🚫 No Down Payment Programs for First Time Home Buyers – [WHAT?]

first time home buyers zero down payment programs

You’ve decided to purchase your first home.  Congratulations!  You will now join the millions of first time home buyers! This is an exciting milestone in your life, but it can be a little intimidating. Before you start picking out curtains and planning your housewarming party there are several things to review before you start house-hunting.

Did you know there are several programs that affords many opportunity’s to South Dakota first time home buyers? Did you know you that you can purchase your first home with no money down? Think this is too good to be true? It get’s even better! Most first time home buyer’s will never have to pay back the gift funds they received to buy their first home. If this has peaked your interest in anyway, keep reading! To learn more about this program, please reach out to a team member of RL Real Estate Group now at 605-371-4338.

Are you a financially prepared first time home buyer?

  •  Do your homework  before you start the home buying process. Pull your credit report and fix any issues. Get your FREE credit report here!
  • Here is some advice for raising your credit score. Write down your budget, including expenses for clothing, gas, groceries, and any children’s expenses. Here’s a budgeting tool that will help.
  • Give your financial health a check-up – before you begin talking to lending agents or mortgage brokers,  take inventory of your finances . You should have a savings account of three to six months of living expenses set aside for the unexpected. Then take a look at the remainder of your savings and retirement accounts. 

🆓 FREE Credit Counseling

 Call or email Christina Ulvestad  from First Premier Bank in Sioux Falls. She offers free credit counseling and so much more! Reach Christina at CULVESTA@firstpremier.com or 605-357-3165.

  • How much home can you afford? Your home loan will depend on several things. The debt-to-income ratio is very important. Your credit score, especially your repayment history for larger installment loans, such as a car or student loan is vital. Typically, lenders will approve about  four to five times your reported income  for a home loan, although these amounts will vary.

Here is a calculator that will help determine how much home you can comfortably afford.

  •  What are my first time home buying options if my credit isn’t great?  Home loans aren’t for those that are a credit risk. If your credit is less than average, maybe you had some bad luck or setbacks in the past. Consider taking a few months to a year to boost your credit score. You can do a quick self-analysis using this tool. Working with a reputable credit counselor will also help you raise your score organically.

🏠Guide for First Time Home Buyers in South Dakota


First Time Home Buyers Home ownership is a big step, and while the market for a first time home buyer in South Dakota is hot right now, especially the Sioux Falls area, shopping without preparation can lead to frustration and disappointment. Take a look through the guidelines – call RL Real Estate Group if you have questions! – and determine your home ownership readiness. South Dakota first time home buyers have many options and incentives when it comes to securing financing for their dream home.  Regan Laughlin and her team can walk with you every step of the way.

Do I qualify as a First Time Home Buyer?
You may be eligible if you have not purchased a home in the last 3 years!

What do I need to know when looking for a first time home buyer loan?

Depending on your financial situation, you may have a variety of options to select from. There are grants and incentives for those wishing to purchase their first home. Home buyers in South Dakota may be eligible for certain tax breaks and lending incentives.

 What is a First Time Homebuyer Loan and how does it differ from other loans? 

First time home buyer loans typically have borrower-friendly loan features like easier approval and down payment assistance. While loans specifically designed for your first home purchase may sound appealing, they may not always a perfect fit. They often come with strings attached – which might or might not be deal-breakers. These programs vary depending on where you live and what’s available to you. The general idea is to provide financial assistance to qualified buyers.

 What is the limit for first time home buyers? 

Lending limits for first time home buyers vary by the buyer’s creditworthiness, annual household income, and their income-to-debt ratio. For FHA Loans and other government-sponsored assistance programs, there is a cap on how much you’ll be able to borrow, period.

 Do I need a down payment on my home?  

The rule of thumb is about 20 percent of the loan you’re requesting. FHA requires only 3.5% for home buyers as compared to 5% down for Conventional buyers. Many people save for a few years before they feel comfortable enough to apply for their first time home buyers loan. Saving for a home may be more accessible than you think, though. To set aside a bit aside each month adds up quickly.

🤔What is the First Time Home Buyer Program?

I’m sure you’ve seen banner ads about “get this awesome first time home buyer credit” on your phone or computer. There are many incentives for first time home buyers,but not as flashy as the banner ads will have you believe. (I know, right?). Here are some of the South Dakota first time home buyers incentives and qualifications that you may be eligible for.



 Am I a First Time home buyer? I owned a home in the past .

