Step 1: Confirm Your VA Loan Eligibility
The first step in the VA loan process is confirming that you meet the service requirements. VA loans are available to a specific group of borrowers, and understanding your eligibility is the foundation of everything that follows.
- Active-Duty Service Members: You are eligible after 90 consecutive days of active service during wartime or 181 days during peacetime. If you are currently serving, you qualify.
- Veterans: You meet the minimum service requirements based on your era of service. Most veterans who served at least 90 days in wartime or 181 days in peacetime qualify.
- National Guard and Reserve Members: You are eligible after 6 years of service in the Guard or Reserves, or after 90 days of active-duty service under Title 10 orders. For members of the 114th Fighter Wing at Joe Foss Field, this is particularly relevant.
- Surviving Spouses: Un-remarried surviving spouses of service members who died in the line of duty or from a service-connected disability may be eligible.
Your eligibility determines not just whether you can use a VA loan, but how much entitlement you have available. Full entitlement means no down payment required on any loan amount that falls within the conforming loan limit. In Minnehaha County, the 2026 conforming loan limit is $766,550, which covers virtually every home in the Sioux Falls market.
To confirm your eligibility, you will need a Certificate of Eligibility (COE). You can obtain this through the VA’s eBenefits portal online, or our team can pull it for you directly through our lender portal — which is often the fastest route.
Step 2: Understand What Makes VA Loans Different
VA loans stand apart from conventional and FHA financing in several key ways. Here is a side-by-side comparison to help you see exactly where the advantages lie.
| Feature | VA Loan | Conventional Loan | FHA Loan |
|---|---|---|---|
| Down Payment | 0% | 3–20% | 3.5% |
| Private Mortgage Insurance | None | Required if <20% down | Required (MIP for life of loan) |
| Interest Rate (Local Avg) | 5.50% | 6.10% | 5.85% |
| Credit Score Minimum | No VA minimum (lenders typically require 580–620) | 620–680 | 580 |
| Funding Fee | 1.25–3.3% (waived for disabled vets) | None | 1.75% upfront + 0.85% annual |
| Loan Limit (Minnehaha Co.) | $766,550 (full entitlement) | $766,550 | $541,287 |
| Occupancy Requirement | Primary residence only | Primary, secondary, investment | Primary residence only |
| Assumable | Yes | Usually no | Yes |
| Closing Cost Limits | Seller can pay all closing costs | Seller limited to 3–6% | Seller limited to 6% |
The combination of zero down payment and no PMI creates substantial savings for VA borrowers. On a $324,800 home (the Sioux Falls median), a conventional buyer putting 5 percent down would need $16,240 for a down payment plus approximately $120 per month in PMI. A VA borrower needs zero down and pays zero PMI. At a rate of 5.50 percent versus 6.10 percent conventional, the VA borrower saves roughly $190 per month on a comparable loan amount. Over a 30-year term, those monthly savings add up to more than $68,000.
Curious about your VA loan eligibility? Our team can pull your Certificate of Eligibility and walk you through your options in about 15 minutes. Start the conversation at fairwayheartland.com or apply directly at fairwaynow.com.
Step 3: Know Your Sioux Falls Buying Power with a VA Loan
One of the most powerful aspects of a VA loan in Sioux Falls is how far your benefit stretches in this market compared to higher-cost areas. Here is a look at what your VA benefit buys you locally versus other military-connected metros.
| Metro Area | Median Home Price | VA Loan Monthly Payment (0% Down, 5.50%) | Conventional Monthly Payment (5% Down, 6.10%) |
|---|---|---|---|
| Sioux Falls, SD | $324,800 | $1,844/mo | $2,073/mo + PMI |
| Colorado Springs, CO | $465,000 | $2,640/mo | $2,967/mo + PMI |
| San Antonio, TX | $285,000 | $1,618/mo | $1,818/mo + PMI |
| Fayetteville, NC | $310,000 | $1,760/mo | $1,977/mo + PMI |
In Sioux Falls, your VA benefit goes further than in most military-connected metros. The median home price of $324,800 is well below the national median of approximately $400,000, and when you combine zero down payment with a rate around 5.50 percent and no PMI, your monthly housing cost is manageable even on a single military income.
