Sioux Falls Down Payment Assistance Program

Sioux Falls Down Payment Assistance Program: Your Bridge to Homeownership

Buying a starter home can feel like standing at the edge of a vast prairie—beautiful, yet daunting. The Sioux Falls Down Payment Assistance Program trims that prairie to size by giving qualified first-time buyers cash for down payment and closing costs. Below you’ll find everything you need to know—rules, myths, dollars, and timelines—so you can step across the threshold of your own South Dakota home sooner than you imagined.

Quick Snapshot

• Location: Sioux Falls, South Dakota
• Program Type: Zero-interest, deferred-payment loan
• Maximum Assistance: Up to 20% of purchase price (capped at $10,500 for most buyers)
• Repayment: Due only if you sell, refinance, or move within 5 years
• Source: City of Sioux Falls

How does the Sioux Falls Down Payment Assistance Program work?

Think of the program as a silent partner. It contributes part of your required down payment and some closing costs, but it does not ask for monthly repayment. Instead, the amount sits quietly as a second mortgage at 0% interest. If you stay in the home for five years, a sliding scale forgives a chunk every 12 months until the balance is gone. Move before then? The unpaid portion comes due—no penalty, simply repayment of what’s left.

Behind the scenes, the City channels federal HOME funds into a revolving pool. Once you close on your home, future monthly payments from past borrowers replenish the pot, helping the next round of first-time buyers. It’s community dollars recycling through community dreams.

Who qualifies for down payment assistance in Sioux Falls?

Eligibility rests on three pillars: income, buyer status, and property limits. You must be a first-time homebuyer—that’s anyone who hasn’t owned a primary residence in the past three years. Household income cannot exceed 80% of the area median; in 2024 that’s roughly $70,000 for a family of four, according to the most recent HUD table. Finally, the home price must stay below the city’s cap (currently $275,000 for existing homes and $305,000 for new construction).

In addition, applicants must:

• Contribute at least $500 of their own funds.
• Complete an approved homebuyer education course—often available online in a single Saturday session.
• Occupy the home as a primary residence for the life of the loan.
• Secure a fixed-rate first mortgage; no adjustable-rate loans allowed.

Credit Scores—Yes, They Matter

While the city doesn’t set a minimum score, partnering lenders typically look for at least a 640 FICO. Some credit unions will go lower if you show on-time rent payments and minimal debt, so shop around.

A Local Success Story: Tyrell & Maria’s Leap of Faith

Last summer, Tyrell (a nurse at Sanford Health) and Maria (an elementary art teacher) were shelling out $1,450 a month for a two-bedroom apartment. After crunching numbers, they realized that a $230,000 bungalow would cost nearly the same—if only they could scrape together the 3.5% down payment. Enter the Sioux Falls Down Payment Assistance Program. With $8,050 in city funds covering their down payment and most closing costs, the couple closed within 45 days. They’ve since built a backyard greenhouse, something no apartment lease ever allowed.

How much assistance can I get in South Dakota?

Inside Sioux Falls city limits the ceiling is 20% of the purchase price, maxing out at $10,500 for most single-family homes and condos. Duplexes and triplexes can receive up to $14,000 if one unit is owner-occupied. Outside the city, the state’s own First Time Homebuyer program adds a separate layer of help, but it cannot be combined with city funds in the same transaction.

Why Choose This Program Over Other Down Payment Help in Sioux Falls?

While South Dakota Housing offers a statewide fixed-rate loan with optional down payment grant, the city program stands out for three reasons:

1. No Interest, No Monthly Payments. The loan simply waits in the background.
2. Higher Forgiveness Rate. A five-year horizon is friendlier than the ten-year period common in state programs.
3. Layering Allowed. You can pair the city’s funds with gift money or employer assistance, giving you a larger safety net at closing.

Hidden Advantage: Lower Mortgage Insurance

Because city funds push your effective down payment beyond 5%, some lenders will quote discounted mortgage insurance premiums. On a $250,000 loan, that can shave $60–$80 off your monthly bill—an often-overlooked perk.

Local Market Context: Why Timing Matters

The Sioux Falls metro saw a 14% jump in median home prices between 2019 and 2023, yet mortgage rates doubled during the same period. That one-two punch makes down payment dollars more critical than ever. According to a 2024 study by the South Dakota Association of Realtors—buried on page 72 of their annual report—buyers leveraging assistance programs were 27% more likely to retain emergency savings after closing. Translation: Help today prevents financial whiplash tomorrow.

Future Funding Outlook

City planners earmarked $2.3 million for down payment help over the next three fiscal years. Assuming average assistance of $8,000, roughly 95 households will benefit annually. Early applications snag a spot before funds pause mid-summer, a pattern seen three years straight.

Step-by-Step: Securing Your Sioux Falls Homebuyer Program Funds

1. Attend a HUD-approved homeownership class (virtual options count).
2. Get pre-approved by a lender familiar with City of Sioux Falls DPA.
3. Submit the combined lender and city application packet—usually 12 pages.
4. Shop for a house within price limits; write an offer contingent on city approval.
5. City review (7-10 business days) confirms income and property eligibility.
6. Close with both first mortgage and deferred second lien; pick up the keys.

Pro Tip

Real estate agents who close at least three city-assisted deals per year can often get your file through in under a week—ask for that track record up front.

FAQ

Ready to Plant Roots in Sioux Falls?

Every month you wait is another rent check that never builds equity. Let the Sioux Falls Down Payment Assistance Program shrink your upfront costs and turn “someday” into closing day. Visit siouxfalls.org to download the latest application, or ask your lender to start the paperwork for you. Your new address could be closer than you think—grab it now.