The FHA defines a first-time homebuyer as a person who has not owned a home for three years. This includes single parents and displaced homemakers who only owned a house previously with a spouse. Be careful, however. If you lost your home due to foreclosure, you may not be eligible for an FHA Loan. Your banker will be able to tell you for sure.

 What is an FHA Loan? 

If your credit is shaky, you may have more luck with the Federal Government than a traditional mortgage lender. The Federal Housing Administration has a program that insures the mortgages of many first-time home buyers. As a result of this guarantee, lenders who might otherwise feel uncertain about your qualifications will be more inclined to lend to you. There are limits to these loans, however, and certain guidelines lenders must abide by.

FHA first-time home buyers loans offer a low down payment, reduced interest, limited fees and the possibility of deferring payments. The Federal Housing Administrations and most states offers these types of loans. The FHA insures lenders against potential default and requires a minimum credit score of 580 or above for a loan with a down payment of 3.5%. Most lenders, though, require a credit score of 620 or 640 and above to approve an FHA loan. You will need to provide full documentation of your income and assets and meet the lender’s debt-to-income ratio. Typically a maximum of 41% to 43% of your monthly gross income that goes toward the minimum payments on all of your revolving and installment debts.

 USDA (yes, the food people) offers home loans 

– and you don’t necessarily have to buy or run a farm to be eligible. This program focuses on rural areas and incentivizes settlement in those housing market, such as rural South Dakota.

USDA first time home buyers  The USDA 

insures the loan, the payments are fixed, and the rates are competitive with what you may find from traditional lending banks. Credit scores 640 and higher  typically streamlines application processing. With a credit score below 640, you still can qualify for a USDA loan. The lender will ask for extra documentation about your payment history. Keep in mind that there are income limitations, which can vary by region. For more detailed information, check the USDA website and ask your primary banker.

 VA Loans  

The U.S. Department of Veterans Affairs (VA) offers a loan program to military service members and their families. Similar to the FHA program, these types of mortgages are guaranteed by the federal government. This means the VA will reimburse the lender for any losses that may result from borrower default. The primary advantage of this program is that borrowers can receive 100% financing for the purchase of a home. That means no down payment whatsoever.

Income Guidelines and Purchase Price Limits for 1st Time Home Buyers income and purchase guidelines for first time home buyers

Income guidelines can vary year to year. Also, income limits typically are different from county to county. When calculating income, the first time home buyers program looks at total gross household income. See the chart below for income guidelines and purchase price limits in the state of South Dakota. Keep up to date with information and programs for first time home buyer, they are subject to change.

What is a First Time Home Buyers Grant?

Grants are, basically, free money. They require applications like a loan and have restrictions. Unlike a loan, if you fully comply with the terms, you do not have to pay the money back. Fail to comply, however, and you may be subject to financial penalties. Different economic development agencies have incentives for first-time buyers who meet income, credit, and other criteria. These programs have application processes. When you meet the guidelines, you can receive enough assistance to cover a down payment, and/or reduce the amount of your loan.

 The National Homebuyers Fund 

is one of the few multi-state first-time homebuyer grants. After you find a participating lender, the down payment assistance program provides up to 5 percent of the loan amount. This is a non-repayable grant, which means you don’t have to pay it back. This program has income criteria related to FHA, VA, and USDA loans. Check with a participating lender for more information about income requirements and limits – based on your location and housing market.

 HUD’s Good Neighbor Next Door Program 

Although not strictly limited to first time home buyers, the Good Neighbor Next Door program from the Department of Housing and Urban Development (HUD) can help you save big on a home. HUD lists eligible properties by state. To be eligible, you must purchase property in an area marked out for revitalization. The idea is to encourage renewal in specific areas.

This program is only open to certain professions, including law enforcement officers, firefighters, emergency medical technicians, and teachers. These properties are often areas of urban blight, rural abandonment, or places that others are reluctant to live in. Weigh location against savings before you make your choice. When you commit to living in the property for at least 36 months, you can receive up to 50 percent off the list price of the home. There is more information here.


 What is the HERO Housing Program? 

Development of The HERO Program helps SD first time home buyers. They offer free resources for first time home buyers; education and preparedness. For a first time home buyer in South Dakota, the HERO Program provides home ownership education from certified professionals. Specifically trained counselors adhere to standards of learning, with the agency’s stated objectives to advance home ownership through high quality education. Their goal is to improve the overall standard of living for residents of South Dakota by giving South Dakotan’s a better opportunity to achieve and maintain home ownership. Phew! These folks truly are heroes for home buyers who don’t know where to start. For more information, their website has an overview of the program, and what you can expect from the HERO housing program.

