South Dakota Second Home Loans and Mortgage Solutions

Financing Your Dream Second Home

Thinking of purchasing a second home in South Dakota? Whether it’s a retreat in the Black Hills, a lake house near Watertown, or a seasonal condo in Sioux Falls, BNB Lending offers second home loans tailored to part-time personal use. We help buyers navigate South Dakota’s unique tax rules, local STR regulations, and lender compliance standards. With competitive rates, fast approvals, and guidance through every step, BNB Lending ensures your South Dakota second home financing is structured for long-term success and full legal alignment.

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How to qualify

To obtain a quote, we will need the following information:

Property Value and

 Purchase Price


Down Payment

Amount


Credit Score

 

Asset Types

  • Single Family Homes
  • Townhomes
  • Condos
  • 2 - 4 Units (Duplex, Triplex, Quadplex)
  • Multi-Family: 5 - 8 Units
  • Mixed-Use: 2 - 8 Units
  • Multi-Family: 9+ Unit



Loan Terms


  • Loan Sizes: $100k up to $3.5 Million (Larger loan sizes available on a case by case basis)
  • Purchase LTV: Up to 85%
  • Rate & Term Refinance LTV: Up to 80% 
  • Cash Out Refinance LTV: Up to 80%
  • Amortization: 30 Year % 40 Year Amortization Options Available
  • Term Lengths: 5/6 ARMs, 7/6 ARMs, 10 Year Interest Only, 30 Year Fixed & 40 Year Fixed
  • Floor Rate: 5.50% (subject to change daily due to market volatility)
  • Full Recourse with personal guarantee required for all borrowers with majority ownership (typically 20%+ or 25%+ if closing in an Entity)
  • DSCR Requirement: 1.00x or greater depending on loan size and property type. Sub-1.00x DSCR and NO DSCR options available.
  • Vesting: Lending to Individuals, LLCs, and Corporations. Trusts Allowable on a Case by Case Basis.
  • Average Time to Close: 14 to 35 days

Wondering if you qualify for investment property financing in your area?


We offer lending services in all 50 states!

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Frequently Asked Questions

What are the requirements for a second home loan in South Dakota?

South Dakota second home loans follow standard federal guidelines. The property must be a single-unit dwelling, livable year-round, and used by the borrower for part of the year. It cannot be held by an LLC or used primarily for short-term rentals. Lenders generally require a 10–20% down payment, good credit, and verifiable income. South Dakota does not impose additional lending conditions, though HOA rules or city-level zoning may impact usage. At BNB Lending, we review your property’s details and intended use to confirm loan eligibility.

How do short-term rental rules affect loan classification?

If the home is rented frequently, lenders may classify it as an investment property, requiring different loan terms. South Dakota has no statewide STR law, but cities like Rapid City may require permits or impose occupancy rules. The state levies a 4% hotel tax on short-term stays, and local lodging taxes may also apply. At BNB Lending, we assess your planned use, location, and rental activity to determine whether the loan qualifies as a second home mortgage or needs to follow investment loan guidelines.

Do second homes qualify for property tax benefits in South Dakota?

South Dakota second homes are assessed at 100% of market value, then equalized to 85% for taxation purposes. There are no state-level exemptions or special classifications for vacation homes—only owner-occupied primary residences may qualify for certain relief programs. STRs and second homes are taxed at standard rates. At BNB Lending, we help you project annual property taxes based on your home's assessed value and usage, so you can plan financing with a clear picture of long-term ownership costs.

Can I deduct mortgage interest on a second home?

Mortgage interest on a second home may be deductible on your federal tax return if you itemize and the property qualifies for personal use under IRS rules. South Dakota has no state income tax, so there’s no corresponding deduction at the state level. If you occasionally rent the home, your deductions may be prorated based on personal versus rental use. BNB Lending helps you structure your loan to maintain eligibility for available deductions and recommends working with a CPA familiar with IRS rules and South Dakota tax treatment.

Are there second home loan programs in South Dakota?

South Dakota Housing Development Authority programs are focused on first-time and primary homebuyers. They do not offer financial assistance or down payment programs for second homes or seasonal-use properties. At BNB Lending, we fill that gap by offering private second home mortgage solutions across South Dakota—from lakeside retreats to Black Hills cabins. We help buyers navigate financing requirements, STR considerations, and local regulations so your mortgage is tailored to your lifestyle and investment goals.

What types of properties qualify for second home loans?

Second homes must be one-unit residences that are livable year-round and primarily used by the borrower for personal stays. Acceptable types include detached homes, condos, and townhouses. The home must meet appraisal standards and cannot be a multi-unit, investment-only, or commercial-use property. In South Dakota, local zoning and STR rules may influence loan eligibility. BNB Lending reviews your property’s characteristics, location, and intended use to ensure it qualifies for second home financing under lender and legal guidelines.

Who benefits from choosing a second home loan over an investment loan?

These loans are perfect for self-employed individuals, LLCs, and investors managing multiple properties. If you plan to use your South Dakota home primarily for personal stays and only rent it occasionally, a second home loan may offer better rates and terms than an investment loan. These loans must be in your personal name—not held by an LLC. BNB Lending structures South Dakota second home loans to provide flexibility while keeping your financing compliant with lender and zoning guidelines.

Thinking beyond Tennessee? Explore Airbnb loans and second home opportunities in nearby states like North Carolina or Georgia to expand your portfolio.