Financing
There are at least five different options for financing available to home buyers. The options are as follows:
• USDA Rural Development 502 Guaranteed Loan Program
This program is available for both first time home buyers and non-first time home buyers. You may borrow up to 102% of the appraised value of the home. Mortgage insurance is not required. Qualifications depend on annual income and size of family. The loan will be repaid in monthly payments over a 30 year term. Fixed interest rates are available. For income qualifications and current interest rates, refer to USDA Rural Development's website at www.rurdev.usda.gov
• USDA Rural Development 502 Direct Program
This program is also available for both first time home buyers and non-first time home buyers. You may also borrow up to 102% of the appraised value of the home. Mortgage insurance is not required. Income limits are more restrictive and also depend on family size. Subsidized interest rates are available based on need. The subsidized rates are subject to recapture if home is sold. The loan term is up to 33 years. For more details, refer to USDA Rural Development's website at www.rurdev.usda.gov
• FHA (HUD)
HUD finances up to 93% of appraised value of the home. It requires mortgage insurance, which runs a minimum of $50 per month or more depending on the amount of down payment. A 20% down payment is required to avoid the mortgage insurance requirement. The loan term is 30 years. Visit your local bank for more details.
• VA
The terms are similar to Rural Development guidelines. The buyer must be a U.S. veteran to qualify. Visit your local bank or the Veterans Administration for more details.
• Conventional Financing
Conventional bank financing usually requires at least a 20% down payment or mortgage insurance. It carries a 30 term. This program is available and used if the home buyer does not qualify for the other options. Visit your local bank for more details.
Help With Down Payment and Closing Costs
We also have access to programs to help with down payment assistance and closing costs or to buy down the price of the homes:
• Federal Home Loan Bank's Rural Homeownership Fund Grant
This program provides up to $5,000 for first time home buyer or $2,500 for non-first time home buyer. Money can be used for down payment assistance or closing costs. This program can be used with all of the financing options above. Income qualifications also apply. The applicant must complete home buyer education. See the Federal Home Loan Bank of Des Moines website at www.fhlbdm.com for more details and participating banks in our area.
• Loan Assistance Program (LAP)
This program provides down payment and closing cost assistance with loans approved through South Dakota Housing. Interest rates are 5% for a five year term for a maximum of $5,000. Homebuyer education is required. Qualification is subject to income and purchase price limits. See South Dakota Housing Development Authority's website for more details and a complete list of participating lenders at www.sdhda.org
• Employer Mortgage Assistance Program
This program provides down payment and closing cost assistance in the form of a second mortgage for homebuyers employed by a participating employer. The interest rate is 2 for a five year term with loan amounts from $600 - $6,000. It is subject to the same income and purchase price limits as South Dakota Housing's first time homebuyer program. Homebuyer education is recommended. See www.sdhda.org for more details.