How to Buy a House in South Dakota: A Homebuyer’s Guide
Updated: April 25, 2023
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As one of the safest states in the USA, South Dakota is a popular location for homebuyers. The job market is booming, and the cost of living is low. With an average home price of $305K, which has gone up by 15% in the past year, the state is still considered affordable for buyers.
Buying a home entails taking time to save and prepare. MoneyGeek covers the basics of purchasing a home in South Dakota, from choosing a location to available mortgages and requirements.
Choose an Ideal Location
Many factors affect the housing market, including location, neighborhood culture, cost of living and crime rate. You should also consider other amenities, such as public transportation or proximity to restaurants and shops. Examine each area's unique characteristics to find the best place to buy a house in South Dakota.
Calculate Mortgage Rates
Always obtain multiple quotes from lenders to ensure you find the best mortgage rates. Different mortgage products have different rates and fees, so comparing several loan packages will help you find an option that meets your needs.
Prepare Down Payment Requirements
The down payment is a major factor in determining your loan's total cost. If you put more cash down, you'll pay less each month. Many lenders ask for 20% of the home's purchase price, though this figure depends on the lender and mortgage type.
Get Pre-Approved for a Mortgage
Getting pre-approved for a mortgage is a great way to tell how much you can afford to spend on a house. Pre-approval considers all of your debts, your monthly income and other factors in determining how much borrowing power you have.
However, pre-approval is different from pre-qualification, which only considers your present finances and not what they may be in the future.
Conduct a Home Inspection
A home inspection is a thorough examination of a house — inside and out — by a professional inspector. It gives you an assessment of the home’s condition and whether it has any defects.
The results of a home inspection can help you determine whether or not you want to buy the house. If the inspector uncovers serious defects, you can negotiate with the seller for repairs, a lower price or even walk away from the sale.
Close Your Mortgage Loan
Closing on a mortgage loan is the last step of the homebuying process, where you and your lender sign the final documents that make you an owner. With good preparation and planning, everything should go smoothly. You should also know there are costs associated with closing.
South Dakota Homebuying Details
You need to take specific steps to buy a home in South Dakota. It helps to research and learn everything you can about the South Dakota real estate market.
Members of federally recognized tribes in South Dakota can turn to the Mazaska Owecaso Otipi Financial (Mazaska) for affordable loans. Mazaska was created to empower the Native American community in South Dakota with access to loans at reasonable interest rates. The loans it offers include homeowner credit opportunity, home purchase, rehabilitation, construction and credit builder.
Homes Are Possible, Inc is a national non-profit that assists with down payment and closing cost assistance, as well as home repair funding, to low-income families who need affordable housing.
Frequently Asked Questions About Buying a Home in South Dakota
Get the information you need to buy a house in South Dakota. MoneyGeek answers questions about income, tax rates, and other questions to help you make an informed decision.
- How long has the property been up for sale?
- Is the property in a flood or earthquake-prone zone?
- What are the repairs and renovations done in the house?
South Dakota's low taxes and unspoiled natural landscape make it a great place for nature lovers. The state also has an excellent job market, meaning that interested job seekers moving to South Dakota won't be disappointed.
With rising property prices in South Dakota, you may prefer to hold off on buying a property until the market becomes more affordable. Or, you can buy now and get the best price possible by looking for affordable neighborhoods and working with the right agents.
The median monthly income in South Dakota is $4,991. The income required will depend on the mortgage program and the property you purchase.
The property tax rate in South Dakota is 1.18%.
The cheapest South Dakota city to buy a house in is Blunt, with a median Zillow Home Value Index of $295K.
sources
- Homes Are Possible, Inc. "Housing Assistance." Accessed October 22, 2022.
- Mazaska. "Programs and Services." Accessed October 22, 2022.
- South Dakota Housing Development Authority. "Top 3 Most Affordable Communities in South Dakota." Accessed October 20, 2022.
- South Dakota Department of Labor and Regulation. "South Dakota Real Estate Commission." Accessed April 26, 2023.
- United States Census Bureau. "Quick Facts: South Dakota." Accessed October 22, 2022.
- U.S. Department of Agriculture. "Single Family Housing Direct Home Loans in South Dakota." Accessed October 22, 2022.
- Zillow. "South Dakota Home Values." Accessed October 22, 2022.
- Zillow. "Compare Today’s Mortgage Rates in South Dakota." Accessed October 22, 2022.