FHA versus conventional is not a question of which program is better. It is a question of which one costs less and closes more reliably for your profile, and that depends on your credit score, down payment, debt-to-income ratio (DTI, your monthly debts divided by gross monthly income), and how long you will keep the loan. Florida adds its own cost drivers: homeowners and flood insurance, condo approvals, and a homestead tax rule that surprises first-year owners. The seven strategies below follow the order I use with clients, starting with the numbers that decide the most.
By Duane Buziak, NMLS #1110647, a Florida-licensed mortgage broker serving clients statewide (Coast2Coast Mortgage LLC, NMLS #376205). Figures below are illustrations unless a source is named. Rates, limits, and insurance factors change, so confirm current numbers before you rely on them.
1. Compare the core rules side by side
The structural rules explain almost everything that follows. FHA loans are insured by the Federal Housing Administration, so the insurance premium (MIP, mortgage insurance premium) is set by HUD and does not change with your score. Conventional loans follow Fannie Mae and Freddie Mac guidelines, and private mortgage insurance (PMI) is priced by private insurers based on your score and loan-to-value ratio (LTV, the loan balance divided by the home’s value).
As of 2026, the general picture looks like this. Verify each item at HUD.gov and in the current Fannie Mae and Freddie Mac guidelines:
- Down payment: FHA allows 3.5% with a 580 score or higher. Conventional allows as little as 3% to 5% on many programs.
- Typical minimum score: FHA starts at 580 for the 3.5% option. Conventional usually starts around 620.
- Mortgage insurance: FHA charges an upfront premium (1.75% of the loan, usually financed) plus an annual premium. Conventional charges PMI only when you put down less than 20%, with no upfront premium on most loans.
- Removal: With less than 10% down, FHA MIP generally lasts the life of the loan. With 10% or more down, it generally drops off after 11 years. Conventional PMI can be requested off at 80% LTV and ends automatically at 78%.
- Loan limits and property standards: Both vary by county. FHA appraisals also enforce minimum property condition standards.
The common mistake is treating FHA as simply “the low credit loan.” It is often the right tool at a 620 score, but its MIP can follow you for decades, which changes the math for anyone who plans to stay. Measure this step by counting the programs you are confirmed eligible for on paper, including your county’s limit, before you compare any prices.
2. Let your credit score pick the starting lane
FHA MIP does not move with your score. Conventional PMI moves a lot. That asymmetry is why a 640 borrower and a 760 borrower can buy the same house with the same down payment and land in opposite lanes.
Suppose a $350,000 home with 3.5% down on FHA and 5% down conventional. FHA annual MIP at roughly 0.55% on a $337,750 base loan comes to about $155 a month for both borrowers. Conventional PMI on a $332,500 loan might run near 1.25% a year at a 640 score (about $346 a month) and near 0.25% at 760 (about $69 a month). These PMI percentages are assumptions for illustration, not quotes. At 640, FHA’s insurance is about $190 a month cheaper. At 760, conventional is about $86 a month cheaper, and the gap widens once PMI can be removed.
To find your real lane:
- Start with a soft credit pull mortgage check through NoTouch Credit Pull. This is a soft inquiry my office uses to view your credit and test eligibility without a hard inquiry, so it does not touch your score the way a standard application pull does. It uses VantageScore 4.0, which can differ from the FICO scores used in final underwriting, so treat it as a strong estimate.
- Request written quotes for both FHA and conventional at your actual score.
- Ask for the same price, down payment, and closing date on each quote.
The pitfall is comparing interest rates alone. FHA rates are often a little lower, but a lower rate with higher insurance can cost more each month. Measure the total monthly payment including mortgage insurance on each program.
3. Run the payment math with mortgage insurance included
A full PITI (principal, interest, taxes, insurance) plus MI comparison is the only fair test. Here is an illustration on a $350,000 purchase, assuming a 6.00% rate on FHA, 6.25% on conventional with 5% down, 6.00% on conventional with 20% down, and $750 a month combined for property taxes and homeowners insurance on all three. These are placeholder assumptions, not quotes.