 Register for HERO Housing Program Classes 

Even if you don’t qualify for the HERO program, or if you’re just starting out and have questions, you can still register for one of the upcoming HERO classes. Here’s a link to the Sioux Empire Housing Partnership website, with all the dates and details you’ll need.

 What is the HAPI Down Payment Closing Cost Assistance? 

Another program to help rural South Dakota development, as well as keep housing markets in larger cities stable, is the South Dakota’s Homes Are Possible Inc. (HAPI) program. There is one just for Brown County, and then a separate one for the rest of South Dakota – here are the details. Research demonstrated that even though first time home buyers are able to make monthly payments on a new home, they may not have enough saved for a down payment. Because of this revelation, development of HAPI ensued. This award comes in the form of a $3,500 forgivable grant.


The program’s funds are available to eligible applicants who are interested in purchasing a home, but need financial help to pay the upfront costs. Some financial difficulties include a down payment, closing costs, and prepaid items required to obtain home ownership. These expenses tend to add up substantially and inability to pay might keep people stuck in a renters trap. Applicants must complete a HERO course, and meet eligibility guidelines. I’ve worked with several home buyers in this program with great success – just ask me if you think you qualify!


  •  What is GROW South Dakota?  For more than 50 years GROW South Dakota’s housing, community and economic development programs and services have been serving the needs of local individuals, families, business owners, and entire communities in order to sustain our rural quality of life. GROW South Dakota focuses on helping SD first time home buyers with assistance to buy. The programs vary by region. For example, Sioux Falls residents could be awarded up to $10,000 down payment/closing cost, or 0% interest deferred mortgage, for the purchase of their owner-occupied principal residence.

I have questions about the GROW South Dakota Affordable Housing Program.

There are a lot of terms that your mortgage lender and Realtor will toss around. Between the loan process, and trying to decide which loan is right for you, many first time home buyers walk out” head spinning”. The GROW South Dakota program for economic development sponsors an affordable housing program. Geared mainly toward first-time buyers in South Dakota. In fact, in 2015, GROW South Dakota represented one of eight organizations in the Minnesota, North Dakota, and South Dakota region to be awarded the Bush Prize for Community Innovation from the Bush Foundation. This prestigious annual award honors and supports innovative organizations with a track record of making great ideas happen. If you need clarification on any of these FAQs. drop me a line or speak with a lender now.

 Why is there a mortgage and promissory notes placed on the property ?

Under the guidelines for the Federal Home Loan Bank Program (FHLB), GROW South Dakota requires to place a deed restriction on the property for five years.

 What is the Truth in Lending I received? Do I have to pay this money ?

A Truth in Lending is required if there is a mortgage placed on your property, even though you do not make payments on the loan. It shows what the estimated overall costs are going to be at the final term of the loan. It helps you, as a first-time homebuyer, with transparency from your lender, and is required by law for almost all home loans. As far as payments – you are obligated to pay based on the terms of the promissory note and mortgage.

 What happens to the mortgage and promissory note debt if I need to move into a different living arrangement (e.g. nursing home, assisted living, apartment) or if I pass away ?

Although your heirs won’t inherit your debt, they won’t automatically inherit your home as a full asset, either. The deed restriction remains on the property until the property is sold or transferred. At this point, your heirs may choose to pay off the original loan and keep the difference. Or, if the person purchasing the home from them is eligible, that person may have the option to assume the forgivable loan, if that option was on the original deed restriction. If you have more detailed questions, your primary lender can help you work out arrangements as part of your estate planning.

 I am married but my spouse is not listed on the deed, will we both have to sign the mortgage ?

Both husband and wife will need to sign the deed restriction. What if I am divorced but do not live with my spouse and my spouse will not sign the deed restriction? When the program guidelines require a deed restriction be placed on the property, you will not be considered eligible. If the applicant fails to make good on the promissory note, a judgment can be placed on the person.

 What can I expect from the mortgage lending process?  

Many sellers won’t entertain an offer unless the buyer has been pre-approved for the mortgage amount. Many realtors will be unable to help you shop for homes before you’ve spoken with a lender and determined how much you have to spend. Before you speak to a realtor, talk to your banker first. There are some first time home buyer incentives, as well as certain steps in a first time home buyers application that your lending agent can help guide you through.

🙋Only 5 Questions to Loan Pre-Qualification

  • Your mortgage lender will help you fill out an application. Have documentation of your income and debt prepared..

