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

Most Florida buyers asking about this have a specific situation in mind: mid-600s credit score, not enough cash for 20% down, and a lender who told them both options are on the table. The short answer is that FHA is usually the right call when your score is below 680 and your savings are tight. Conventional is usually the right call when your score is 700+ and you can stomach either a slightly higher down payment or temporary PMI. The math changes once you factor in mortgage insurance duration, and that is where most buyers get confused.

This post breaks down both loan types side by side for buyers in Tampa Bay, St. Pete, and Central Florida — with the 2026 loan limits, current MIP and PMI rates, and the condo eligibility wrinkle that catches people off guard in this market.

Down Payment Requirements

FHA requires 3.5% down if your credit score is 580 or above. Drop below 580 (down to a floor of 500) and FHA bumps the requirement to 10%. On a $350,000 home in the Tampa Bay median range, 3.5% is $12,250. That is genuinely accessible for many first-time buyers.

Conventional loans can go as low as 3% through Fannie Mae HomeReady or Freddie Mac Home Possible — but those programs have income limits and the 3% tier typically requires a higher credit score (usually 620 minimum, often 640 in practice). The standard conventional down payment is 5%. Below 20%, you will pay PMI.

• FHA: 3.5% down with 580+ FICO; 10% down with 500-579 FICO
• Conventional HomeReady / Home Possible: 3% down, income-limited programs, 620+ FICO required
• Standard conventional: 5% down (620+ FICO), 10-15% down (740+ preferred for best pricing)
• 20% down on either type: eliminates mortgage insurance entirely on conventional; reduces FHA MIP duration to 11 years

On a $400,000 home — roughly the Hillsborough County median — 3.5% FHA down is $14,000. Five percent conventional is $20,000. That $6,000 gap is real money, especially when you are also covering closing costs.

Credit Score Requirements

FHA is the more forgiving option on credit. The program-minimum is 500, though virtually no lender will approve under 580 in practice. At 580, you get the 3.5% down path. At 640+, you stop seeing rate add-ons from lenders who layer risk-based pricing on top of the FHA floor.

Conventional loans require 620 to qualify with most lenders. The pricing improves meaningfully at each FICO tier. A borrower at 620 paying conventional PMI is in a different cost bucket than a borrower at 760. Mortgage pricing is not a flat rate — conventional pricing is FICO-sensitive in a way FHA is not, which is why FHA often wins for borrowers in the 620-680 range even when they technically qualify for conventional.

• FHA floor: 580 (3.5% down path) / 500 (10% down path, lender discretion)
• Conventional floor: 620 (most lenders), 640+ for competitive pricing
• FHA sweet spot: 580-679 — borrowers in this range often save money vs. conventional despite higher MIP
• Conventional sweet spot: 700+ and especially 740+ — where conventional PMI rates drop below FHA MIP costs
• DTI: FHA allows up to 43% debt-to-income (sometimes higher with compensating factors); conventional typically caps at 45%

Mortgage Insurance: MIP vs. PMI — The Math That Matters

This is the decision that determines which loan type wins over the long run — and it is where FHA can turn from a benefit into a cost trap if you are not paying attention.

FHA MIP: Two Charges, One That May Never Go Away

FHA charges mortgage insurance in two forms. First is an upfront MIP (UFMIP) of 1.75% of the base loan amount, due at closing. On a $350,000 loan, that is $6,125 — though it can be rolled into the loan rather than paid out of pocket. Second is an annual MIP charged monthly, currently at 0.55% for most 30-year loans with less than 10% down. On a $350,000 loan, that is $1,925/year or about $160/month added to your payment.

The duration rule is the critical one. If you put down less than 10%, FHA MIP stays on the loan for its entire term — all 30 years. There is no mechanism to remove it based on equity growth. The only way out is to refinance into a conventional loan once you have built enough equity (typically 20%, though you can refi earlier if you are comfortable with conventional PMI rates at that point).

If you put down 10% or more, FHA MIP falls off automatically after 11 years. That is still a long time to pay — but it is not forever.

• Upfront MIP: 1.75% of loan amount (rollable into the loan)
• Annual MIP: 0.55% per year for most 30-year loans under $541,287 with LTV above 95%
• MIP duration: lifetime of loan if down payment is under 10%
• MIP duration: 11 years if down payment is 10% or more
• Exit path: refinance to conventional once you have 20% equity

Conventional PMI: Temporary, Rate-Variable, Cancellable

Conventional PMI rates range from 0.25% to 2.0% annually depending on your credit score and down payment. A buyer at 720 FICO with 5% down typically lands around 0.5-0.8%. A buyer at 640 FICO with 5% down might see 1.2-1.5%. This is where credit score matters more than it does with FHA.

