📊 What Credit Score Do You Need to Buy a Home in South Dakota?

By Jeff Younger — Borrow Smart Mortgage Services

Introduction

If you’re thinking about buying a home in Sioux Falls or anywhere in South Dakota, your credit score plays one of the biggest roles in determining whether you qualify — and what interest rate you’ll receive.

The good news? You don’t need perfect credit to become a homeowner. In fact, many South Dakota homebuyers qualify with average or even below-average scores, depending on the loan program.

As your local mortgage expert at Borrow Smart Mortgage Services, here’s exactly what credit score you need to buy a home in South Dakota in 2026 — and how to boost your approval odds.

1. Minimum Credit Score Requirements by Loan Type

Different loans have different rules. Here’s a simple breakdown:

✔ FHA Loans – 580+

FHA loans are one of the most flexible options for first-time buyers or anyone with moderate credit.

Requirements:

• 580+ for 3.5% down

• 500–579 may qualify with 10% down (case-by-case)

Best For:
Buyers with limited credit or previous credit challenges.

✔ Conventional Loans – 620+

Conventional loans (Fannie Mae/Freddie Mac) require a stronger credit profile.

Requirements:

• 620+ minimum

• 700+ gets better pricing

• 740+ qualifies for the best interest rates

Best For:
Borrowers with stable income and good credit who want lower long-term costs.

✔ VA Loans – No Set Minimum (Typically 580–620)

VA loans do not have an official credit minimum, but most lenders look for 580–620.

Best For:
Eligible veterans, active-duty military, and surviving spouses.

✔ USDA Rural Development – 640+ Recommended

USDA loans require no down payment but do use automated underwriting.

Requirements:

• 640+ recommended for streamlined approval

• Lower scores may qualify with additional documentation

Best For:
Buyers in eligible rural areas around Sioux Falls (Tea, Harrisburg, Brandon, Hartford, etc.)

2. What Credit Score Do You Really Need in South Dakota?

While the minimums are helpful, here’s what I see most South Dakota buyers get approved with:

• 580–640 → FHA or VA

• 640–680 → USDA or FHA

• 680–720 → Better Conventional pricing

• 720+ → Best interest rates and lowest monthly payments

Even if your score is lower, local programs like SDHDA down payment assistance can still help you qualify.

3. Why Your Credit Score Matters for a Mortgage

Your credit score affects:

• Your interest rate

• Your monthly payment

• Whether you pay mortgage insurance

• How much you qualify to borrow

• Your loan approval itself

A difference of just 20–40 points can save you thousands over the life of your mortgage.

4. How to Improve Your Credit Quickly Before Buying

Here are fast ways many of my clients raise their score in 30–60 days:

✔ Pay down credit card balances

Keep them below 30% of the limit.

✔ Don’t apply for new credit

New inquiries temporarily lower your score.

✔ Keep old accounts open

Length of credit history boosts your score.

✔ Dispute errors on your report

Incorrect late payments or balances can be fixed quickly.

✔ Make all payments on time

This is the biggest factor in your score.

If you want, I can run a Credit Simulator to show exactly how certain actions will raise your score.

5. South Dakota Lending Is More Flexible Than You Think

Many buyers worry too much about credit. The truth is:

• South Dakota has strong first-time buyer programs

• Local lenders understand rural income variations

• SDHDA programs offer flexibility and down payment help

You don’t need a perfect score — you need the right loan strategy.

Ready to See What You Qualify For?

I can review your credit, show you the loan programs you qualify for, and map out the best path to homeownership in South Dakota.

📞 Call or Text: 605-982-7947
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