South Dakota’s zero state income tax is another advantage that boosts your effective income. A service member or veteran earning $75,000 in Sioux Falls takes home roughly $3,500 to $5,000 more per year than the same earner in Colorado or North Carolina, where state income taxes range from 4.5 to 5.25 percent. That extra take-home pay directly improves your debt-to-income ratio when qualifying for your VA loan.
Step 4: Navigate the VA Funding Fee
The VA funding fee is a one-time charge that helps fund the VA loan program for future veterans. It is important to understand because it affects your total loan cost, but it is also one of the most misunderstood aspects of VA financing.
| Borrower Type | Down Payment | First-Time Use | Subsequent Use |
|---|---|---|---|
| Regular Military | 0% | 2.15% | 3.3% |
| Regular Military | 5–9% | 1.5% | 1.5% |
| Regular Military | 10%+ | 1.25% | 1.25% |
| Reserves / National Guard | 0% | 2.15% | 3.3% |
On a $324,800 loan with zero down, a first-time VA borrower pays a funding fee of approximately $6,983 (2.15 percent). This fee can be rolled into the loan so you do not need to pay it upfront. However, there is an important exception: veterans receiving VA disability compensation are exempt from the funding fee entirely. If you have a service-connected disability rating, you save that $6,983 immediately.
For members of the 114th Fighter Wing and other Guard and Reserve members in the Sioux Falls area, the funding fee percentages are the same as regular military. The key distinction is your service history and whether this is your first or subsequent use of the VA benefit.
Step 5: Find the Right Home in Sioux Falls
VA loans have a few property requirements that are worth knowing before you start your home search. The home must be your primary residence (VA loans cannot be used for investment properties or vacation homes), and it must meet the VA’s Minimum Property Requirements (MPRs), which ensure the home is safe, structurally sound, and sanitary.
In practice, most homes in Sioux Falls meet these requirements without issue. The city’s housing stock ranges from well-maintained older homes in established neighborhoods like McKennan Park and All Saints to newer construction in developments like The Sanctuary in northeast Sioux Falls and the Allen Homes communities along the southern corridor toward Harrisburg.
For buyers looking at new construction, VA loans work seamlessly with builder incentives. Over 60 percent of new construction homes in the Sioux Falls market currently include some form of builder incentive — from 2-1 rate buydowns to closing cost credits of $5,000 to $15,000. These incentives can be combined with VA financing, and the seller’s ability to pay all closing costs on a VA loan makes new construction an especially strong fit.
Step 6: Close with Confidence
The VA loan closing process follows a similar timeline to conventional loans, typically 30 to 45 days from contract to closing. One additional step is the VA appraisal, which is conducted by a VA-assigned appraiser and ensures the home meets both the MPRs and the agreed-upon purchase price. In the Sioux Falls market, VA appraisals have been aligning well with purchase prices thanks to stable and predictable home values.
The seller can pay all of the buyer’s closing costs on a VA loan, which is a significant advantage over conventional and FHA options. In addition, the VA limits certain fees that lenders can charge, protecting borrowers from excessive costs. Our team handles the VA-specific documentation, coordinates with the VA appraiser, and ensures a smooth closing process.
The Heartland Heroes program through our branch also offers closing cost discounts for military service members, law enforcement, and medical professionals. If you are a veteran or active-duty member, this program may provide additional savings on top of the VA loan benefits you are already receiving.
Your VA Loan Checklist for Sioux Falls
- Confirm your VA loan eligibility and obtain your Certificate of Eligibility (COE)
- Get pre-approved with a VA-experienced lender who knows the Sioux Falls market
- Understand your full entitlement and how it applies to Minnehaha County loan limits
- Factor in the funding fee — or confirm your exemption if you have a VA disability rating
- Research neighborhoods that match your budget and lifestyle, from established Sioux Falls to newer developments
- Work with a real estate agent experienced in VA transactions
- Complete the VA appraisal process and move toward closing
Buying a home with a VA loan in Sioux Falls is one of the most financially advantageous paths to homeownership available today. The combination of zero down payment, no PMI, competitive rates around 5.50 percent, and a housing market where the median home is still under $325,000 means your military service benefit goes further here than in most places across the country.