The key difference from FHA: conventional PMI is not permanent. Under the Homeowners Protection Act, lenders must automatically cancel PMI when your loan reaches 78% of the original purchase price (22% equity). You can also request cancellation at 80% LTV (20% equity). And here is the Florida-specific angle: if your home has appreciated, you can order a new appraisal and request PMI removal based on current market value once you hit 20% equity — you do not have to wait to pay down to 80% of the original price.

Tampa Bay home values have been volatile since 2020. Buyers who purchased in late 2022 or 2023 and put 5% down on a conventional loan may have already hit 20% equity through appreciation alone, depending on their specific submarket.

• Conventional PMI rate: 0.25-2.0% annually, varies by FICO and LTV
• Typical rate (720 FICO, 5% down): 0.5-0.8% annually
• Automatic cancellation: when loan balance reaches 78% of original value
• Borrower-requested cancellation: at 80% LTV, requires good payment history
• Appreciation-based removal: order new appraisal once current LTV is under 80%

The Crossover Calculation

If you put 5% down with a 680 FICO score, conventional PMI might run $120/month. FHA MIP runs about $160/month on the same loan. FHA is cheaper monthly — but conventional PMI goes away in roughly 7-9 years through normal paydown, or faster through appreciation. FHA MIP stays for 30 years. The total cost of FHA over the loan life is almost always higher than conventional for buyers who stay in the home.

The counter-argument: FHA got you into the house with a lower down payment and a rate you could qualify for. If the alternative was renting another 3 years to save 20% while Tampa Bay home prices kept rising, the extra lifetime MIP cost might be the cheaper path. This is not a theoretical concern in this market.

2026 FHA Loan Limits in Central Florida and Tampa Bay

FHA loan limits are set annually by HUD based on area median home prices. Most of Florida sits at the 2026 national floor.

• Hillsborough County (Tampa): $541,287 for a single-family home
• Pinellas County (St. Petersburg / Clearwater): $541,287
• Orange County (Orlando): $541,287
• Osceola County (Kissimmee): $541,287
• Seminole County: $541,287
• Lake County: $541,287
• Pasco County: $541,287
• Manatee County: $541,287
• Sarasota County: $541,287
• Monroe County (Florida Keys): $990,150 — highest in Florida
• Broward, Miami-Dade, Palm Beach: $667,000

The $541,287 limit covers most homes in the Tampa Bay and Central Florida markets. Median home prices in Hillsborough are around $400,000 and in Orange County around $453,000 as of early 2026 — well within the FHA ceiling for buyers shopping in the median range. Where FHA limits start to matter is at the higher end of the market: a buyer looking at a $600,000 home in South Tampa or St. Pete's waterfront districts would need a conventional loan because FHA cannot cover that price point.

Conventional conforming loan limits are higher. The 2026 standard conforming limit is $806,500, with high-balance limits up to $1,209,750 in designated areas. That is a significantly wider coverage range for buyers shopping above the mid-$500K level.

Condo Eligibility: Where FHA and Conventional Diverge Most in Florida

If you are buying a condo — and in St. Pete, downtown Tampa, or most of Orlando, you very likely are — condo eligibility is the biggest practical difference between FHA and conventional in 2026. Florida's condo financing environment is tighter than it has been in years, and the two loan types have different approval requirements.

FHA Condo Loans: Project Approval Required

FHA can only finance a condo if the entire building or development has received FHA project approval, or if the specific unit qualifies for Single-Unit Approval (the 'spot approval' pathway). Project approval requires at least 50% of units to be owner-occupied, no more than 15% of units delinquent on HOA assessments, and no more than 10% of units in the building to have active FHA-insured mortgages.

Single-Unit Approval (spot approval) allows an FHA loan on an unapproved building, but the same owner-occupancy and delinquency tests still apply — they are just run at the time of your purchase rather than in advance. Not every lender offers spot approval, and it adds time to the closing process (typically 2-3 weeks for the questionnaire and underwriting review).

Check HUD's condo lookup tool (entp.hud.gov) before making an offer on a condo if you are planning to use FHA. In Tampa Bay, a meaningful number of older condo buildings — particularly in St. Petersburg and Clearwater Beach — are not on the approved list and do not qualify for spot approval because of owner-occupancy ratios or HOA delinquency issues.

Conventional Condo Loans: Warrantability in 2026

Conventional condo loans (Fannie Mae / Freddie Mac) use a warrantability framework rather than project approval. A building is warrantable when it passes five tests: sufficient owner-occupancy, no single entity owning more than 10% of units, limited commercial space, healthy HOA reserves, and no active significant litigation.

