There’s no single number — it depends on your loan. FHA loans start at a 580 credit score with 3.5 percent down (or 500 with 10 percent down). Conventional loans and South Dakota Housing (SDHDA) down payment assistance both use a 620 minimum, VA loans have no set floor but most local lenders want around 620, and USDA loans typically need 640. Clearing the minimum gets you approved. Your actual score sets your interest rate — and on a Sioux Falls-priced home, the gap between a 640 and a 760 is worth tens of thousands of dollars.

It’s the question that stops a lot of Sioux Falls buyers before they even start: is my credit good enough to buy a house?

Most people guess too high. They assume they need a 700, or a 720, or some mythical “perfect” score, and they put off talking to a lender for a year they didn’t need to wait. The truth is more forgiving than that — and also more expensive than the minimums make it look.

Here’s the number you actually need, what it costs you at each level, and how to move it before you lock a 30-year rate.

The minimum score by loan type

There isn’t one magic number, because there isn’t one loan. Each program sets its own floor, and here’s where they land in 2026:

  • FHA loan — 580. At 580 or above you qualify for the low 3.5 percent down payment. Between 500 and 579 you can still get an FHA loan, but you’ll need 10 percent down. FHA is the most common landing spot for Sioux Falls buyers who are still rebuilding credit. Here’s how FHA loans work in Sioux Falls.
  • Conventional loan — 620. Fannie Mae and Freddie Mac have technically loosened their hard credit-score rule, but in the real world almost every lender still treats 620 as the practical floor for a conventional loan. Below that, the pricing gets punishing fast.
  • VA loan — no set minimum, but plan on 620. The VA itself doesn’t require a score, but lenders do. Most Sioux Falls lenders want around 620, though some go lower when income and payment history are strong.
  • USDA loan — around 640. USDA loans (the $0-down option for homes in Brandon, Harrisburg, Tea, Madison, Canistota, and other eligible areas outside the city core) don’t have a government minimum, but 640 is the cutoff for the automated approval system most lenders use.
  • SDHDA down payment assistance — 620. South Dakota Housing requires a 620 for both its First-Time and Repeat Homebuyer programs, plus income limits and a purchase-price cap (currently $410,000 for first-time buyers). That assistance can be worth $9,000 to $15,000 on a Sioux Falls home, so 620 is a meaningful threshold to clear.

So the honest floor to buy a house in Sioux Falls is 580 with an FHA loan and 3.5 percent down. Hit 620 and the whole menu opens up — conventional financing, VA, and SDHDA assistance all come into play.

Lenders can also add their own “overlays” — stricter requirements on top of the program minimum. One lender’s 580 FHA floor is another’s 620. If the first lender turns you down, that’s not always the final word, and it’s worth checking with a second.

The minimum gets you approved. Your score sets your rate.

This is the part the “what score do I need” question misses. Clearing 620 doesn’t mean you get the same deal as a buyer at 760. You get approved — but you pay for the gap every month for 30 years.

In 2026, buyers with scores of 760 and up are seeing 30-year rates around 6.1 percent. Buyers in the 620-to-639 range are closer to 7.4 percent. That’s not a rounding error — that’s a different mortgage.

Put real Sioux Falls numbers on it. The median home here is about $335,000. Say you put 5 percent down and finance around $318,000:

  • At roughly 6.25 percent (a 740-plus score), your principal and interest run about $1,960 a month.
  • At roughly 7.25 percent (a mid-600s score), the same loan runs about $2,170 a month.

That’s more than $200 a month, over $2,500 a year, and north of $70,000 across the life of the loan — for the exact same house. The higher score doesn’t just get you in the door. It’s real money you keep.

The takeaway I give every buyer: if you’re close to the next tier — say you’re at 695 and 700 opens a better rate — a few weeks of focused work can pay for itself many times over. It’s one of the highest-return things you can do before you buy.

