Conventional Loans
in Florida
Conventional is rarely the easiest loan to qualify for. It is often the better long-term loan when the file is strong enough to earn it. When credit, reserves, and income are solid, conventional lowers lifetime cost, eliminates permanent mortgage insurance, and gives borrowers cleaner flexibility later. This page helps you answer the right questions before you apply.
Conventional is strongest when the file earns it — not when the ad sounds cleaner.
- Credit score too weak for the price point — LLPA pricing hits hard
- Too little cash left after closing — thin reserves raise underwriting risk
- Ignoring PMI structure and assuming the rate headline tells the full story
- Forcing conventional because it sounds more prestigious than FHA
Education and planning only. Not a commitment to lend or an approval. Final terms depend on full documentation, automated underwriting findings, appraisal, and investor guidelines.
What Is a Conventional Loan
A conventional loan is a mortgage that is not backed by a government agency. It follows guidelines set by Fannie Mae and Freddie Mac — the two government-sponsored enterprises that purchase most conventional mortgages from lenders and keep the secondary market functioning. Because conventional loans carry no government insurance, lenders rely on the borrower's own credit profile, income documentation, and reserves to manage risk.
In Florida, conventional loans are available for primary residences, second homes, and investment properties across all 67 counties. Loan amounts up to the conforming limit — $832,750 for most Florida counties in 2026, and $990,150 in Monroe County — are eligible for purchase by Fannie Mae and Freddie Mac. Amounts above the conforming limit require jumbo financing under different guidelines.
The key distinction from FHA: conventional loans use private mortgage insurance (PMI) instead of FHA's mortgage insurance premium (MIP), and PMI can be canceled once the loan reaches 80% of the home's value. FHA MIP in most cases remains for the life of the loan. That difference is often where conventional wins long-term — for the right borrower profile.
Optimal Mortgage is licensed to originate conventional loans statewide in Florida. Whether you are buying in Miami-Dade, Broward, Palm Beach, Orlando, Tampa, Jacksonville, or anywhere across the state, the same team with the same standard of care handles your file — regardless of which loan officer you work with.
Who Conventional Loans Are Best For
Conventional is usually the stronger long-term tool when your credit, income, and reserves support it. It is not automatically the best loan simply because it is not a government program. The loan serves the right borrower well and punishes the wrong borrower through LLPA pricing adjustments that add up fast.
- Credit is 700+ and pricing does not get penalized
- You have cash to close and meaningful reserves after closing
- You want mortgage insurance you can eliminate later
- You are buying a second home or investment property
- You plan to hold long enough for the PMI removal to pay off
- The property type fits conventional without extra pricing layers
- Credit is below 680 and LLPA adjustments become significant
- Cash is tight and FHA gives a cleaner entry path
- DTI is stretched and automated underwriting is less flexible
- The property has appraisal risk with no cushion in the deal
- You are chasing conventional for reasons of perception, not math
What usually breaks the conventional file
- Credit score not strong enough for the structure — pricing adjustments stack silently
- Insufficient liquid reserves after closing — especially on investment property or second home
- Appraisal gap with no seller credit or additional cash available to bridge it
- Property type — condos, 2-4 unit, and certain property conditions add complexity and pricing
- Risk layering — multiple moderate weaknesses at once push conventional from ideal to wrong fit
Down Payment and Cash to Close
The down payment comparison is usually the first place buyers look and the last place they should anchor their decision. Conventional loans allow as little as 3% down on owner-occupied primary residences in certain programs. But the more important question is total cash to close and what is left in reserves after the transaction closes.
Down payment options in Florida
- 3% down — available for first-time buyers in some conventional programs (Fannie Mae HomeReady, Freddie Mac Home Possible)
- 5% down — standard minimum for most conventional primary residence purchases
- 10% down — often improves PMI rate and strengthens the file profile
- 20% down — eliminates PMI entirely; strongest pricing tier in most scenarios
- Second homes — typically require 10% minimum down
- Investment properties — typically require 15-25% depending on unit count and loan structure
Fannie Mae & Freddie Mac Affordable Programs
Conventional financing includes several income-based programs designed to expand homeownership access. These products use the same Fannie Mae and Freddie Mac infrastructure as standard conventional loans but with reduced down payment requirements and more flexible qualifying criteria.
Fannie Mae
HomeReady®
3% down for borrowers at or below 80% AMI. Accepts non-borrower household income as a compensating factor. Reduced PMI rates. Homebuyer education required.
Income limit: 80% AMI · Min credit: 620
Freddie Mac
Home Possible®
3% down for borrowers at or below 80% AMI. Allows co-borrowers who won't occupy the property. Sweat equity accepted. Homebuyer education required.
