FHA Loans in South Dakota: 2026 Limits, the Seller-Paid Transfer Fee and Who Pays for Title Insurance

South Dakota's official residential purchase agreement has two blank lines instead of a printed answer: the buyer's share of the title insurance, and the seller's. No South Dakota statute or agency fills them in, so who pays for the owner's title policy gets decided the day you and the seller write the offer. On an FHA purchase here, that blank line and a transfer fee the state puts on the seller have more to do with your cash to close than the loan limit does.

An FHA loan in South Dakota can be up to $541,287 on a one-unit home in 65 of the state's 66 counties, and up to $541,650 in Lawrence County, where Spearfish is. Lawrence is the only county in the state above the lowest limit FHA sets anywhere, which HUD calls the floor, and it is above it by $363. A $330,000 home comes in well under either figure, so in South Dakota the question is usually the cash you bring to closing rather than the limit.

I'm Jeff Moran, NMLS #483943, licensed to originate in South Dakota through C2 Financial Corporation, and I have been in the mortgage business since 1996. The South Dakota page covers the closing rules, and the FHA explainer covers how the program works everywhere.

The transfer fee belongs to the seller

South Dakota law puts the real estate transfer fee on the grantor, which is the person signing the deed over to you, and the register of deeds collects it when the deed is recorded. It belongs on the seller's side of the closing statement, so if an estimate you are handed shows it on your side, please ask about it. South Dakota also has no mortgage-recording tax based on the loan amount. That leaves the recording fees on the mortgage and its release, plus the settlement and title-service charges.

Title insurance in South Dakota: who pays, and what it costs

The blank line in the purchase agreement decides who pays the owner's premium, and the premium itself is a filed rate. South Dakota's title insurance law has title companies file their rates with the Director of Insurance, and it does not let a company charge anything other than its filed rate, so there is no rebate or discount to ask for. Companies can file different schedules, though, and the way to shop is to compare two companies' filed premiums and their settlement charges.

The 2026 FHA loan limits, county by county

HUD set these in Mortgagee Letter 2025-23, and they apply to FHA loans whose case numbers were assigned on or after January 1, 2026. The case number is the file number FHA assigns to your loan.

Area	One unit	Two units	Three units	Four units
65 counties at the floor	$541,287	$693,050	$837,700	$1,041,125
Lawrence County	$541,650	$693,400	$838,150	$1,041,650

Your down payment, and how much the seller can help

On a $330,000 purchase, FHA wants at least $11,550 from you, which is 3.5 percent of the home's value. Value means the lower of the price and the appraised value, and HUD's Handbook 4000.1 calls that money your minimum required investment. The loan itself is $318,450, and FHA's upfront mortgage insurance premium is 1.75 percent of that, about $5,573, which you can pay in cash or finance into the loan.

Your closing costs and prepaid items (costs like homeowners insurance and property taxes paid ahead at closing) are a separate pile of money, and the handbook does not let them count toward the $11,550. The seller can help with that second pile. Sellers, agents and builders may contribute up to 6 percent of the sales price toward your closing costs, prepaid items, points and the upfront premium, which on this example is $19,800. None of it can go toward your 3.5 percent.

FHA next to VA in Rapid City and Aberdeen

Federal mortgage disclosure data for 2024 puts FHA and VA close together in western South Dakota: 325 of the Rapid City area's 1,837 home purchase loans were FHA and 412 were VA. In the Aberdeen area, FHA was ahead of VA, with 64 of 367 loans to VA's 33. My Rapid City page and Aberdeen page have the details. If you have VA eligibility, I can price both, and VA loans in South Dakota explains that side.

Do I need an attorney to close an FHA loan in South Dakota?

South Dakota does not require an attorney at an ordinary residential purchase or refinance closing. South Dakota's real estate licensing law lets a licensee prepare the closing statement and the other transaction forms the state lists. It bars a licensee from giving legal advice or drawing up other legal documents, though, so a legal question goes to a lawyer you hire.

Your next step

When you're ready, you can see rates and the payment for a home in your price range, with South Dakota closing costs included, and choose the option that works best for you. Which loan fits puts FHA next to conventional and VA, and how to get pre-approved explains what I will ask you for.

Nothing here is a loan approval, a denial or a commitment to lend. Final approval depends on the home, the appraisal and full underwriting, and HUD revises limits and premiums from time to time, so please confirm the current figures with me.

Common questions

What is the FHA loan limit in South Dakota for 2026?

Sixty-five of the state's 66 counties are at the national floor for a one-unit home, and Lawrence County, where Spearfish is, is slightly above it. The limits apply to FHA loans whose case numbers were assigned on or after January 1, 2026.

Who pays the transfer fee on a South Dakota home purchase?

The seller. South Dakota law assigns the real estate transfer fee to the grantor, so it is not a line in your budget. A refinance records a mortgage without transferring the deed, so it does not trigger the fee.

Can the seller pay my FHA closing costs in South Dakota?

Yes, within FHA's limit. Sellers, agents and builders can contribute up to 6 percent of the sales price toward closing costs, prepaid items, points and the upfront premium. The credit cannot be used for your minimum required investment.

Can I negotiate a title insurance discount in South Dakota?

Not on the premium. A South Dakota title company cannot charge anything other than the rate it has filed with the state, so there is no discount to negotiate. You can compare companies' filed rates and their settlement charges.

Does South Dakota require an attorney for the closing?

No. An attorney can advise you if you choose to hire one.