FHA vs. Conventional Loans in Florida: Which Is Right for You?

When buying a home in Florida, you'll need to decide between two primary mortgage options: FHA (Federal Housing Administration) loans and conventional loans. Both are valid paths to homeownership, but they offer different advantages and come with distinct tradeoffs. The right choice depends on your credit profile, available down payment, and how long you plan to stay in the home. Let's break down the key differences so you can make an informed decision.

Credit Score Requirements

Your credit score plays a significant role in which loan type makes sense for your situation. FHA loans are designed to be more accessible to borrowers with less-than-perfect credit, while conventional loans reward those with strong credit histories.

FHA Loans: The minimum credit score for an FHA loan is typically 580. If your score falls between 580 and 619, you'll need to put down 10% as a down payment (more on that below). FHA loans are forgiving of past credit challenges, including past late payments, foreclosures, and short sales — as long as there's sufficient seasoning time.

Conventional Loans: Most conventional lenders require a minimum credit score of 620 to qualify. However, to get the best interest rates, you'll typically need a score of 740 or higher. The better your score, the better your rate. Between 620-739, you'll still qualify, but at higher rates. Above 760, you'll see the most competitive pricing.

Down Payment Comparison

The down payment requirement is often the deciding factor for first-time buyers and those with limited savings. Here's how the two stack up.

FHA Loans: FHA allows down payments as low as 3.5% of the purchase price. This is one of the biggest advantages of FHA lending, especially for buyers who haven't accumulated a large down payment fund. For a $300,000 home in Florida, that's just $10,500 down.

Conventional Loans: Conventional loans typically require a minimum 3% down payment — matching FHA — but many lenders prefer 5-10%. To avoid private mortgage insurance (PMI) entirely, you'll need 20% down. For that same $300,000 home, 20% equals $60,000. However, some buyers put down 5-10% and accept PMI until they reach 80% loan-to-value (LTV).

Mortgage Insurance: The Big Difference

This is where the real long-term cost comparison happens. Both loan types require mortgage insurance if you're putting down less than 20%, but they work very differently — and this is the key differentiator between FHA and conventional loans.

FHA Mortgage Insurance Premium (MIP): FHA borrowers pay two mortgage insurance premiums: an upfront mortgage insurance premium (UFMIP) of 1.75% added to your loan balance at closing, and annual mortgage insurance (MIP) that's paid monthly. The monthly MIP typically ranges from 0.55% to 0.80% of your loan balance annually, depending on your loan term and LTV. The critical issue: FHA mortgage insurance lasts for the life of the loan if you put down less than 10%. You cannot remove it, even after paying down to 80% LTV.

Conventional PMI: Conventional loans require private mortgage insurance (PMI) if you put down less than 20%. However, PMI is removable. Once your loan balance drops to 80% of the original home value (or through automatic removal at 78% LTV per RESPA rules), you can have PMI removed. This is a major advantage — you're not stuck with insurance forever.

Loan Limits in Florida

If you're buying an expensive home or in a high-cost area of Florida, loan limits matter. Different counties have different limits, and FHA limits are typically lower than conventional.

FHA Loan Limits: FHA limits vary by county. In most Florida counties, the 2026 limit for a single-family home is $420,680. In high-cost counties like Miami-Dade and Broward, limits reach $638,650. These limits are set based on local median home prices.

Conventional Conforming Limits: In 2026, the conforming loan limit (the maximum for conventional loans purchased by Fannie Mae and Freddie Mac) is $766,550 nationwide for single-family homes. This is higher than FHA in most areas, giving you more flexibility if you're buying a luxury or high-value property.

If you need to borrow more than the conventional conforming limit, you'll move into jumbo loans, which have stricter credit and down payment requirements.

Property Requirements

FHA and conventional lenders have different standards for the properties they'll finance. FHA appraisals are stricter.

FHA Property Standards: FHA requires that the home meet specific safety, soundness, and sanitary standards. The appraiser must verify that the roof has a remaining life of at least 2 years, major systems (electrical, plumbing, HVAC) are functional, and the property poses no health or safety risks. FHA is particularly strict about lead paint (homes built before 1978), mold, and structural issues. Appraisals often uncover items that need repair before you can close.

Conventional Standards: Conventional appraisals are less rigid. The appraiser focuses on whether the property value supports the loan amount. As long as the home is habitable and marketable, conventional lenders are typically more flexible. You have more negotiating power with the seller to address repairs post-closing.

This matters in the Florida market, where older homes, properties with foundation concerns, or those needing cosmetic work may struggle with FHA approval.

Which Should You Choose?

Here's a practical decision framework based on your situation:

Choose FHA if:

• Your credit score is below 620
• You have less than $15,000 saved for a down payment
• You plan to stay in the home for 10+ years (the lifetime MIP becomes less painful over time)
• You're buying a newer home in good condition with no repair needs
• You want to qualify with a higher debt-to-income ratio

Choose Conventional if:

• Your credit score is 680 or higher
• You plan to stay fewer than 10 years or expect significant home appreciation
• You want the flexibility to remove mortgage insurance once you hit 80% LTV
• You're buying an older home or one requiring repairs (FHA might not approve it)
• You're buying above the FHA loan limit in your county
• You're comfortable with 5-10% down and accepting temporary PMI