FHA vs. Conventional Loans for South Florida Homebuyers

Most South Florida buyers who aren't putting 20% down end up choosing between two loans: an FHA loan insured by the U.S. Department of Housing and Urban Development (HUD), or a conventional loan that follows Fannie Mae or Freddie Mac guidelines. This guide focuses on homes you will live in. The right choice depends on your credit, your down payment, the price of the home and, in Miami-Dade, Broward and Palm Beach, very often the condo building you're buying into.

As a rule of thumb, FHA loans tend to fit buyers with thinner credit or a smaller cushion, while conventional loans tend to fit buyers with stronger credit who want mortgage insurance that can eventually come off. That rule breaks often enough that it's worth pricing both on the same home before you write an offer.

Down payment and credit: FHA vs conventional

HUD allows an FHA down payment as low as 3.5% for borrowers with a credit score of 580 or higher. Borrowers with scores from 500 to 579 need at least 10% down, and scores below 500 aren't eligible. Individual lenders may set stricter minimums of their own.

On the conventional side, Fannie Mae offers options with as little as 3% down on a one-unit primary residence, such as HomeReady (which has income limits) and its 97% loan-to-value options, which may require homebuyer education. In November 2025 Fannie Mae dropped its fixed 620 minimum credit score for loans run through its Desktop Underwriter system and replaced it with an overall risk assessment. In practice, lenders and mortgage insurers typically still set minimum scores, and your score continues to affect pricing and the cost of mortgage insurance.

Both programs generally allow documented gift funds from family toward the down payment, which is common for first-time buyers in Miami. Keep large deposits traceable: the underwriter will ask where the money came from.

Mortgage insurance: FHA MIP vs conventional PMI

This is where the two loans differ most over the long run.

FHA mortgage insurance premium (MIP)

Every FHA loan carries an upfront MIP, usually financed into the loan, plus an annual MIP paid monthly. Under HUD's rules, how long the annual premium lasts depends on your original loan-to-value: put down 10% or more and annual MIP runs for 11 years; put down less than 10% and it runs for the life of the loan. For most 3.5%-down borrowers, the practical way out of MIP is to refinance into a conventional loan once you have enough equity and the numbers make sense.

Conventional private mortgage insurance (PMI)

Conventional loans only require PMI when you put down less than 20%. Under the federal rules the CFPB explains, you can ask your servicer in writing to cancel PMI once your balance reaches 80% of the home's original value (with a good payment history and no decline in value), and the servicer generally must end it automatically when the balance is scheduled to reach 78%. PMI cost is driven largely by credit score and down payment, which is why borrowers with strong credit often find conventional cheaper over time, while borrowers with lower scores may find FHA competitive.

2026 FHA and conforming loan limits in Miami-Dade, Broward and Palm Beach

All three counties are in the same metro area (Miami-Fort Lauderdale-West Palm Beach), so they share the same limits. For 2026, HUD's FHA limits and FHFA's conforming limits are:

• 1 unit: FHA $667,000; conforming $832,750
• 2 units: FHA $853,900; conforming $1,066,250
• 3 units: FHA $1,032,150; conforming $1,288,800
• 4 units: FHA $1,282,700; conforming $1,601,750

These are loan limits, not price limits. With 3.5% down, the maximum one-unit FHA loan supports a purchase price of roughly $691,000. Both loan types can finance a 2–4 unit property if you live in one of the units. A conventional loan above the conforming limit is a jumbo loan with its own guidelines. Limits reset every year, so check HUD's FHA Mortgage Limits lookup and FHFA's conforming loan limit page for the year you close.

Condos: FHA approval is often the deciding factor

In South Florida a large share of entry-level homes are condos, and the building matters as much as the buyer. For FHA, the unit must be in a project on HUD's approved list or qualify for FHA's single-unit approval. Single-unit approval has its own limits: the project must be complete, have at least five units, and stay under a cap on FHA-insured loans (generally 10% of units in projects with ten or more units). You can search approved projects yourself in HUD's FHA condominium search; confirm the status shows approved and hasn't expired.

Conventional loans also review the condo project, under Fannie Mae or Freddie Mac rules instead of HUD's list. With either loan, buildings can be hard to finance when they have major pending litigation, large special assessments, significant deferred maintenance or hotel-style rental activity. Since Florida's post-Surfside condo safety laws, many buildings of three or more stories must complete milestone inspections and structural integrity reserve studies. Ask the association for those reports, its budget and any planned assessments before you commit to a price.

FHA vs conventional loan Florida comparison

	FHA	Conventional
Minimum down payment	3.5% (580+ score); 10% (500–579)	As low as 3% for eligible buyers; varies by program
Credit	HUD floors of 500 / 580; lenders may require more	No fixed Fannie Mae minimum in DU since Nov. 2025; lenders typically set their own
Mortgage insurance	Upfront and annual MIP on every loan	PMI only with less than 20% down
How it ends	After 11 years with 10%+ down; otherwise life of loan (or refinance)	Request at 80% of original value; generally automatic at 78%
2026 limit, 1 unit (our three counties)	$667,000	$832,750
Condos	FHA-approved project or single-unit approval	Project review under Fannie Mae / Freddie Mac rules
Occupancy	Primary residence	Primary, second home or investment

Two more local points apply to both loans. First, FHA appraisals include property-condition standards, so an older house with a failing roof or safety issues may need repairs before closing. Second, insurance drives affordability here: get windstorm, homeowners (or condo unit) and, if the home is in a FEMA flood zone, flood insurance quotes early, because lenders count them in your monthly housing cost. If you're comparing who to work with, our guide on mortgage broker vs. bank explains how each works.

Next step

The fastest way to settle FHA vs. conventional is to price both on the same home. Call FFC Lending at (786) 723-5626 or send the details through our contact page: the purchase price, the address or condo building, your estimated credit range and how much you plan to put down. A licensed loan originator will review the scenario with our lender partners and walk you through the trade-offs.