Important 2026 update: Fannie Mae's Lender Letter LL-2026-03 (issued March 2026) retired the Limited Review process for established condo projects and raised the minimum reserve funding requirement from 10% to 15% of annual budgeted assessments (effective January 2027). This means lenders now run full project reviews on every conventional condo loan. Buildings with underfunded reserves, active special assessments, or insurance coverage gaps can lose conventional financing eligibility — which has real-world consequences in the Tampa Bay and Orlando condo markets, where post-Surfside SB 4D reserve studies pushed a lot of assessments into 2025-2026.

Neither FHA nor conventional is automatically easier for condos in Florida right now. Both loan types can hit a wall if the building has reserve or HOA issues. The practical advice: if you are buying a condo in a building built before 2000 anywhere in the Tampa Bay coastal zone, have your agent check HOA financials and get a condo questionnaire before you get emotionally attached to the unit.

Frequently Asked Questions

Should I get an FHA or conventional loan in Florida?

FHA if your FICO score is below 680 or your down payment is under 5%. Conventional if your FICO is 700+ and you want to avoid permanent mortgage insurance — conventional PMI is cancellable once you hit 20% equity, FHA MIP is not (unless you put 10% down). For buyers right at the credit line (620-680), run the full monthly payment comparison both ways before deciding.

What is the FHA loan limit in Tampa or Orlando for 2026?

Both Hillsborough County (Tampa) and Orange County (Orlando) are at the 2026 FHA floor: $541,287 for a single-family home. Pinellas County (St. Pete / Clearwater) is also $541,287. These limits cover the median price range in all three markets but cap out before the upper price tier.

Can I remove FHA mortgage insurance?

Only in one of two ways: put 10% or more down at origination (MIP drops off after 11 years), or refinance to a conventional loan once you have enough equity. There is no way to request FHA MIP removal based on appreciation or paydown if your original down payment was under 10%.

How does FHA work for condos in Florida?

The condo building must be FHA-approved, or you must qualify for Single-Unit Approval (spot approval). Check entp.hud.gov before making an offer. Many Tampa Bay and Orlando condo buildings are not on the approved list — especially older buildings where owner-occupancy ratios have shifted toward investor-heavy.

Does conventional or FHA require a higher credit score?

Conventional requires 620 minimum (most lenders), with meaningful pricing improvement at each tier above that. FHA accepts 580 for the 3.5% down path. FHA is the better path below 680 FICO — both for qualification and for cost, because conventional pricing gets expensive in the 620-680 range.

Which loan type is better for first-time buyers in Florida?

FHA is the most common choice for first-time buyers with credit scores below 700 and savings below 10% of purchase price. It has looser DTI limits, more flexible credit requirements, and a set MIP structure rather than the variable PMI pricing of conventional. That said, if you qualify for conventional HomeReady or Home Possible with 3% down and a 640+ score, run the comparison — conventional PMI cancels, FHA MIP does not.

What happens to FHA and conventional rates in Florida specifically?

Both loan types are subject to the same underlying interest rate environment — FHA and conventional rates track together and move with Fed policy and MBS market conditions. Florida-specific factors like property insurance costs affect your monthly payment (insurance is part of PITI) but do not directly change your loan rate. What does vary by buyer: FHA charges a flat MIP regardless of FICO, while conventional PMI pricing is FICO-stratified.

How to Decide: A Simple Framework

The right answer depends on your specific numbers, not a general rule. But here is how I think through it with buyers I work with in Tampa Bay and Central Florida:

1. Run your credit score. If it is below 580, FHA (with 10% down) may be your only conforming option. If it is 580-679, FHA is likely cheaper monthly and easier to qualify for. If it is 680-740, run the comparison both ways — the crossover varies by down payment. Above 740, conventional almost always wins.
2. Assess your down payment savings. Less than 5% saved beyond closing costs? FHA is the practical path. 5-10% saved? Compare both. 10% or more? Conventional starts to make more sense (and if FHA, you hit the 11-year MIP dropoff).
3. Check the property. Condo? Run the FHA approval check first. Non-warrantable building? That forces the decision. Single-family home? Either loan type can work.
4. Calculate total cost over your expected hold period. If you plan to stay 5 years, lifetime FHA MIP costs less in cash paid than it would over 30. If you plan to stay 15 years, conventional PMI cancellation saves you significantly. Model it out.
5. Ask your lender for side-by-side payment worksheets. A good Florida lender will show you the monthly payment, total MI cost, and breakeven year for both options before you commit.

If you are a first-time buyer in Tampa Bay or Central Florida and want a direct take on which path fits your situation, I am happy to connect you with lenders I trust in this market. Reach out through the contact page.

Related reading: see the First-Time Home Buyer Guide to Florida Real Estate at /blog/first-time-home-buyer-guide for the full purchase process overview, and Pre-Approval vs. Pre-Qualification at /blog/pre-approval-vs-pre-qualification for how to strengthen your position before you make an offer.