Compare Current Mortgage Rates in South Dakota

The amount you borrow to buy a house and the interest rate you receive on your home loan both constitute most of what you’ll pay each month. Interest rates represent the cost of borrowing, and you’ll want to try and find the lowest rate you can. As you shop around, pay attention to several factors that affect the interest rate you’ll receive when you buy a home.

Below, we discuss what factors affect mortgage rates in South Dakota, what you can do to receive a lower rate, and first-time homebuyer programs that may help you buy your first home.

South Dakota mortgage rates are determined by a combination of local, national, and global economic conditions, the Federal Reserve, and inflation. Currently, there are no usury laws that affect South Dakota mortgage rates.

The rate you receive will also be influenced by:

• Credit score
• Down payment amount
• Type of loan
• Fixed vs. variable interest rate
• Loan amount

Keep in mind that the loan amount and interest rate are not the only variables that affect the monthly payment. Property taxes, mortgage insurance, and property insurance will all play a role as well.

Yes, South Dakota has first-time homebuyer programs for qualified applicants. The funding from these programs can often be used for both down payment and closing costs. 

If buying a home is contingent upon financial assistance, make sure you are approved before you go house hunting. Even if you qualify, there is no guarantee that you will receive funding, and you may be required to work with specific lenders. 

• Grow South Dakota: Grow South Dakota offers a deferred, 0% loan that must be repaid when the primary mortgage matures, the home is sold, the primary mortgage is refinanced, or the title is transferred. You can borrow between $5,000 and $10,500 to use for either down payment or closing costs. 
• South Dakota Housing: Qualified homebuyers who meet the income eligibility requirements and plan to buy a home for less than $385,000 may receive a down payment and closing cost assistance. To receive assistance, buyers must work with a participating lender.
• Homes are Possible, Inc.: Qualified homebuyers in Aberdeen, South Dakota, may receive a $5,000 loan that can be used for either down payment or closing costs. The loan needs to be repaid once the title is transferred, the home is sold, or the mortgage is refinanced.
• Yankton’s Planning & Development District III: Yankton offers a few different down payment and closing cost programs for qualified first-time homebuyers. Homebuyers must meet income requirements and purchase a home that meets the program’s guidelines. 

To get the best interest rate on a mortgage in South Dakota, consider taking the following steps:

• Improve your credit score: To boost your credit score, pay your bills on time and pay down your debt. While you may be tempted to close your credit cards once they’re paid off, you’ll want to keep them open because they contribute to your credit history. 
• Lower your debt-to-income ratio (DTI): Your DTI helps lenders determine your credit risk. Lenders compare your monthly debts to your income to assess whether they should extend you a home loan. If lenders consider you a risk, they are more likely to give you a higher interest rate. Paying down your debts will not only improve your credit score and improve your overall financial health, but it may also help you get approved for a higher loan amount. 
• Compare lenders: Different lenders might offer you different rates for the same type of mortgage for reasons ranging from overhead costs to the lender’s risk tolerance. To improve your odds of receiving a low interest rate, make sure you shop around and compare both rates and fees. The primary fee you should pay attention to is the loan origination fee, which averages around 0.5% to 1.5% of the total loan amount.
• Compare loan types: Each loan type has its own pros, cons, and most importantly, rates. When comparing the different options, keep a close eye on the rates and fees to find the most affordable choice. For example, FHA loans require you to pay mortgage insurance for the life of the loan, and USDA loans have an annual guarantee fee. 
• Make a higher down payment: A higher down payment would give you a better loan-to-value ratio, which would help you present less of a risk to lenders. If you have the ability to put more money down upfront, it can help you score a lower interest rate. 
• Borrow less: A lower loan amount may result in a lower rate. If it’s practical, you may consider purchasing a cheaper house to receive a better interest rate.

Remember your mortgage rate isn’t the only thing that affects your monthly payment amount. For example, property taxes in Canton, South Dakota, can be significantly higher than other areas in the state. This tax is typically divided into 12 equal payments, which your lender will include in your monthly payment. 

There are five types of home loans you can choose from when buying a home. These options include:

• Conventional: Conventional loans follow the guidelines established by Fannie Mae and Freddie Mac. These loans are not insured by the U.S. government and have stricter eligibility requirements. 
  • 3% down payment requirement
  • 620 minimum credit score
  • $766,550 maximum loan amount
• FHA: FHA loans are insured by the federal government and have easier requirements to meet than conventional loans. FHA loans are intended for homebuyers with subprime credit scores or low annual incomes. 
  • 3.5% down payment requirement
  • 580 minimum credit score for a 3.5% down payment
  • $498,257 maximum loan payment
• VA: Intended for active and retired military, as well as their surviving spouses, VA loans do not require a down payment and are insured by the U.S. government. 
  • 0% down payment requirement
  • Minimum credit score varies by lender; no minimum established by the VA
  • No maximum loan limit if you have full entitlement 
• USDA: USDA loans are for properties in rural areas the United States Department of Agriculture has deemed to be in need of economic development. To qualify, each applicant must meet the income limits and purchase an eligible property.
  • 0% down payment requirement
  • Minimum credit score varies by lender; no minimum is established by the USDA.
  • $398,600 maximum loan amount
• Jumbo: Jumbo loans are for properties with purchase prices greater than the limits established by Fannie Mae and Freddie Mac for conforming loans. For South Dakota, any property that requires a mortgage above $766,550 requires a jumbo loan.
  • 10%-20% down payment requirement depending on the lender
  • Minimum credit score varies by lender; typically 680 or better
  • No maximum loan amount