- FHA, 3.5% down ($12,250): loan of about $343,660 with the upfront premium financed. Principal and interest about $2,060, MIP about $155, total near $2,965.
- Conventional, 5% down ($17,500): loan of $332,500. Principal and interest about $2,047, PMI assumed at $138, total near $2,935.
- Conventional, 20% down ($70,000): loan of $280,000. Principal and interest about $1,679, no PMI, total near $2,429.
Over five years, FHA MIP adds roughly $9,300 and the 5%-down PMI roughly $8,300. By year ten, FHA MIP is near $18,000 and still running, while PMI would stop around the point your balance reaches 80% of the value, which on schedule alone is close to year ten, sooner with appreciation or extra payments.
Use the CFPB mortgage calculator for the base numbers, then replace its defaults with a real Florida homeowners quote and a flood quote if the address needs one. National average insurance figures understate Florida costs badly. Compare total cost at five and ten years, not only the monthly figure.
4. Use Florida’s no state income tax and DTI limits
Florida has no state income tax, so more of your gross income reaches your bank account than in most states. That helps cash flow but does not change how underwriters calculate DTI, which uses gross income. What it does mean is that you may be comfortable carrying a higher ratio than the same ratio would allow elsewhere, which makes the approval ceilings matter more.
Take a borrower earning $7,000 a month with $600 in car and card payments. Using the FHA payment from Strategy 3 (principal, interest, and MIP of about $2,215) plus $350 in taxes, compare two insurance costs:
- $350 monthly insurance: housing payment $2,915, front-end DTI about 41.6%, back-end about 50.2%.
- $600 monthly insurance: housing payment $3,165, front-end about 45.2%, back-end about 53.8%.
That $250 insurance difference moves back-end DTI by 3.6 points, which can push a file past a program’s ceiling. As of 2026, conventional automated underwriting generally tops out near 50% back-end, while FHA can accept higher ratios with compensating factors. Confirm current guidelines instead of assuming.
To apply this, calculate front-end and back-end DTI using real insurance and HOA dues, then ask which program’s automated underwriting approves the ratio. The common mistake is leaving insurance and HOA out until underwriting, when the file fails late. Measure your back-end DTI against each program’s ceiling, and aim for a cushion of several points.
5. Check flood zone and property condition first
A house can disqualify one program or raise the cost of both before the rate ever matters. Imagine an older Florida home with a leaking roof and peeling paint. FHA appraisers must flag condition problems that affect safety or soundness, so it may stall at appraisal, while a conventional appraisal might allow it to proceed. Conversely, a home in flood zone AE needs flood insurance with either program, because federally backed financing requires it in special flood hazard areas.
Before you write an offer:
- Enter the address at the FEMA Flood Map Service Center and note the zone.
- Get a flood insurance quote and a homeowners wind quote for that exact property.
- For a condo, confirm the project’s FHA approval on HUD’s condo lookup, and ask whether the project meets Fannie Mae and Freddie Mac review standards. Florida associations facing reserve and inspection requirements can fail either one.
- Ask your agent about roof age, electrical, and any visible deferred maintenance.
The mistake that costs the most is writing an offer first and checking condo approval and flood zone afterward. By then you have a deposit at risk and a short window. What to measure: the flood premium and every appraisal-risk flag you identified before making the offer.
6. Pair the loan with Florida down payment assistance
Down payment assistance (DPA) can work with either FHA or conventional, but it usually comes with a first mortgage priced slightly higher. As of 2026, verify these terms at Florida Housing Finance Corporation: Florida Assist is up to $10,000 as a 0% deferred second mortgage, and Florida HLP is up to $10,000 at 3% interest amortizing over 15 years. Both are repaid, so they are help with cash at closing, not free money. Eligibility depends on income limits tied to area median income (AMI); check your county at the HUD User income limits page. Salute Our Soldiers is a separate program for eligible service members and veterans, so verify its current terms as well.