 Help! I’m really confused about mortgage terms .

If the application process is making your head spin, you’re not alone. When you’re trying to determine which type of loan is right for you, as well as the impact your home loan will have on your financial future, including retirement, sometimes it’s hard to decide what is best. If you aren’t sure which loan is best for you, or if there is a certain price point you have in mind, here is a handy link for first time home buyers in South Dakota. Every home buyer has their own priorities when choosing a mortgage. Some are interested in keeping their monthly payments as low as possible. Others are interested in making sure that their monthly payments never increase. And still, others pick a loan based on the knowledge they will be moving again in just a few years.

 Am I pre-qualified for a loan, or pre-approved ?

Your lender pre-qualifies you for a certain amount . To get prequalified, you just need to provide some financial information to the bank. Your income and the amount of savings and investments you have. You may also be asked about any outstanding debt. Your lender will review this information and tell you how much they can lend you. This will tell you the price range of the homes you should be looking at. At this point, you can start making appointments with realtors, although be prepared to have home sellers hesitate to negotiate until you’re pre-approved for your loan.

 Ok, I got pre-qualified, now I can get pre-approved right ?

Get your docs in a row and be patient – approval can take up to two weeks. Collect pay stubs, bank account statements, W-2s,ta x returns for the past two years, statements from current loans and credit lines, and names and addresses of your landlords for the past two years. Have all of that paperwork ready for the lender. It may seem like a lot, but don’t be surprised if your lender wants a lot of documentation. At this point, your pre-qualified loan will be evaluated by the underwriters from your lending institution to make sure that you are a solid credit risk. This can take time – anywhere from a week to three weeks, so be patient.

🤝What should I look for in a Realtor?

When you select your realtor, consider them as part of your home-buying team. A savvy realtor will understand your family and needs, help guide you to properties that suit (and away from ones that don’t), and have recommendations for other vendors and professionals you’ll need throughout the process.


Be sure to interview more than one realtor, and treat the process like you would an applicant applying at your place of business. In reality, that’s what you are doing, so it’s important to take your time and find a realtor that you trust and can depend on.

 Read:  Regan Laughlin and RL Real Estate Group Reviews

Ask for references

An important step in choosing a realtor is asking about previous clients they have helped.  Ask past clients are if they would choose to work with their realtor again. Were they are satisfied with the level of service they received? Ask about how promptly their phone calls or emails were returned, as well as the ease of communicating with their realtor. Outline your expectations at the outset, and be very clear about them. If there are a few deal breakers you have, make sure to tell your realtor up front.

Your realtor

Will offer you a more in-depth picture of the homes you’re looking for. Using knowledge of the current market,and experience to find neighborhoods you’re looking for. Evaluate home price fluctuation that will help determine the right time to buy. One tool RL Real Estate Group can provide to you is comparing prices of the homes in the neighborhood or “comps”. Provide expert opinion on the value of a home relative to its price.

Where do I want to buy my first home?

There’s a lot that goes into deciding where to buy your first home. Deciding to move from a home you own, versus one you rent, is a more complicated process, so there are several things to think about besides the house itself.

Follow Your Dreams for First Time Home Buyers

 Start touring homes in your price range .

It might be helpful to take notes (using this helpful checklist) on all the homes you visit. You will see a lot of houses! It can be hard to remember everything about them, so you might want to take pictures or video. This will help you remember each home, and each of your likes and dislikes. When looking for homes on rlrealestategroup.com, you’ll have the option to favorite the homes you like best, take a virtual tour, and get details of the home’s history and how long it’s been on the market. While these are great tools, especially the virtual tours, they aren’t a substitute for your realtor. The team at RL Real Estate Group can set up physical tours of your home. give you details that may not be listed on the websites, and tell you more about the neighborhood than you can find out online.

 How much will my commute change?  

If it increases, is this something that I am willing to exchange for what my new home’s location offers? Consider driving from your potential new home to work and back during peak travel hours. You may also want to check out public transportation or park-and-ride if you are moving farther from the city center.

 Drive the new neighborhood.  

at night and during the day to get a feel for the community. Look for walking trails, dog parks, and the overall vibe. Remember, it’s not just the home you’ll be living in, but the whole community.

Appraisals, Mortgage approval, and more numbers crunching. Am I done with the loan process yet?

