Tyce Ortman REALTOR

By Tyce Ortman | July 22, 2026

You saved for the down payment. Then your lender handed you a Loan Estimate with a “cash to close” number that was thousands more than you expected, and now you are wondering where that money is supposed to come from.

That gap is closing costs, and it catches almost every first-time buyer in Sioux Falls off guard. The good news: you have more control over how you pay them than most people realize. The bad news: the phrase “roll them into the loan” usually means something different on a purchase than it does on a refinance, and confusing the two can blow up your budget.

Here is exactly what closing costs cover in Sioux Falls, what they run in 2026, and the actual levers for keeping that cash-to-close number down.

What buyer closing costs actually are in Sioux Falls

Closing costs are the fees and prepaid items you pay to finalize your loan and transfer the home — separate from your down payment. In Sioux Falls they typically run about 2% to 5% of the purchase price. On the June 2026 median sale price of $335,000 reported by the Realtor Association of the Sioux Empire, that is roughly $7,000 to $13,000, with most buyers landing near 3%, or about $10,000.

That number breaks into two buckets, and the difference matters when you start negotiating.

Lender and transaction fees — the cost of the loan and the closing itself:

• Loan origination and underwriting: ~$1,500–$3,000
• Appraisal: ~$500–$700 in the Sioux Falls area
• Credit report and misc. lender fees: ~$100–$300
• Title insurance (lender’s policy) + settlement fee: ~$700–$1,200, handled by your title company — First Dakota Title in Sioux Falls, Abstract Title in Madison
• Minnehaha or Lincoln County recording fees: ~$30–$60

Prepaid items and escrow setup — money you would owe as a homeowner anyway, just collected upfront:

• First year of homeowners insurance: ~$1,800–$2,600
• Property tax escrow: a few months set aside, often ~$1,000–$1,800
• Prepaid interest: covers the days between closing and your first payment

Here is a genuine Sioux Falls advantage: South Dakota has no statewide buyer transfer tax. The state’s real estate transfer fee — $0.50 per $500 of value — is paid by the seller, not you. Buyers in many states pay a transfer tax at closing; you skip it here.

Notice that prepaids are often the biggest single chunk. That is why two buyers on identical-priced homes can have very different cash-to-close numbers — insurance rates, tax escrow timing, and your closing date all move the total.

Can you actually roll them into the loan?

This is where the refinance myth trips people up. When you refinance, you already own the home and have equity, so your lender can wrap the closing costs into the new balance — you finance them. A purchase does not work that way. Your loan amount is set by the purchase price and your loan-to-value limit, so you generally cannot add closing costs on top of it and borrow more than the home is worth.

A few narrow exceptions exist: FHA lets you finance the upfront mortgage insurance premium, VA lets you finance the funding fee, and USDA can sometimes finance costs up to the appraised value when the appraisal comes in above the purchase price. But for the everyday conventional buyer, you are not stacking closing costs onto the mortgage.

So when a lender or agent says “we can get your closing costs covered,” they almost always mean one of these three moves — and any of them can get your out-of-pocket cash close to zero:

1. Seller concessions. You ask the seller to pay part of your closing costs, written right into the purchase agreement. This is the most common tool, and in a Sioux Falls market with about a 3.3-month supply and homes averaging well over two months on market, sellers are often willing. The catch is that every loan program caps how much the seller can chip in:

• Conventional, less than 10% down: up to 3% of the price
• Conventional, 10–24.99% down: up to 6%
• Conventional, 25%+ down: up to 9%
• FHA: up to 6%
• VA: up to 4% (the seller can also cover normal closing costs beyond that)
• USDA: up to 6%

One rule trips buyers up: the seller can only cover your actual closing costs, never more. If your costs are $9,000 and you negotiate a $12,000 concession, you get $9,000 — the extra does not become cash back or a price cut unless you restructure the deal.

2. Lender credits. You accept a slightly higher interest rate, and in exchange the lender pays some or all of your closing costs. It is the mirror image of buying down your rate. This trades a lower cash bill today for a higher monthly payment over the life of the loan, so it makes sense when you are short on cash now but comfortable with the payment — or when you expect to refinance or move within a few years and will not carry that rate for long.