Income limit: 80% AMI · Min credit: 660
Freddie Mac
HomeOne®
3% down with no income limits. At least one borrower must be a first-time homebuyer. No geographic restrictions. Homebuyer education required for first-time buyers.
No income limit · Min credit: 620 · First-time buyer required
Fannie Mae
HomeStyle® Renovation
Finance the purchase and renovation of a property in one conventional loan. Eligible for primary, second home, and investment. No minimum renovation amount. Contractor must be approved.
Up to 97% LTV on primary · All property types
Down Payment Assistance (DPA) with Conventional Loans
Down payment assistance programs can be layered on top of conventional financing — including HomeReady and Home Possible — to further reduce or eliminate the cash required at closing. In Florida, the most widely used DPA programs include:
- Florida Housing Finance Corporation (FHFC) — HFA Preferred and HFA Advantage products pair directly with HomeReady and Home Possible. Offers below-market rates and 3–5% DPA as a forgivable second mortgage.
- Hometown Heroes — For Florida frontline workers (teachers, nurses, first responders, military). Up to $35,000 in DPA. Income limits apply at 150% AMI. Pairs with conventional, FHA, VA, and USDA first mortgages.
- County-Level DPA Programs — Miami-Dade, Broward, Palm Beach, Orange, and Hillsborough counties each offer their own DPA programs with varying amounts, income limits, and property requirements.
- Community Seconds — Fannie Mae-approved subordinate financing from government or nonprofit sources that can be combined with HomeReady to cover down payment and closing costs.
DPA programs have income limits, property price caps, and first-time buyer requirements that vary by program and county. Contact your loan officer to identify which programs apply to your specific file.
Cash to close is more than the down payment
Florida closing costs — including lender fees, title insurance, documentary stamp taxes, prepaid interest, and escrow setup — add meaningfully to the down payment requirement. A borrower putting 5% down on a $500,000 purchase should plan for total cash to close of $40,000-$55,000 depending on the transaction structure, not just $25,000.
Reserve requirement: conventional underwriting increasingly weighs post-closing liquidity. Borrowers who drain all available funds to close are a higher underwriting risk, especially on investment properties and second homes where two to twelve months of reserves may be required.
The strongest conventional structure is not always the one with the smallest down payment. It is the one that gives the borrower the best balance of monthly payment, long-term cost, and post-closing financial position. Our team will model all three scenarios before you make that decision.
Conventional PMI Explained
Private mortgage insurance (PMI) is required on conventional loans when the down payment is less than 20%. Unlike FHA mortgage insurance, which in most cases stays for the life of the loan, conventional PMI can be removed — and that removal is one of the primary reasons conventional wins long-term for borrowers who qualify.
How PMI is priced
Conventional PMI is risk-based. The rate reflects your credit score, loan-to-value ratio, property type, occupancy, and loan structure. A borrower with a 760 score putting 10% down will pay materially less in PMI than a borrower with a 680 score at the same down payment. Unlike FHA's flat MIP structure, PMI rewards stronger credit profiles.
When PMI can be removed
- Automatic termination — federal law (Homeowners Protection Act) requires automatic PMI cancellation when the loan reaches 78% LTV based on the original amortization schedule
- Borrower-requested removal — once the loan reaches 80% LTV (through payments or appreciation), the borrower can request cancellation with a current appraisal
- Refinance — if the property has appreciated significantly, a refinance to a new conventional loan with 80%+ equity eliminates PMI at the new loan origination
PMI vs FHA MIP — the long-term difference
FHA loans originated with less than 10% down carry MIP for the life of the loan. On a 30-year FHA loan, the borrower pays MIP every month for 360 payments regardless of how much equity they build. Conventional PMI, by contrast, can often be removed within 5-7 years as the loan pays down and Florida property values increase. Over a 30-year hold, that difference in insurance cost can exceed $30,000-$50,000 on a mid-range Florida purchase.
This is the math that makes conventional the better long-term structure for borrowers with strong enough credit to earn competitive pricing. It is also the reason that comparing a conventional rate against an FHA rate without accounting for insurance behavior gives you an incomplete picture.
Conventional Loan Requirements
Conventional underwriting rewards strong files and is less forgiving of thin ones than FHA. Understanding where the file needs to be before you apply is the most valuable thing our team can do for you before you write an offer.
Credit
620 is commonly cited as the minimum credit score for conventional approval, but credit score is only part of the story. Depth of credit history, recent payment behavior, derogatory trends, and public records all factor into automated underwriting findings. A borrower with a 680 score and a clean 10-year history often gets a cleaner approval than a borrower with a 720 score and recent lates. Pricing through loan-level price adjustments (LLPAs) begins improving materially at 700 and again at 720, 740, and 760.