How to move your score before you buy

You don’t need a 12-month credit rebuild to make a difference. Scores respond faster than most people think when you hit the right levers:

  1. Pay down your credit card balances. Get each card under 30 percent of its limit, and under 10 percent if you can swing it. Credit utilization is one of the fastest-moving parts of your score, and paying a card from 80 percent down to 20 percent can move the needle in a single cycle.
  2. Don’t miss a single payment. Payment history is the biggest factor in your score. One 30-day late payment can knock off 50 to 100 points at the worst possible time. Put everything on autopay before you start house hunting.
  3. Stop opening new credit. No new car, no store card at the register, no “12 months no interest” furniture financing. Every hard pull and new account can drop your score right when the lender is looking.
  4. Don’t close your old cards. An old card with a long history and a high limit is helping you, even if you never use it. Closing it shortens your history and raises your utilization — the opposite of what you want.
  5. Pull your reports and dispute errors. Get your reports from all three bureaus and check them. A late payment that wasn’t yours, or an account you never opened, can cost you a full loan tier. Disputing it is free.
  6. Ask your lender about a rapid rescore. If you’ve just paid down debt, a good loan officer can order a rapid rescore that updates your report in days instead of waiting a full billing cycle — sometimes the difference between one rate tier and the next.

Here’s the move that costs you nothing: talk to a local lender before you decide you’re not ready. A lot of Sioux Falls buyers assume their credit disqualifies them when it actually clears the FHA line already, or sits one small payoff away from 620. A real pre-approval tells you exactly where you stand — which is very different from a quick pre-qualification. Pair that with a clear picture of how much house you can actually afford in Sioux Falls, and you’ll know whether you’re buying this fall or spending three months getting your score into the next tier first.

Frequently Asked Questions

What credit score do you need to buy a house in Sioux Falls?

It depends on the loan. FHA starts at 580 for the 3.5 percent down option (500 with 10 percent down), conventional loans and SDHDA down payment assistance both use 620, VA loans have no set minimum but most local lenders want around 620, and USDA loans typically need 640. Below those numbers you can still buy, but your choices and your rate get worse.

Can you buy a house in Sioux Falls with a 600 credit score?

Yes. A 600 clears the FHA minimum of 580, so you can buy with 3.5 percent down. You won’t qualify for a conventional loan or SDHDA assistance yet — both want 620 — and your rate will be higher than a buyer in the 700s. It’s often worth a few months of credit work before you lock a 30-year rate.

Does a higher credit score get you a lower mortgage rate?

Yes, and the gap is large. In 2026, buyers at 760 and up are seeing rates near 6.1 percent while buyers in the 620-to-639 range are closer to 7.4 percent. On a typical Sioux Falls loan, that’s more than $200 a month and tens of thousands of dollars over the life of the loan.

What credit score do you need for SDHDA down payment assistance?

South Dakota Housing requires a minimum 620 for both its First-Time and Repeat Homebuyer programs. You also have to meet income limits and stay under the purchase-price cap, currently $410,000 for first-time buyers. You apply through an SDHDA-approved lender, not the state directly.

How can you raise your credit score fast before buying?

Pay your credit cards below 30 percent of their limits, never miss a payment, and don’t open new accounts before you apply. If you’ve recently paid down debt, ask your lender for a rapid rescore, which can update your score in days. Dispute any errors on your report, and don’t close old cards.

The bottom line

You need a 580 to buy a house in Sioux Falls with an FHA loan, and a 620 to open up conventional financing, VA, and SDHDA down payment assistance. But the minimum only decides whether you’re approved — your actual score decides your rate, and that gap is worth real money every month you own the home.

If you’re not sure where your credit stands or how close you are to the next tier, that’s exactly the conversation to have before you start looking. I’ll connect you with a local lender, help you read where you really are, and build a plan to buy now or get your score ready — whichever is the stronger move for you. Reach out anytime at 605-201-2846 or siouxfallsgreathomes.wordpress.com.

About Jeff Merrill
Jeff Merrill leads The Jeff Merrill Team, powered by eXp Realty, serving Sioux Falls and the surrounding South Dakota communities of Madison, Mitchell, Canistota, and beyond. He helps motivated buyers, sellers, and new agents cut through the hype in real estate with honest guidance, hands-on mentorship, and a track record of real results. Connect with Jeff at siouxfallsgreathomes.wordpress.com or 605-201-2846.

This article is general information, not financial or lending advice. Credit requirements, rates, and program terms change and vary by lender and borrower — verify current numbers with a licensed South Dakota loan officer before making decisions.