A couple received orders to Ellsworth Air Force Base and came to Rapid City for the first time to look for a home. They wanted to sort out which loan would be right for them before making an offer, and we compared conventional loans, VA loans, and USDA loans step by step.

The housing prices in Rapid City vary by source. As of February 2026, the median sale price is $320,000, which is a 4.9 percent increase from the previous year, and according to Zillow, the average home value is $365,969. Some listings show prices up to $420,000, so it's good to know that the market has significant price variations depending on the property conditions.

If you are currently serving, VA loans are the first option to consider. Ellsworth Air Force Base hosts the 28th Bomb Wing and a B-1B squadron, and this area is known for being very accommodating to VA loans. The biggest advantages are that you can purchase without a down payment and there is no PMI requirement. Additionally, South Dakota has no state income tax, so for price ranges like Box Elder or Rapid City, housing allowances can often cover most of the monthly payments.

Next, we looked at USDA loans. Typically, in larger cities, urban areas are often excluded from USDA eligibility, but about 97.8 percent of Pennington County is classified as eligible for USDA loans, which is different from other cities. However, this percentage is based on the entire county, so it's important to check which specific areas within Rapid City are included based on the address. We also informed the couple about the income limits associated with this option.

If they do not qualify for VA or USDA loans, the next step is to compare conventional loans and FHA loans. For conventional loans, if your credit score is above 620, you can start with a down payment of 3 percent, but if it's less than 20 percent, PMI will apply. FHA loans allow access with a credit score of 580 or higher, starting at 3.5 percent, which is a manageable combination for the previously mentioned price range of $320,000.

Pennington County has a standard conforming loan limit of $832,750 as of 2026, and there are no areas designated as high-cost in South Dakota. Given the price range we checked earlier, any loan option should be manageable within this limit.

When checking school districts, refer to ratings from GreatSchools or Niche, but keep in mind that school district boundaries change frequently, so it's advisable to verify the assigned school for the specific address before purchasing. For families relocating from other states, it's also important to check that South Dakota's property tax and insurance conditions may differ from their previous residence.

Near Ellsworth Base, we often meet individuals considering purchases based on rental demand. Since many military families have fixed terms of service, rental demand tends to be steady, but it's also important to consider the timing of vacancies in relation to relocation. The burden of PMI varies based on the down payment ratio, so we recommend calculating returns based on a conservative scenario that adequately reflects management fees and vacancy periods.

Ultimately, in Rapid City, if you have military-related experience, VA loans are a viable option, and even if not, USDA loans can be available depending on the address, making it a unique market. If neither loan applies, comparing conventional and FHA loans can be helpful in practice. Given that many families are relocating from other states, it's easy to overlook aligning the moving date with the closing schedule, which is an important practical detail. This article is not investment or legal advice, and loan conditions may vary based on individual circumstances and lenders, so it is recommended to consult with a professional before finalizing any agreements.