property for five years.
What encumbrances will be placed upon the property?
What is involved?
Interested households must submit an application, general release form, and all necessary supporting documentation including:
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Two most recent pay stubs showing year-to-date income.
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Statements covering the two most recent, consecutive months for any and all bank accounts.
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Signed and dated federal income tax returns from the least two years, including all supporting forms and schedules. If you were not required to file, provide a signed statement that you were not required to file.
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Divorce decree and/or child support, if applicable.
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Social Security benefits statement, if applicable.
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Letter of commitment from your primary mortgage lender.
How do I apply for assistance?