3. Down payment and closing-cost assistance. South Dakota Housing (SDHDA) offers programs that pair a first mortgage with help toward your down payment and closing costs, subject to income and purchase-price limits. The City of Sioux Falls has run buyer-assistance programs as well. If you are a first-time buyer or near the income limits, these are worth a hard look before you assume you need every dollar in the bank.

How this plays out on a $335,000 Sioux Falls home

Say you are buying at the median $335,000 with 5% down on a conventional loan. Your down payment is $16,750. Your closing costs land around $10,000. Left alone, you need roughly $26,750 in cash to close.

Now apply the levers. Because you are under 10% down, the seller can contribute up to 3% — about $10,050 — which can cover essentially all of your closing costs. Negotiate a $10,000 concession and your cash to close drops back toward your down payment alone. Pair that with a lender credit or an SDHDA program and even the down payment can shrink.

That is the real answer to “can I roll them in.” You are not financing the costs on top of the loan — you are getting someone else to pay them, whether that is the seller, the lender, or an assistance program. Same result for your bank account, very different mechanics.

The move that matters most is deciding this before you write your offer. A concession negotiated up front is clean; trying to add one after your offer is accepted means reopening price and terms with a seller who thought the deal was done. Rates in the mid-6s have made buyers deliberate and given you room to ask — but only if you plan for it going in.

Frequently asked questions

How much are closing costs for a buyer in Sioux Falls?
Buyer closing costs in Sioux Falls typically run about 2% to 5% of the purchase price, or roughly $7,000 to $13,000 on a $335,000 home, with most buyers near 3%. The total includes lender fees, title and settlement charges, county recording fees, and prepaid items like your first year of homeowners insurance and property tax escrow.

Does the buyer pay a transfer tax in South Dakota?
No. South Dakota’s real estate transfer fee of $0.50 per $500 of value is paid by the seller, not the buyer. There is no statewide buyer transfer tax, which is one reason closing costs here are a bit lighter than in many other states.

Can the seller pay my closing costs in Sioux Falls?
Yes, through seller concessions written into the purchase agreement. Loan programs cap the amount: conventional loans allow 3% to 9% depending on your down payment, FHA allows 6%, VA allows 4% plus normal costs, and USDA allows 6%. The seller can only cover your actual closing costs, never more than the real total.

What is the difference between rolling costs into a purchase versus a refinance?
On a refinance you have equity, so the lender can add closing costs to the new loan balance — you finance them. On a purchase your loan is capped by the price, so you generally cannot borrow extra to cover costs. Instead you reduce your cash to close through seller concessions, lender credits, or assistance programs.

Is it smart to take a lender credit to cover closing costs?
It can be. A lender credit lowers your cash today in exchange for a slightly higher interest rate and monthly payment. It makes the most sense when you are short on upfront cash or expect to refinance or sell within a few years, so you never carry the higher rate long enough for the extra interest to outweigh the savings.

Planning your Sioux Falls purchase

Closing costs feel like a wall when they show up as a surprise on your Loan Estimate, but they are one of the most negotiable parts of a home purchase — if you build the strategy into your offer instead of scrambling at the closing table. Knowing your loan’s concession cap, whether a lender credit fits your timeline, and which SDHDA programs you qualify for can be the difference between needing $26,000 in the bank and needing far less.

If you’re buying or selling in Sioux Falls or the surrounding area — Harrisburg, Tea, Brandon, Hartford, or out toward Madison — I’m happy to walk you through the numbers on your specific price point and loan type before you write an offer. Reach out anytime: tyceortman@gmail.com.

About Tyce Ortman — Tyce Ortman is a real estate agent with eXp Realty serving the greater Sioux Falls, South Dakota area and the Madison community. He specializes in helping first-time home buyers and sellers, with a focus on pricing properties right and finding each client the perfect home. Connect with Tyce at tyceortman@gmail.com.