Income documentation
Conventional income documentation typically requires two years of W-2s and recent pay stubs for salaried borrowers, or two years of full federal tax returns (personal and business) for self-employed borrowers. Fannie Mae and Freddie Mac have specific rules on how income is calculated, averaged, and trended. Declining income, self-employment income with heavy write-offs, commission income, and rental income each carry their own documentation and calculation requirements.
Debt-to-income ratio
Maximum DTI for conventional loans is generally 45% with standard automated underwriting findings, and can reach 50% with strong compensating factors (reserves, credit, equity). DTI tolerance and reserve strength interact — thin reserves make higher DTI ratios feel riskier to underwriting systems and human underwriters alike.
Property type and condition
- Single-family detached — most straightforward approval path
- Condominiums — require condo project approval (warrantable vs non-warrantable) which affects pricing and availability
- 2-4 unit properties — higher down payment requirements, rental income offset rules apply
- Manufactured homes — eligible under some conventional guidelines with specific requirements
- Property condition — must meet Fannie Mae and Freddie Mac property standards; significant deferred maintenance can require repairs before closing
Loan-level price adjustments (LLPAs)
LLPAs are pricing adjustments applied by Fannie Mae and Freddie Mac based on risk factors in the loan file. Credit score, LTV, occupancy type, property type, and loan purpose each trigger their own adjustment. These adjustments stack, and on a mid-credit, low-down-payment investment property purchase, they can add 1-2 points to the effective cost of the loan. Understanding your LLPA exposure before you lock is something our team builds into every conventional scenario analysis.
Conventional vs FHA — Florida Borrowers
This is not a rate comparison. It is an approval reliability, mortgage insurance behavior, cash to close, and long-term cost comparison. The rate headline rarely tells the full story.
| Compare Point | Conventional | FHA |
|---|---|---|
| Minimum down payment | 3% (select programs) / 5% standard | 3.5% with 580+ credit |
| Minimum credit score | 620 floor — pricing improves above 700 | 580 for 3.5% down / 500 for 10% down |
| Mortgage insurance | PMI — removable at 80% LTV | MIP — permanent in most cases for 30-year loans |
| Insurance cost | Risk-based — rewards stronger credit | Flat rate — same regardless of credit quality |
| Loan limit (most FL counties) | $832,750 — $990,150 Monroe County | $541,287 standard — up to $990,150 in high-cost counties |
| Investment property | Available — 15-25% down required | Not available — owner-occupancy required |
| Second home | Available — 10% down minimum | Not available — primary residence only |
| DTI tolerance | Up to 45-50% with strong file | Up to 57% with strong compensating factors |
| Appraisal standards | Standard — condition issues can complicate | Stricter — property must meet FHA MPR standards |
| Upfront insurance cost | None | 1.75% UFMIP added to loan balance |
| Best long-term fit | Borrowers with 700+ credit and reserves | Borrowers prioritizing access and approval reliability |
The right answer is always the one that is right for your specific file — not the one that sounds better. Our team models both scenarios on your actual numbers before you choose a direction. That analysis is free and takes one conversation.
Conventional Loans Across Florida — What Changes by Market
Florida is not a single mortgage market. Loan limits, property types, insurance costs, and buyer profiles vary significantly between South Florida, Central Florida, the Gulf Coast, Northeast Florida, and the Panhandle. Optimal Mortgage is licensed statewide and works across all 67 counties — which means the advice we give reflects your actual market, not a national average.
South Florida — Miami-Dade, Broward, Palm Beach
South Florida borrowers benefit from the standard conforming limit of $832,750 in 2026 for conventional loans. FHA high-cost limits of $667,000 in Miami-Dade, Broward, and Palm Beach mean that higher-priced purchases often default to conventional or jumbo. Condo concentration in South Florida also means condo project approval is a frequent underwriting consideration — non-warrantable condo financing requires non-QM or portfolio products.
Central Florida — Orange, Osceola, Seminole, Hillsborough
The Orlando and Tampa markets use standard conforming limits ($832,750) and have a broad range of property types. First-time buyer programs including Fannie Mae HomeReady and Freddie Mac Home Possible are frequently structured here. The short-term rental market in Osceola County (near Disney) creates occupancy classification issues — investment property down payment and reserve requirements apply to properties intended for vacation rental.
Northeast Florida — Duval, St. Johns, Clay, Nassau
Jacksonville and surrounding counties have standard conforming limits and typically see more conventional approval than FHA, reflecting the stronger credit profiles in many St. Johns County communities. The military presence near Jacksonville Naval Air Station means VA eligibility is common and should always be evaluated before defaulting to conventional.
Monroe County — Florida Keys
Monroe County has the highest loan limits in Florida — $990,150 for conventional in 2026. The Keys present specific property challenges including flood zone requirements, insurance costs that significantly impact DTI calculations, and limited inventory. Conventional financing in Monroe requires careful attention to appraisal, insurance, and cash to close.
