VA Home Loans in Sioux Falls: How to Buy With $0 Down

If you’re an eligible veteran, service member, or surviving spouse, a VA home loan lets you buy a Sioux Falls home with no down payment and no monthly mortgage insurance. That’s the single biggest reason a VA loan often beats FHA or conventional financing for the buyers who qualify.

Quick Answer: A VA-backed home loan lets eligible veterans, active-duty service members, National Guard and Reserve members, and some surviving spouses buy a primary residence in Sioux Falls with 0% down and no private mortgage insurance. You’ll pay a one-time VA funding fee — often 2.15% for first-time use — which can be rolled into the loan and is waived entirely for veterans receiving service-connected disability compensation.

By Tyce Ortman — August 27, 2026

What makes a VA loan different

Most loans make you choose between a big down payment and paying for mortgage insurance. A VA loan removes both. According to the U.S. Department of Veterans Affairs, the program requires no down payment and no monthly mortgage insurance — the two costs that slow down most first-time buyers.

Here’s what that’s worth in real numbers. On a home priced around $340,450 — roughly the Sioux Falls median sale price reported for mid-2026 — a conventional buyer putting down 3% needs about $10,200 up front, and an FHA buyer at 3.5% needs about $11,900. A VA buyer with full entitlement can put down $0. That money stays in your pocket for moving costs, an emergency fund, or a rate buydown.

Because there’s no down payment and no monthly insurance, the VA loan is the strongest zero-down option most buyers will find. The other one — a USDA loan in a rural town like Madison — only works outside the city’s eligible-area lines. A VA loan works anywhere in the Sioux Falls metro.

The one cost to plan for: the VA funding fee

VA loans aren’t entirely free of upfront cost. Most borrowers pay a one-time VA funding fee, which helps keep the program running without taxpayer down payments. The VA sets the rate by loan type, how much you put down, and whether you’ve used the benefit before.

For a VA-backed purchase loan, the current funding fee rates are:

First-time use, no down payment: 2.15% of the loan amount
First-time use, 5% or more down: 1.5%
First-time use, 10% or more down: 1.25%
After first use, no down payment: 3.3%

On a $340,450 purchase with nothing down, the first-use fee runs about $7,320. You don’t have to bring that to closing — the VA lets you roll the funding fee into the loan and pay it over time.

There’s a big exception worth knowing: if you receive VA compensation for a service-connected disability, you’re exempt from the funding fee entirely. The same exemption applies if you’re eligible for that compensation but taking retirement or active-duty pay instead, if you’re a surviving spouse receiving Dependency and Indemnity Compensation, or if you’re an active-duty Purple Heart recipient. For those buyers, the zero-down VA loan is also a zero-funding-fee loan.

Who’s eligible

Eligibility comes down to your service history. VA loans are available to veterans, active-duty service members, and many National Guard and Reserve members who meet the service requirements, as well as some surviving spouses. Before you can close, you’ll need a Certificate of Eligibility (COE), which your lender can usually pull in minutes or you can request directly from the VA.

It’s for a primary residence. You’ll certify that you intend to live in the home, generally within 60 days of closing. VA loans aren’t for pure investment properties or second homes.
There’s no VA loan limit with full entitlement. Since 2020, veterans with full entitlement have no cap on how much they can borrow with zero down, subject to what a lender will approve. A median-priced Sioux Falls home sits comfortably within reach.
The benefit is reusable. You can use a VA loan more than once and restore your entitlement after you sell and pay off the prior loan.

How a VA offer works in the Sioux Falls market

A common myth is that VA offers are weak in a competitive market. They’re not — the loan is fully underwritten like any other, and sellers receive their proceeds the same way. What does help you is the VA’s rule on seller concessions: the VA allows sellers or builders to cover buyer closing costs, capping seller’s concessions at 4% of the home’s reasonable value. That’s a useful lever when you’re negotiating, and it works alongside the standard seller-paid closing cost concessions available in Sioux Falls.

With builders adding inventory across Tea, Harrisburg, and northwest Sioux Falls, buyers have more room to negotiate those credits than they did at the peak of the seller’s market. A VA loan pairs well with new construction for exactly that reason.

One planning note: on a VA purchase loan, the only cost you can finance into the loan is the funding fee. Your other closing costs — the appraisal, title work, and recording fees — are paid at closing, though a seller concession or lender credit can cover them. If you’re also a first-time buyer, it’s worth checking whether you can layer in the down payment and closing-cost assistance available through Sioux Falls programs to bring your out-of-pocket cash close to zero.

Frequently Asked Questions

Do VA loans really require no down payment?

Yes. Eligible veterans, service members, and surviving spouses with full entitlement can buy a primary residence with 0% down and no monthly mortgage insurance. That’s the core advantage of the program and why it often beats FHA and conventional loans for those who qualify.

How much is the VA funding fee?

For a first-time VA purchase loan with no down payment, the funding fee is 2.15% of the loan amount. It rises to 3.3% for later uses with no money down and drops if you make a down payment. You can roll the fee into your loan instead of paying it at closing.

Who is exempt from the VA funding fee?

Veterans receiving VA compensation for a service-connected disability are exempt, along with those eligible for that compensation, surviving spouses receiving Dependency and Indemnity Compensation, and active-duty Purple Heart recipients. Exempt borrowers get the zero-down benefit with no funding fee at all.

Can I use a VA loan more than once?

Yes. The VA benefit is reusable. Once you sell a home and pay off the VA loan, you can restore your entitlement and use it again on your next primary residence.

Is there a loan limit on VA loans in Sioux Falls?

Not for buyers with full entitlement. Since 2020, there’s no VA loan limit for full-entitlement borrowers buying with zero down — the amount is set by what your lender will approve based on your income and credit.

The bottom line

For eligible buyers, a VA loan is the most powerful financing available in Sioux Falls: no down payment, no monthly mortgage insurance, and a funding fee that’s waived for disabled veterans. The main step is confirming your eligibility and getting your Certificate of Eligibility so you can shop with confidence.

If you’re a veteran or service member weighing whether a VA loan fits your Sioux Falls home search, I’m happy to connect you with a VA-experienced lender and walk you through the numbers. You can also grab my free Sioux Falls Buyers Guide to map out the rest of the process. Reach out anytime — no pressure, just answers.

About Tyce Ortman
Tyce Ortman is a residential real estate agent with the Jeff Merrill Team at eXp Realty, serving Sioux Falls, South Dakota and surrounding communities including Brandon, Harrisburg, and Tea. He works with both buyers and sellers, guiding them from first search or listing all the way through closing.