South Dakota FHA Mortgages
The South Dakota real estate market is in a great place if you're thinking about buying a home in the state. Thanks to the recent economic downturn, home prices are low and sellers are motivated to reduce prices even more, negotiate on closing costs, or provide other incentives to the right buyer. But due to the state of the economy, the government has also raised the standards on loan qualification and eliminated many loan programs that provided loans to borrowers who may not otherwise qualify for a loan. So what should you do if you're interested in purchasing a home but don't fit the qualifications for most loans?
Should You Go FHA?
South Dakota FHA loans, which are administered by the Federal Housing Administrations, can be a perfect fit for first time homebuyers who are concerned about their credit scores or don't have a large amount of money saved up for a down payment. By working with your lender of choice and providing a guaranty for your loan, the Federal Housing Administration can help you obtain financing even if you don't meet the usual requirements of the lender.
There are other benefits to the South Dakota FHA loan program besides the increased ease of obtaining a loan, however. In addition to relaxed credit standards, the program also only requires 3.5% of the purchase price as the loan's down payment instead of the traditional 20% required by many other loan programs, which can mean savings in the $30,000 range for many properties. South Dakota FHA loans also allow borrowers to roll the closing costs for the purchase process into the loan, which means that you'll pay them off as you pay your mortgage. This concession alone can save most homebuyers between $6,000 and $8,000.
South Dakota FHA Loan Limits
Before you start house hunting, check with your lender of choice to ensure that you qualify for the South Dakota FHA loan program. Additionally, he or she will be able to tell you what your housing budget is, and how it compares to current loan maximums set by the FHA. Typically, most areas have limits of $271,050 for single family dwellings in 2009, but some higher cost of living areas have higher limits to ensure that everyone, regardless of location, can afford to purchase their first home with a South Dakota FHA loan.