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, Community Development has provided loans to more than 470 first-time homebuyers within the city limits of Sioux Falls. Beginning in July of 2007, in conjunction with Mayor Munson’s Neighborhood Conservation Program, the Homebuyers Assistance Program will provide additional assistance as financial incentive for households to purchase properties within the core neighborhoods of Sioux Falls.

What are the household eligibility requirements?

• 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.
• 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 cannot be delinquent on any financial obligations, including but not limited to judgments, child support, and unpaid county aid liens.
• 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.
• Cash assets at the time of closing may not exceed ten percent of the purchase price of the property.
• The applicant must pay at least $500 to $800 (based on a sliding scale according to income).
• Applicants must attend homebuyer education at either the Housing Resource Center or the Sioux Empire Housing Partnership .

What are the property eligibility requirements?

• The property selected must be located within the city limits of Sioux Falls.
• 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.
• Properties must be inspected by a qualified home inspection business. Health and safety deficiencies must be corrected prior to closing.
• Properties constructed prior to 1978 must pass a visual assessment for deteriorated paint surfaces conducted by a visual assessment professional.  Any house failing the visual assessment is ineligible unless an EPA-certified worker or supervisor stabilizes the deteriorated paint prior to closing.
• Total purchase price cannot exceed $128,000.
• Properties used as rental properties in the last 12 months are ineligible.
• Contracts for Deed are ineligible.

What is the maximum amount of assistance?

• A sliding scale based upon income is used to determine the maximum amount of assistance a household may receive.

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?

• 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. 
• 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.
• 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?

• A signed mortgage will be recorded against the property until satisfied.

What is involved?

Interested households must submit an application, general release form, and all necessary supporting documentation including:

• Letter of commitment from a commercial lender for a first mortgage.
• Federal income tax returns for the past two years.
• Two most recent pay stubs showing year-to-date income.
• Two most recent monthly statements for all bank accounts.
• Social Security benefits statement (if applicable).
• Divorce decree and any court documents related to relevant child support (if applicable).

How do I apply for assistance?

• Check the income limits to see if you qualify for the program.
• Call the Community Development Office for a confidential pre-screening and to schedule an appointment.