From the Badlands to the Black Hills, many homebuyers in South Dakota are utilizing the government-backed FHA loan program to help get them and their families into homes.
With all the different types of home financing options, the process can seem a bit overwhelming. Luckily, the FHA loan program is on the Mount Rushmore of mortgage options for South Dakota residents. Keep reading to see why so many South Dakotans choose FHA loans, and why it may be right for you.
Why Consider an FHA Loan in South Dakota
South Dakota is sparsely populated state, with only 11 people per square mile, but despite this many people are still taking out home loans. An FHA loan is a great option regardless of where you want to live. As of April 2019, the total value of FHA loans in the state of South Dakota was over $17 million making it a popular choice among other home loan options.
Benefits of FHA Loans in SD
- FHA loans are great for first-time homebuyers, especially those who can’t or don’t want to put down a large down payment.
- FHA mortgage rates are typically lower than conventional mortgage rates.
- FHA down payment and credit score requirements are typically lower than conventional loans
- Sellers can contribute up to 6% of the purchase price or appraised value (whichever is less) towards the buyers’ closing costs.
- FHA loans are assumable
FHA Loan Limits in South Dakota
There is a baseline loan limit of $314,827 for FHA loans in South Dakota. This limit is adjusted yearly and typically depends on where in the state you want to live. South Dakota however is unique, and the baseline limit applies statewide.
Are You Eligible for an FHA Loan in SD?
You may be eligible for an FHA loan, if you:
- Have 2 years of steady employment, preferably with the same employer.
- Have had steady income (or increasing income) in the past two years.
- Have had less than two 30 day periods of late payments on your credit report.
- Have declared bankruptcy no less than two years ago and have maintained good credit since.
- Have not been a party in a foreclosure for at least three years and have maintained good credit since.
- Anticipate your mortgage payment will be equal to or less than 30% of your gross income.
What Do You Need to Apply for an FHA Loan in SD?
Buyers must be able to provide the following information and documents as requested by lenders:
- The addresses of all your residences over the past two years.
- The names of your employers over the past two years.
- W2's for the past two years and current paycheck stubs.
- Your current gross monthly salary.
- Your Social Security Number.
- Names, addresses, and account numbers with balances on all checking and savings accounts.
- Addresses and loan information of any other real estate you owned.
- Self-employed individuals will need to provide personal tax returns for the past two years and a current income statement and balance sheet for the business.
- Students will need to provide evidence of enrollment. If you have student loans, you need to provide verification information.
Note: Facts and figures sourced from the latest statistics available at the time of this writing including data from the United States Department of Labor, United States Census Bureau and the United States Department of Housing and Urban Development.