Decided on your home and ready to write your offer? Your all done with applications and math? Nope, not yet, There are a few more things that your mortgage lender will ask before they write the check. Lenders want to make sure that their investment (your new home) is sound. A first time home buyer loan is a little riskier than lending to someone who is an existing home owner. Their betting on your ability to comply with terms of a home loan, but don’t give up. When you reached this point, you’re in the home stretch and you’ll be having that first backyard barbecue before you know it.

Mortgage for first time home buyers

 Lenders will arrange.  

for an appraiser to provide an independent estimate of the value of the house you are buying. Appraiser are members of a third party company and are not directly associated with the lender. The appraisal will let all the parties involved know that you are paying a fair price for the home.

 How much will my overhead be affected?  

When moving from an apartment into a larger home, you might find your utility bills are higher than you anticipated. Apartments sometimes bundle things like internet, trash collection, or other utilities into the rent amount. Making first-time homeowners have a bit of “sticker shock” when  paying for all the utilities on their own. Some places may require you to place a deposit for utilities or cable/ internet and other services. If you’ve never had service call before you are ready to opening a new account.

 As you can imagine ,

there is a lot of paperwork involved in buying a house. Your lender will arrange for a title company to handle all of the paperwork. They will make sure that the seller is the rightful owner of the house you are buying. At this point, the lending bank will check for any liens on the home from creditors of the current homeowners. Leins, if found, will be settled before the seller can legally sell you the home.

 You may be asked to purchase mortgage insurance[/su_highlight].

Private Mortgage Insurance (PMI)  protects mortgage lenders against financial losses due to foreclosure. PMI allows you to purchase a new home with less than a 20% down payment. It allows mortgage lenders to accept lower down payments and is an excellent avenue for getting into your dream home with limited funds available. Nearly half of all borrowers put less than 20% down when buying a home.

👍Making an offer and closing for first time home buyers

  When you’re ready to make an offer, make sure that you don’t skip a home inspection. 

Getting a qualified home inspector will only cost a few hundred dollars. If they find things you didn’t during the shopping process, you could save thousands of dollars easily. Sometimes when buying a home from a seller that has lived there for years, there may be issues. Either they simply aren’t aware of, or have gotten used to, and therefore didn’t mention,we need to know. In any market, making your offer contingent on inspection protects you. It gives you a chance to renegotiate your offer or withdraw it without penalty if the inspection reveals significant material damage. I work with a couple of reputable, experienced home inspection professionals and will be happy to give you a referral!

 Inspect your loan terms 

– you’ve probably read so much about lending recently that your eyes are blurry. Before you sign on the dotted line, review the terms of your loan. When getting a HUD- specific loan the best ways to prepare is to thoroughly review your HUD-1 settlement statement. This outlines your exact mortgage payments. The loan’s terms (such as the interest rate and term) and additional fees you’ll pay, including closing costs. Compare your HUD-1 to the good-faith estimate your lender gave you at the outset. Make sure they’re similar and ask your lender to explain any discrepancies.

 What is a title inspection? Do I need to worry? 

Before you can own or “take title” to a home, most lenders will require a title search of public property. They will check records to make sure there aren’t any liens or issues with transferring the property into your name. This is rare, but if something does crop up, it’s better to know that upfront. If the home’s seller has creditor liens placed against the home, the seller will need to pay these off on or before closing. Usually, the seller will have discovered this prior to the closing day. If not your lender will do the title inspection and make both parties aware of any issues. It’s unusual that this comes up so far in the sales process, though.

What do I need to bring to the closing?
Documents that you will need for closing include: 1. Proof of homeowners insurance 2. A copy of your contract with the seller 3. Your home inspection reports 4. Anything the bank required to approve your loan 5. A government-issued photo ID  6. Down payment

  •  Gimme my keys ! Not so fast. Closing paperwork will be filed at the state’s title office, and a property transfer will be recorded. When completed (usually just a couple of days), I’ll give you a call. So I can present you with the keys to your first home! Congratulations!

Search Homes for Sale in Sioux Falls

Contact Info: RL Real Estate Group

Phone: 605-371-4338

Email: Regan@rlrealestategroup.com

Website: RL Real Estate Group

Address: 3626 S. Southeastern Ave | Sioux Falls, SD | 57110

First Time Home Buyers in South Dakota
Article Name
First Time Home Buyers in South Dakota
Are you a first time home buyer in South Dakota? Not sure of were to start? You don't know what questions to ask? Look no further because this complete guide walks you through each step. Did you know first time home buyers in South Dakota may qualify for South Dakota gift funds to help with your down payment?
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