One of the most common questions I hear from first-time homebuyers in South Dakota is:
“How much money do I actually need to buy a home?”
Many people assume they need 20% down.
In reality, most first-time buyers qualify with far less.
Let’s break it down clearly so you know what to expect.
1. Down Payment
Your required down payment depends on the loan program you choose.
Here are common options for first-time buyers in South Dakota:
FHA Loan – As little as 3.5% down Conventional Loan – Often 3% down for qualified buyers VA Loan – 0% down for eligible veterans
On a $250,000 home:
3% down = $7,500 3.5% down = $8,750
Most first-time buyers in South Dakota do not need 20% down.
The key is choosing the right loan structure based on your credit, income, and long-term goals.
2. Closing Costs
In addition to your down payment, you should plan for closing costs.
In South Dakota, closing costs typically range from 2–5% of the purchase price, depending on:
Loan structure Prepaid taxes and homeowners insurance Escrow setup Whether discount points are used
On a $250,000 home, that may range between $5,000–$12,000.
In some situations, seller concessions may help offset part of these costs — but that depends on the market and how your offer is structured.
3. Earnest Money
When you submit an offer on a home, you’ll typically provide earnest money to show good faith.
This is often around 1% of the purchase price, though it can vary.
Important to understand:
Earnest money is not an extra cost.
It is credited toward your down payment or closing costs at closing.
4. What About Down Payment Assistance in South Dakota?
Some first-time homebuyers in South Dakota may qualify for down payment or closing cost assistance programs.
Eligibility can depend on:
- Household income limits
- Credit profile
- Purchase price limits
- Program availability
These programs are not one-size-fits-all, and guidelines can change.
The important thing is this:
Down payment assistance should be evaluated as part of an overall strategy — not assumed upfront.
During pre-approval, we review whether assistance programs make sense for your situation or whether a traditional structure may be stronger long-term.
5. What Will My Monthly Payment Look Like?
Your total monthly payment typically includes:
Principal Interest Property taxes Homeowners insurance Mortgage insurance (if applicable)
Your payment is influenced more by interest rate, taxes, and insurance than just your down payment.
If you’re unsure what fits comfortably within your budget, reviewing your numbers before you start house hunting makes a major difference.
You can also read a full breakdown of the buying process in my South Dakota First-Time Homebuyer Guide.
You may also want to review:
Do First-Time Buyers Need Large Savings?
Not necessarily.
Many first-time homebuyers in South Dakota purchase with:
3–5% down Structured closing costs Gift funds (when allowed) Careful loan selection
The key isn’t having a massive savings account.
The key is understanding your options early — before you start touring homes.
Work With a South Dakota First-Time Homebuyer Specialist
Buying your first home is a major financial decision. Preparation makes the process smoother and significantly less stressful.
If you’re wondering:
How much you qualify for What payment feels comfortable Whether you qualify for assistance What loan option fits best
The first step is a simple pre-approval conversation.
Mike Bellmore, NMLS#2267854
Member FDIC
Equal Housing Lender
All loans subject to credit approval.
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