FHA vs Conventional Loan: Which Should You Choose in Florida?

The Short Answer

FHA loans are government-backed and built to help people with lower credit scores or smaller down payments get into a home. Conventional loans are not government-backed, usually need stronger credit, but can cost less over time if you qualify. Neither one is "better." The right pick depends on your credit score, your savings, and how long you plan to stay in the home.

FHA vs Conventional at a Glance

Most South Florida buyers are looking well under these limits, so the loan limit rarely decides it. The real difference is down payment, credit, and that forever mortgage insurance on FHA.

Pros and Cons of Each

Down Payment: What Do You Actually Need?

On a $300,000 home, an FHA loan with 3.5% down means about $10,500 upfront. A conventional loan with 3% down means about $9,000. The dollar difference is small. The credit requirement is where they really split apart.

If you are a first-time buyer with a steady income but modest savings, both can work. The bigger question is usually your credit score, because that decides which door is even open to you.

Credit Score: Where Do You Stand?

FHA is the more forgiving path. You can qualify with a score as low as 580 and still put down just 3.5%. If your score is between 500 and 579, you can still get an FHA loan, but you will need 10% down.

Conventional loans usually want a minimum of 620. And here is the catch: to get the best rates and the lowest mortgage insurance, you will want a score of 740 or higher. The higher your score, the less you pay every month.

A simple rule: below 620, FHA is probably your path to homeownership right now. At 700 or above, a conventional loan can save you money over time.

Mortgage Insurance: The Cost Most People Miss

Both loans require insurance when you put less than 20% down. That is where the long-term cost really differs.

FHA: You pay an upfront premium of 1.75% of the loan, rolled into your loan balance. Then you pay an annual premium of 0.55% of the loan amount for the life of the loan if you put less than 10% down. It never goes away unless you refinance or sell. On a $300,000 loan, that works out to about $137 per month.

Conventional: You pay private mortgage insurance, or PMI, which typically runs 0.3% to 1.5% a year depending on your credit. The good news is PMI automatically falls off once your balance drops to 78% of the home's value. For someone with good credit, that might be $75 to $100 a month, and it disappears after a few years.

Which One Should You Choose?

Here is how I usually walk buyers through it:

Don't Forget Down Payment Assistance

Whichever loan you pick, Florida programs can help with your down payment and closing costs. The Hometown Heroes program offers up to $35,000 in assistance (5% of the loan amount, whichever is less) for eligible full-time workers in qualifying occupations, and FL Assist offers up to $10,000 (which cannot be combined with Hometown Heroes). In many cases you can pair either one with an FHA or conventional loan, subject to eligibility and funding availability. Our full financing and programs guide walks through every option available to South Florida buyers, and your lender can confirm current program details.

The Bottom Line

The right loan depends on your specific numbers. Plenty of buyers start with FHA because their credit needs a little work, then refinance into a conventional loan a few years later once they have built equity and improved their score. The most important step is talking to a lender who can look at your actual income, debts, and credit and tell you what you qualify for.

For a deeper breakdown that includes rates and refinancing strategy, see our complete FHA vs Conventional guide. And if you are just getting started, the First-Time Buyer Guide takes you through the whole process step by step.