Homebuyers Assistance Program
This program provides financial assistance to low- and moderate-income households for assistance with the downpayment and closing costs associated with the purchase of a property within the designated program area.
Since the program's inception in 1998, Community Development has provided loans to more than 750 first-time homebuyers.
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 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 six 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 six months after satisfying the delinquent obligation, or six 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. 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 $10,000.
The applicant shall pay a minimum of $500 toward the transaction. This amount may be greater depending on the amount of the first mortgage loan and the amount of the property to be purchased.
- 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.
- Funds from the Homebuyers Assistance Program shall not be used to buy down the interest rate of the first mortgage, such as with SDHDA’s below market rate with two percent discount fee.
What are the property eligibility requirements?
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 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 $137,000.
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.
Contracts for Deed are ineligible.
What is the maximum amount of assistance?
- An eligible household can receive up to $5,000.
What are the terms of the loan?
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:
Two most recent pay stubs showing year-to-date income.
Statements covering the two most recent, consecutive months for any and all bank accounts.
- Signed and dated federal income tax returns from the previous year, including all supporting forms and schedules. (A second year will be required if the application is self-employed.) If you were not required to file a tax return, provide a signed statement that you were not required to file.
Divorce decree and/or child support, if applicable.
Social Security benefits statement, if applicable.
Letter of commitment from your primary mortgage lender.
How do I apply for assistance?