The breakeven needs three variables: rate premium, DPA amount, and timeline. Suppose a $330,000 loan, a $10,000 DPA, and a 0.50% higher rate. At about 6.00% versus 6.50%, the payment rises roughly $107 a month, or about $1,284 a year. Premium paid reaches $6,420 at 5 years, about $9,000 at 7 years, and about $12,840 at 10 years. The premium passes the $10,000 mark around month 93, so the breakeven is roughly year eight. Selling at year five means you paid less than the assistance gave you. Staying ten years means you paid more, and Florida HLP adds a payment of its own.
The mistake is taking DPA without running these numbers. Measure the breakeven year against how long you realistically expect to own, then compare it with simply bringing the cash yourself.
7. Plan your exit: MI removal, refinance, and homestead
Decide at the start how you will shed mortgage insurance. For conventional loans, the CFPB explains that you can request PMI removal at 80% LTV and that it ends automatically at 78% on schedule. FHA borrowers who put less than 10% down usually cannot cancel MIP, so the exit is a refinance.
Suppose an FHA borrower owes $340,000 on a home now worth $425,000, which is 80% LTV. Refinancing to conventional removes MIP of about $156 a month. If the new rate matches the old one and refinance closing costs are $6,500, break-even is about 42 months. A higher new rate stretches that figure, so run it with a real quote.
- Track your LTV each quarter.
- Set a calendar date for an appraisal check once your estimated LTV nears 80%.
- Calculate break-even months as closing costs divided by monthly savings.
- After closing, file for the homestead exemption under Florida Statute 196.031, which can reduce assessed value by up to $50,000. The filing deadline is March 1.
The common error is expecting the exemption to lower your first year’s tax bill. It applies to your ownership as of January 1, and the following year’s assessment typically resets toward your purchase price, so escrow can rise. Budget for it. Measure refinance break-even in months and your LTV progress toward 80%.
Eight questions Florida buyers ask about FHA and conventional loans
Is an FHA loan cheaper than a conventional loan in Florida?
It depends mainly on your credit score. FHA is often cheaper below roughly a 680 score, while conventional usually wins at higher scores and larger down payments because PMI shrinks and can be removed.
What credit score do I need for each?
As of 2026, FHA starts at 580 for 3.5% down, and conventional generally starts near 620. Some programs go lower with more down, so ask for a quote at your actual score.
Does conventional always require 20% down?
No. Many conventional programs accept 3% to 5% down. You pay PMI until you reach 80% LTV.
Does FHA mortgage insurance last forever?
Not always. With 10% or more down it generally lasts 11 years, and with less than 10% down it generally lasts the life of the loan. Check HUD guidance for your case date.
Can I get a mortgage pre approval without hard pull?
Yes. A soft credit pull lets Duane Buziak review your credit and eligibility without a hard inquiry, so shopping both programs does not lower your score.
Do FHA loans work for condos in Florida?
Only if the condo project is FHA approved. Confirm it on HUD’s lookup before offering, and ask about conventional project eligibility as a backup.
Can I use Florida DPA with either loan type?
Generally yes, with eligible first mortgages. Florida Assist and Florida HLP each offer up to $10,000 as of 2026, but the first mortgage rate may carry a premium, so run the breakeven.
Can I refinance from FHA to conventional later?
Yes, and many borrowers do it once they reach about 20% equity. It makes sense when monthly savings recover the closing costs within your expected time in the home.
The order to work through before you make an offer
Start with credit and DTI, because they determine which programs are even open and which lane is cheaper. Next, price both payments with mortgage insurance included, using real Florida insurance quotes. Then verify the property, the flood zone, and any DPA fit, since those can change the answer at the last step. Exit planning comes last but should be written down before you close.
If you want to see both programs priced at your actual profile, ask for a no-hard-inquiry mortgage pre approval with Duane Buziak at Florida Mortgage Maestro, a Florida-licensed mortgage broker serving clients statewide. Your dream home in Florida is closer than you think. Let’s turn your homeownership goals into reality with a personalized mortgage solution designed for your unique journey. Get your credit-safe consultation today and discover the loan options that fit your life, backed by trusted guidance every step of the way.