5 Best Construction Loans in South Dakota


Construction loans in South Dakota are available in a wide array of options and are perfect for financing a new home build, whether that’s a primary residence or vacation property.

South Dakota is a great place to live, work, and play. The state has a population of 905,404 people and is growing steadily. Its most famous attraction, Mount Rushmore, attracts over two million people each year.

Home prices aren’t as low as you might think given the mainly agrarian nature of the state. The average home price in South Dakota is $241,500, and it’s increasing every year according to local newspapers.

With increasing housing prices and limited supply of existing homes on the real estate market, many people in South Dakota have started considering construction loans as a way to finance the construction of a new home or the renovation of an existing property. 

This brief article will explain everything you need to know about getting a construction loan in South Dakota, including the benefits of doing so and what to consider before applying. 

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Benefits of a new construction loan in South Dakota

A new construction loan can help you build your dream home. You’ll be able to choose the design, location, and floor plan that suits your needs best. If the home you want to build isn’t available for sale, you can get a loan from the bank to start the home building process from scratch.

A new construction loan typically only requires interest-only payments during the construction period, giving you some flexibility with your monthly budget given that you’ll still be paying expenses associated with your current living situation.

The downside is that the process of building a home can take anywhere from six to 18 months depending on the complexity of the project. It’s not a project for the faint of heart, so you’ll want to make sure you are prepared for the process and working with the appropriate team.

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5 Best construction loan lenders in South Dakota

If you’re in the market for building a home in South Dakota, consider these construction mortgage loans that are available to state residents.

1. BankWest

BankWest has been operating in South Dakota for more than 130 years. If you’re looking for a bank with a long history in the state, this bank is for you. BankWest provides the full suite of financial products to its customers, including construction loans.

Not surprisingly, we were particularly interested in learning about the construction loan offered by BankWest. Here’s what we found during our research:

  • Your initial construction loan allows for draws to pay building expenses to the general contractor throughout the construction process.
  • Your plans and bids must be provided to the bank. The bank will use these to hire an appraiser to perform an “as completed” value estimate.
  • Borrowers may secure a construction loan for up to 95-100% of the project cost.
  • Land/lot expenses can be rolled into your construction loan.
  • You’ll work with the same BankWest loan expert during the construction loan process from the construction phase of your project through converting your loan to permanent financing.
  • 25% down payment required for land/lot only loans
  • Lot loan balance can be rolled into the construction loan when you’re ready to build

When you’re ready to connect with a loan officer, use our form to quickly match with construction loan programs based on your specific circumstances.

2. Wintrust Mortgage

Wintrust Mortgage is one of the top 20 bank-owned retail mortgage loan originators in the country that originates in excess of $4 billion in loans annually in all 50 states. 

Recently we asked Wintrust Mortgage to provide us with details on their construction loan terms and this is what they said:

  • One-Time Closing. Only pay the closing cost once
  • Lock in your rate upfront and avoid interest rate risk
  • FHA (first time homebuyers), VA, and Conventional options
  • 0% Down up to $822,375 (VA ONLY)
  • 3.5% Down up to FHA County Limits ($356,362-822,375) 
  • 10% Down on Second homes
  • FICO 680+
  • Loans must include building no Lot/Land Loans 
  • Maximum of 10-acres per build site
  • Stick Built and Modular Homes ONLY
  • NO log homes or metal homes (barndominium)
  • Tear Down and Rebuilds do qualify
  • No self-build or owner builders. The builder must be approved. 
  • Does Not allow ADUs (Accessory Dwelling Unit – Granny Flat/Garage Conversions/Basement)
  • Now lending in all 50 States

When you’re ready to connect with a loan officer, use our form to quickly match with construction loan programs based on your specific circumstances.

3. Black Hills Federal Credit Union

Black Hills Federal Credit Union started in 1941 and serves the entire state of South Dakota through its 15 locations. If you’re looking to partner with a credit union during your construction project, they could be a good choice. Black Hills Federal Credit Union offers a full range of financial services, including construction loans.

