The Short Version
FHA loans are backed by the Federal Housing Administration and are designed to help people with lower credit scores or smaller down payments buy a home. Conventional loans are not government-backed and typically require stronger credit, but they can cost less over time if you qualify.
Neither is "better." The right choice depends on your credit score, how much you have saved, and how long you plan to stay in the home.
Down Payment: How Much Do You Need?
This is usually where the decision starts. Here is how the numbers break down for 2026:
| Loan Type | Minimum Down Payment | Minimum Credit Score |
|---|---|---|
| FHA | 3.5% (score 580+) | 500 (10% down) / 580 (3.5% down) |
| Conventional | 3% (first-time) / 5% (repeat) | 620 minimum, 740+ for best rates |
On a $300,000 home, an FHA loan with 3.5% down means you would need about $10,500 upfront. A conventional loan with 3% down means about $9,000. The difference is small, but the credit score requirement is very different.
Credit Score: Where Do You Stand?
FHA loans are more forgiving. You can qualify with a credit score as low as 580 and still put just 3.5% down. If your score is between 500 and 579, you can still get an FHA loan, but you will need 10% down.
Conventional loans typically require a minimum score of 620. But here is the thing: to get the best interest 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.
If your credit is below 620, an FHA loan is probably your best path to homeownership right now. If your score is 700 or above, a conventional loan might save you money in the long run.
Mortgage Insurance: The Hidden Cost
Here is where things get a little tricky. Both FHA and conventional loans require mortgage insurance when you put less than 20% down. But they work very differently.
FHA: You pay an upfront mortgage insurance premium (MIP) of 1.75% of the loan amount, rolled into the loan. Then you pay an annual MIP of 0.55% of the loan balance for the life of the loan if you put less than 10% down. That is right. It never goes away unless you refinance or sell. On a $300,000 loan, that is about $137 per month added to your payment.
Conventional: You pay private mortgage insurance (PMI) which typically costs 0.3% to 1.5% of the loan amount per year, depending on your credit score. The good news is that PMI automatically falls off once your loan balance drops to 78% of the home's value (or you can request cancellation at 80%). For someone with good credit, PMI might cost $75 to $100 per month on a $300,000 loan, and it goes away after a few years.
Loan Limits: How Much Can You Borrow?
For 2026, FHA loan limits in most Florida counties are $541,287 for a single-family home. In higher-cost areas like Monroe County or Miami-Dade, the limit goes up to $990,150.
Conventional (conforming) loan limits are higher: $832,750 in most counties and $990,150 in high-cost areas. If you need a bigger loan, conventional is the way to go. For most buyers looking at homes under $500,000 in South Florida, both options will work.
Which One Should You Choose?
Here is a quick guide based on common situations:
Go with FHA if:
- Your credit score is between 580 and 680
- You have less than 5% saved for a down payment
- Your debt-to-income ratio is a little high (FHA allows up to 57% DTI)
- You plan to stay in the home for many years and may refinance later
Go with Conventional if:
- Your credit score is 680 or higher (ideally 740+)
- You have at least 3% to 5% saved for a down payment
- You want lower monthly payments and flexible PMI cancellation
- You are buying a condo that may not be FHA-approved
Don't Forget Down Payment Assistance
Whichever loan type you choose, Florida has programs that can help with your down payment and closing costs. The Hometown Heroes program offers up to $35,000 in assistance (0% interest, deferred, no monthly payments) for eligible buyers in 100+ occupations. FL Assist offers up to $10,000 in down payment help. You can use these with FHA or conventional loans in many cases.
Check out our full financing guide for details on every program available to South Florida buyers.
The Bottom Line
The right loan for you depends on your specific financial picture. I have worked with buyers who went FHA because their credit needed some work and conventional buyers who saved thousands with lower monthly payments. Neither decision is permanent, either. Plenty of buyers start with an FHA loan and refinance into a conventional loan a few years later once they have built equity and improved their credit.
The most important step is talking to a lender who can look at your actual numbers and tell you what you qualify for. Austin Edwards at Ocean Blue Lending (561-426-8238) works with my buyers all the time and knows these programs inside and out.
For a more comprehensive comparison including interest rates and refinancing strategy, see our complete FHA vs Conventional guide.
Want to Know What You Qualify For?
Not sure whether FHA or conventional is right for you? Let us help you figure it out. Call or Text Ryan at 561-915-8590 or Austin Edwards at Ocean Blue Lending at 561-426-8238. A 15-minute conversation can save you thousands of dollars over the life of your loan.