How much of a down payment do I need to buy a house in South Dakota?

First-time home buyers in South Dakota can qualify for up to 5% of their home's price in assistance for use as a down payment. Many home buyers in South Dakota will qualify for this assistance, but even if you don't, you can also get a zero down payment mortgage through VA or the USDA. In addition, conventional mortgages typically only require 3% down, and FHA mortgages just 3.5%.

How much are closing costs in South Dakota?

Closing costs in South Dakota are really reasonable, at $3,105 on average, or about 1.3% of your home's purchase price.

What does homeowners insurance cost in South Dakota?

Homeowners insurance on a $300,000 home in South Dakota is about average for the United States at $2,678, just 3% more than the national average.

What is the property tax rate in South Dakota?

South Dakota's property tax rate averages about 1.28% of the assessed fair market value of your home, putting it 16th in the nation for property taxes. However, due to low real estate costs, the median property tax is 27th in the nation.

South Dakota Mortgage Calculator

The Mount Rushmore State offers home buyers a chance to buy a house among the scenic beauty of the Upper Plains region, but moving to a new area can present expenses that you may not be prepared for. Before you pack your bags for South Dakota, give our South Dakota mortgage calculator a spin. Simply plug in some numbers to learn your expected costs this real estate season.

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The Mount Rushmore State offers home buyers a chance to buy a house among the scenic beauty of the Upper Plains region, but moving to a new area can present expenses that you may not be prepared for. Before you pack your bags for South Dakota, give our South Dakota mortgage calculator a spin. Simply plug in some numbers to learn your expected costs this real estate season.

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South Dakota housing market

South Dakota is full of opportunity for home buyers who are looking for a different kind of life far away from giant urban areas. The real estate market there is still relatively inexpensive compared to the national market, but it has seen tremendous gains in the last five years. The median home price in South Dakota increased 64.6% in that time, but is still over 30% below the national median home sales price.

In the last five years, South Dakota's home supply has been very low at times, and inventory tends to range from two to four months at any given time, which is still not a balanced market, but is certainly a far less competitive one than in most areas. You may have trouble finding a home in any specific town due to the scattered nature of the towns in the state, but if you've willing to cover a little ground, your home-buying process shouldn't be difficult.

South Dakota may be a much easier place to buy your next home than many areas of the country, but it will still put you ahead of the game to talk to a few mortgage lenders to find the best mortgage rates before you start looking for your home. This also will give you the advantage of being pre-approved before you even start house-shopping, so you're prepared to make your best offer on the house of your dreams.

Here's a quick snapshot of some of the most important South Dakota markets and how prices are trending there.

Metropolitan Area	Median Home Value	1-Year Change
Sioux Falls	$317,836	9.8%
Rapid City	$326,000	8.6%
Aberdeen	$218,450	10.9%
Watertown	$265,000	32.5%

Data source: Redfin. Figures accurate as of May 2, 2024.

How do I calculate my mortgage payment?

If you want to find out what your mortgage payment will be, try a mortgage calculator like this one. But, if you really, really want to do the math by hand, the formula for a basic mortgage payment is below.

Although this is a great way to estimate the principal and interest portion of your payment, most people's payments will look a little different. Mortgage payments typically include principal, interest, real estate taxes, and homeowners insurance, commonly called PITI. They may also include payments for or contributions toward expenses like:

Private mortgage insurance (for a conventional loan)
Mortgage insurance premium for an FHA loan
Homeowners association dues
Homeowners association assessments
Flood insurance

To calculate your new mortgage with these additional expenses included, just click "show additional inputs" on the mortgage calculator above and add your estimated figures. It will get you a very close estimate of what to expect.

Things to know before buying a house in South Dakota

South Dakota has very affordable real estate, but state real estate taxes are higher than most. Taxes on real estate in South Dakota rank 16th in the U.S., at 1.28% of the property's assessed fair market value. That means that if your home was assessed at $126,200, you'd pay $1,620 in taxes each year.

South Dakota isn't one of the states seeing huge changes due to climate change -- at least, not yet. The state is warming, but more slowly than most, and while larger and more intense downpours are possible, much of this excess water is expected to run off into river systems. So, if you live near a river, flooding may be more likely, but you don't need to worry about an increase in violent storms with high winds, at least not in the near term.

Unless you live on or close to a body of water, a homeowners insurance policy may provide you with plenty of coverage for your needs, but be sure to ask your insurance agent because they have their finger on the pulse of claims in your area. Once you know what your insurance will cost, you can plug that number into the South Dakota mortgage calculator to give you a better estimate of your overall payment.

Tips for first-time home buyers in South Dakota

First-time home buyers in South Dakota can take advantage of down payment assistance offered through South Dakota Housing's Fixed Rate Plus Loan. This program allows for 3% to 5% provided for your down payment in the form of a second mortgage with no payment due until you sell or refinance the initial mortgage.

You will have to income-qualify, though, based on your household size and county of residence. The upper income range for a family of two, for example, is $95,100 to $106,500 -- so it can be pretty easy to qualify for assistance. First-time home buyers will be limited to homes priced under $385,000, but that, too, is simple to find in South Dakota.

Advice for all first-time borrowers

There's a lot to do to get ready for your first mortgage, so first-time home buyers should ideally start working on making themselves the best possible borrower months or years before contacting lenders. While credit scores are important, they're not everything when it comes to getting a mortgage. You'll also need to demonstrate that:

Your employment is reliable, by staying on the job for at least two years prior to and throughout the buying process.
You're not overburdened with debt, by maintaining a low debt-to-income ratio.
You're prepared for closing with money for closing costs and down payment, set aside in a separate account (or proof you've applied for assistance).
You always pay your bills on time -- this is the biggest factor that goes into calculating your credit score.

It can also be incredibly tempting to try to get ahead of some of the expenses of moving to a new house by buying new furniture or decor, but this can backfire by raising your debt-to-income ratio, over-encumbering your credit cards or credit lines, and eating into your seasoned cash to close.

Guard your credit carefully through the home-buying process, and wait to do anything dramatic until you've closed. Underwriting will check your file at least twice, if not more, prior to closing, and can cancel your mortgage should something change.

FAQs

First-time home buyers in South Dakota can qualify for up to 5% of their home's price in assistance for use as a down payment. Many home buyers in South Dakota will qualify for this assistance, but even if you don't, you can also get a zero down payment mortgage through VA or the USDA. In addition, conventional mortgages typically only require 3% down, and FHA mortgages just 3.5%.
Closing costs in South Dakota are really reasonable, at $3,105 on average, or about 1.3% of your home's purchase price.
Homeowners insurance on a $300,000 home in South Dakota is about average for the United States at $2,678, just 3% more than the national average.
South Dakota's property tax rate averages about 1.28% of the assessed fair market value of your home, putting it 16th in the nation for property taxes. However, due to low real estate costs, the median property tax is 27th in the nation.

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