We contacted Black Hills Federal Credit Union to gather information about their construction loan and here is what they said:

  • Interest-only payments during the construction period (up to six months)
  • Money is advanced incrementally during this time
  • Loan automatically converts to long-term conventional financing
  • Only pay closing costs once
  • Loans available to renovate (add a garage or finish a basement) before you move in

When you’re ready to connect with a loan officer, use our form to quickly match with construction loan programs based on your specific circumstances.

4. US Bank

US Bank is a large home loan lender with a solid construction loan option. They can’t work with owner-builders, investment property, or manufactured homes, but if you fall outside of that category (e.g. a primary residence or a second home), then you may like the options.

We reached out directly to US Bank to get details on their home construction loans and this is what we heard back:

  • 720 credit score required
  • 10% down up to $750,000
  • 20% down up to $1.5 million 
  • 25% down up to $2 million
  • Loans up to $10 million are available 
  • Primary residence and Second homes only
  • May use lot purchase as a down payment
  • Major renovation loans are available
  • 12-24 month Build periods are available 
  • 30 year fixed One-Time-Close or ARM (5/1, 7/1 & 10/1)
  • One-time closing automatically converts to permanent financing at the end of construction
  • Interest-only payments during construction
  • No prepayment penalty
  • No Spec or Investment Builds
  • No Pre Starts

When you’re ready to connect with a loan officer, use our form to quickly match with construction loan programs based on your specific circumstances.

5. BMO Harris

BMO Harris is the 8th largest bank in North America by assets and provides financial services ranging from personal and commercial banking to wealth management and investment services. Among these many products, they also provide a construction loan for homeowners looking to build or renovate a home.

We spoke directly with a loan officer at BMO Harris to learn more about their construction loan program and were able to get quite a lot of details. Here is what you need to know:

  • 700 Minimum credit score required for credit approval
  • 10% down up to $1M loan amount (No PMI…720+ credit score required)
  • 20% down up to $2M loan amount
  • 30% down up to $3M loan amount
  • 35% down up to $4M loan amount
  • 40% down up to $5M loan amount
  • 45% down over $5M+ loan amount
  • 10% of the loan amount required for reserves
  • Primary residence and Second homes only (1 unit only)
  • Ground-up or tear-down construction utilizes Loans-to-Cost
  • Renovation utilizes As-Completed Value
  • 12-24 month construction periods are available 
  • 30/20/15/10 Fixed or ARM (5/6, 7/6 & 10/6) available
  • One-time closing automatically converts to permanent financing at the end of construction
  • Only 1 appraisal needed
  • 90 day lock same as 30 day pricing
  • Relationship rate discounts are available
  • Interest-only payments during construction
  • No prepayment penalty
  • No Spec or Investment Builds
  • No Builder Approval Required (must be licensed with General Liability coverage)
  • No owner builder
  • No Pre-starts
  • No Modular, Mobile for Manufactured homes

When you’re ready to connect with a loan officer, use our form to quickly match with construction loan programs based on your specific circumstances.

Does a South Dakota construction loan make sense for you?

A construction loan can be a great way to finance your next home or renovation project, but it’s not appropriate for everyone. These are some of the factors you should consider before you take out a construction loan:

If you need to borrow money from a mortgage lender or other financial institution, it’s worth considering whether you can afford the payments. Just because you can cover the expenses doesn’t necessarily mean that you should. 

Construction loans are typically harder to get approved for than traditional financing options because there is no underlying collateral supporting the mortgage, so the bank will examine your credit history and ability to repay the loan more closely.

At the end of the day, a South Dakota construction loan is a great way to realize your dream of homeownership, but there are many things to consider before applying for a new construction loan in South Dakota.

If you’re looking to explore construction loans in other states, check out our national guide to construction loans and get started exploring all 50 states.

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Joshua Holt

Joshua Holt is a licensed mortgage loan originator (NMLS #2306824) and founder of Biglaw Investor. His mortgage expertise lies in the areas of professional mortgage loans, particularly for lawyers, doctors and other high-income professionals. Prior to Biglaw Investor, Josh practiced private equity mergers & acquisition law for one of the largest law firms in the country.

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