Frequently Asked Questions About VA Loans in Sioux Falls
Who qualifies for a VA loan in Sioux Falls?
VA loans are available to active-duty service members, veterans, National Guard and Reserve members, and eligible surviving spouses. Active-duty members qualify after 90 consecutive days of wartime service or 181 days of peacetime service. Most veterans qualify under the same minimums based on their era of service. National Guard and Reserve members become eligible after 6 years of service or 90 days of active-duty service under Title 10 orders — which is especially relevant for members of the 114th Fighter Wing at Joe Foss Field in Sioux Falls.
Do VA loans require a down payment in Sioux Falls?
No. VA loans with full entitlement require zero down payment on homes up to the conforming loan limit of $766,550 in Minnehaha County — which covers virtually every home in the Sioux Falls market. This is one of the most significant advantages of VA financing compared to conventional loans (which require 3–20% down) and FHA loans (which require 3.5% down).
Is there mortgage insurance on a VA loan?
No. VA loans do not require private mortgage insurance (PMI) or a monthly mortgage insurance premium (MIP), regardless of your down payment. This alone saves VA borrowers in Sioux Falls approximately $120 per month compared to a conventional buyer putting less than 20% down — and even more compared to FHA borrowers who pay MIP for the life of the loan.
What is the VA funding fee and how much is it?
The VA funding fee is a one-time charge that helps sustain the VA loan program for future veterans. For first-time users putting 0% down, the fee is 2.15% of the loan amount — approximately $6,983 on a $324,800 loan. The fee can be rolled into your loan so nothing is due at closing. Importantly, veterans with a service-connected disability rating are completely exempt from the funding fee, saving thousands of dollars immediately.
What credit score do I need for a VA loan in Sioux Falls?
The VA itself does not set a minimum credit score. However, most lenders — including our team at the Heartland Branch — typically look for a score of 580 to 620 or higher for streamlined processing. Even borrowers with lower scores may qualify depending on the full strength of their financial profile, including income stability and residual income.
What is the VA loan limit in Sioux Falls for 2026?
The 2026 conforming loan limit in Minnehaha County (Sioux Falls) is $766,550 for VA loans with full entitlement. This is well above the Sioux Falls median home price of $324,800, meaning the vast majority of homes in the market are fully covered with zero down payment required.
How do I get my Certificate of Eligibility (COE)?
You can obtain your Certificate of Eligibility through the VA’s eBenefits portal at va.gov. Alternatively — and often faster — our team can pull your COE directly through our lender portal during the pre-approval process. Most COEs are retrieved within minutes, so this step rarely causes delays.
Can the seller pay closing costs on a VA loan?
Yes — and this is one of VA financing’s most powerful features. On a VA loan, the seller can pay all of the buyer’s closing costs with no percentage cap in the same way that conventional loans limit concessions to 3–6%. In the current Sioux Falls market, many sellers are open to concessions, which means VA borrowers can often purchase a home with very little cash out of pocket beyond reserves.
How does the VA appraisal work?
A VA appraisal is conducted by a VA-assigned appraiser and serves two purposes: confirming the home’s market value and verifying that it meets the VA’s Minimum Property Requirements (MPRs) for safety, structural soundness, and sanitation. Most homes in Sioux Falls pass without issue. The appraisal is ordered after your purchase contract is accepted and typically completes within a few days to two weeks, depending on appraiser availability.
Can VA loans be used for new construction in Sioux Falls?
Yes. VA loans work well with new construction, and the Sioux Falls market currently has strong builder incentive programs that can be combined with VA financing. Over 60% of new construction homes in the area include incentives such as 2-1 rate buydowns or closing cost credits of $5,000 to $15,000. Combined with the VA’s allowance for the seller to pay all closing costs, new construction can be an especially affordable path for veteran buyers.
How much can a veteran save with a VA loan versus a conventional loan in Sioux Falls?
On the Sioux Falls median home of $324,800, a VA borrower saves approximately $190 per month compared to a conventional borrower at 5% down — thanks to the lower VA rate (5.50% vs. 6.10%) and the elimination of PMI. That adds up to more than $68,000 in savings over a 30-year loan term. The VA borrower also avoids the $16,240 down payment required for a conventional 5%-down loan, preserving that capital for other uses.
