Fixed Rate Plus First-Time Homebuyer Assistance Programs

Fixed Rate Plus: The South Dakota First-Time Homebuyer Program You’ll Wish You Knew Sooner

Buying your first home in South Dakota can feel like staring across a vast prairie—you know the destination is out there, but the path seems endless. Fixed Rate Plus, a signature offering from the South Dakota Housing Development Authority (SDHDA), turns that horizon into a clearly marked trail by pairing competitive fixed-rate mortgages with down-to-earth qualifying guidelines. In the next few minutes, you’ll learn how the program works, who qualifies, and why thousands of low- to moderate-income households have decided “now” is the right time to plant roots.

Quick Glance: Why First-Time Buyers Gravitate Toward Fixed Rate Plus

• Locked-in interest rates that stay steady for the life of the loan
• Forgivable down-payment assistance of up to 3% of the mortgage amount
• Flexible credit criteria compared with many conventional loans
• Available statewide—from Sioux Falls to Spearfish and everywhere in between

According to SDHDA’s 2023 annual report, nearly 6 in 10 first-time buyers who used agency financing chose a fixed-rate option—validation that predictability still trumps flashy gimmicks. Fixed Rate Plus builds on that predictability by layering in meaningful assistance, making monthly payments easier to handle even when rates creep up nationally.

How Does Fixed Rate Plus Work?

The mechanics are refreshingly straightforward. SDHDA partners with approved local lenders to originate a Fixed Rate Plus mortgage. You receive:

1. A 30-year fixed interest loan on your primary residence.
2. Up to 3% of the base loan amount as a second mortgage to cover part—or all—of your down payment and closing costs. This second loan is forgivable after three years as long as you remain in the home.

The two-loan structure gives borrowers breathing room during the expensive first years of ownership while still encouraging long-term commitment to their new community.

Who Is Eligible for Fixed Rate Plus in South Dakota?

Eligibility blends the familiar with the refreshingly flexible:

• First-time buyer status—defined as no ownership interest in a primary residence within the past three years—or purchase in a designated “targeted area.”
• Income limits set by county and family size. For example, a household of three in Minnehaha County can earn up to roughly $104,000 (SDHDA, 2024 limits).
• Purchase price caps—currently ranging from about $381,000 to $465,000 depending on location.
• Minimum credit score of 640, though many lenders report approvals with compensating factors at 620.
• Completion of an approved homebuyer education course—often online and under $100.

Program details adjust slightly each year, so cross-check the latest numbers on SDHDA’s official page: Fixed Rate Plus.

Real-Life Snapshot: Maria’s Journey from Renting to Owning in Rapid City

Maria, a 28-year-old healthcare technician, had been renting a two-bedroom apartment for $1,250/month. After a promotion, she started hunting for an affordable starter home but balked when initial spreadsheets showed she needed nearly $15,000 upfront. An SDHDA-approved lender introduced her to Fixed Rate Plus. With a 3% forgivable second loan, Maria’s out-of-pocket cash dropped below $6,000. She closed on a 1,300-square-foot townhome at a 30-year rate 0.40% lower than her bank had quoted. Today her mortgage, insurance, and taxes total $1,180—less than rent—and she’s building equity on day one.

Benefits That Stretch Beyond the Interest Rate

While locking a predictable rate grabs headlines, borrowers list these under-the-radar perks as equally valuable:

1. Built-In Down-Payment Assistance

The forgivable second loan means buyers keep more emergency savings intact—a lifesaver when unexpected furnace repairs arrive mid-winter.

2. No First-Time Buyer Penalty on Student Loans

SDHDA permits the use of FHA, VA, USDA, and conventional underwriting, allowing more flexibility in how student-loan debt is calculated—an advantage for recent graduates.

3. Statewide Availability

Unlike many local grants, Fixed Rate Plus can be used everywhere from densely populated Sioux Falls neighborhoods to rural counties bordering the Badlands.

4. Layering with Other Programs

Borrowers may combine Fixed Rate Plus with federal tax credits (MCC), local employer incentives, or tribal assistance to craft an even stronger affordability package.

People Also Ask

What Credit Score Is Needed for Fixed Rate Plus?

Lenders approved by SDHDA typically look for a minimum 640 FICO. However, files with strong compensating factors—steady job history, low debt-to-income ratios, or substantial cash reserves—have secured approvals with scores as low as 620. If your credit sits below 640, consider:

• Paying down revolving balances to below 30% utilization.
• Adding on-time rent or utility histories via alternative reporting services.
• Disputing outdated collection accounts that no longer belong on your report.

Because every lender overlays its own risk guidelines, speaking with two or three providers can increase your odds of success.

How Much Down Payment Is Required with Fixed Rate Plus?

Technically the first mortgage observes whichever agency guidelines you choose—FHA (3.5% down), conventional (3% down HomeReady or HomeOne), VA (0% down), or USDA (0% down). The brilliance of Fixed Rate Plus is that its forgivable second loan can supply up to 3% of the purchase price, effectively covering the entire minimum for a 97% conventional loan or most of an FHA down payment. You will still need to bring earnest money, appraisal fees, and any costs exceeding the 3% cap, but many buyers land at the closing table with $1,000–$3,500 instead of five-figure sums.

Key Numbers at a Glance (2024)

• Interest rate: Typically 0.125–0.375 percentage points below local bank averages
• Second loan amount: 2%–3% of the base mortgage, forgivable after 36 months
• Income limits: $98,700–$115,400 depending on county and family size
• Purchase price cap: $381k non-targeted / $465k targeted areas

Rates adjust daily, and limits update annually—always verify current figures with SDHDA or an approved lender.

5 Insider Tips to Strengthen Your Application

1. Get Certified Early. Complete the required homebuyer education course before house-hunting. Certificates typically remain valid for 12 months.
2. Ask About “Pre-Appraisal Credits.” Some lenders can roll your appraisal fee into closing, reducing upfront cash.
3. Keep Large Deposits Documented. Any non-payroll deposit over $1,000 must show a clear paper trail—plan accordingly to avoid delays.
4. Shop Homeowners Insurance. Rates vary by 30% or more statewide; a lower premium can boost your debt-to-income ratio.
5. Lock Strategically. Because Fixed Rate Plus is state-subsidized, locks longer than 60 days can be costly. Time your search so inspection and appraisal happen quickly.

Frequently Asked Questions

Ready to Turn the Key on Your South Dakota Dream?

Prairies, rolling hills, and bustling downtowns all share one common truth: homeownership is the surest way to anchor yourself in a community. Fixed Rate Plus removes the biggest hurdles—volatile interest rates and daunting down payments—so you can focus on paint colors, backyard barbecues, and weekend hikes to Spearfish Canyon.

If you’re even thinking about buying, schedule a 15-minute strategy call with an SDHDA-approved lender today. You’ll walk away knowing your exact price range, the current rate you qualify for, and a customized action plan to own your own front door sooner than you imagined.

Get Pre-Qualified for Fixed Rate Plus Now