Florida insurance costs and DTI impact
Florida homeowner's insurance has risen substantially since 2021. In coastal counties especially, annual premiums that once ran $2,000-$3,000 now frequently reach $6,000-$12,000 or more. Because insurance is included in the DTI calculation (monthly escrow payment), elevated insurance costs directly reduce the loan amount a borrower qualifies for at any given income level. Our team accounts for current actual insurance estimates, not national averages, when modeling Florida conventional loans.
At-a-glance: Conforming programs compared
The fast scan before you go deep. The highlighted column is the program you are viewing.
| Compare Point | Conventional | FHA | VA | USDA | Jumbo |
|---|---|---|---|---|---|
| Best for | Stronger credit long-term flexibility | Access on tighter credit or cash | Eligible veterans preserving cash | Rural buyers income limits apply | Higher loan amounts stronger files |
| Min down | 3-5%+ depending on program | 3.5% with 580+ credit | 0% with full entitlement | 0% rural eligible areas | Typically 10-20%+ |
| Mortgage insurance | PMI removable at 80% LTV | MIP permanent on most 30yr loans | No PMI funding fee may apply | Annual guarantee fee 0.35% | Varies by structure |
| Income docs | Full W-2 / tax returns | Full income docs more DTI room | Full docs plus residual income test | Full docs plus income limits | Full docs plus reserves emphasis |
| Credit floor | 620 min best pricing 740+ | 580 for 3.5% down 500 for 10% | No VA minimum lender overlays | 640+ typical | 720+ typical pricing sensitive |
| Property types | Broadest condo and property fit | Condo must be FHA-approved | Property must be VA-eligible | Single-family rural only | High-balance luxury select condos |
| DTI tolerance | Up to 45-50% with strong file | Up to 57% with compensating factors | Flexible with residual income | Up to 41-46% | Stricter 43-45% typical |
| Occupancy | Primary 2nd home investment | Primary residence only | Primary residence only | Primary residence only | Primary 2nd home investment |
Illustrative only. Eligibility, pricing, and program rules vary by lender, file, and property. This is not a Loan Estimate or a commitment to lend.
If this is your first home — or feels like it
A lot of Florida buyers fit a first-time program even when they didn't expect to. Worth a look before assuming you have to bring the full down payment yourself.
Many programs define first-time as not having owned in the prior three years. Returning buyers can sometimes qualify even if they have owned before.
State and local programs may offer down-payment or closing-cost help for eligible Florida buyers. Eligibility, funding, and program rules change — check current availability before assuming it applies.
Outside of formal assistance programs, lender credits and negotiated seller credits can absorb closing costs. The right combination depends on rate, scenario, and contract.
Assistance programs change. Funding runs out, eligibility shifts, and what worked last quarter may not work this quarter. If assistance matters to your scenario, send us the file and we will check what is actually available right now for your situation.
What actually drives your rate and total cost
Loan type matters, but inside any single program — including Conventional — four levers move the rate and cost the most.
Mid score, depth of credit history, and any recent derogatory events all move pricing — sometimes more than the loan program itself. Loan-level price adjustments on conventional stack silently and materially.
Down payment relative to value. Lower LTV typically improves pricing and may reduce or eliminate mortgage insurance, depending on the program. The threshold where PMI drops off is a real economic event worth planning around.
Buying down the rate with points or taking a higher rate for a lender credit toward closing costs. Same loan — different shape of total cost. The right choice depends on how long you plan to hold the property.
Primary, second home, or investment. Single-family vs condo vs multi-unit. Each one prices differently inside the same loan program. A condo surcharge or investment property LLPA can move the effective rate meaningfully.
Want the rate-and-cost mechanics in plain terms? Run the calculators to model your specific scenario, or contact our team for a full pricing analysis on your file.
Conventional loan questions Florida borrowers ask most
Find Out if Conventional Is the Right Structure for Your File
Our team will model conventional against FHA on your actual numbers — credit, income, cash, and property — before you choose a direction. That analysis is free, takes one conversation, and will tell you exactly where each program lands on your file. Every client who works with Optimal Mortgage gets the same honest assessment, the same standard of care, and the same commitment to their long-term best interest.
Optimal Mortgage LLC is a Licensed Mortgage Broker — not a lender. We arrange loans through a network of wholesale lenders and do not make loan commitments or fund loans directly. Every client who contacts our team receives the same standard of care, the same honest analysis, and the same commitment to their best interest — whether working directly with our principal or any member of our team. Our goal is not to place you in the loan that earns us the most. It is to place you in the loan that is right for your file, your timeline, and your financial position.
Optimal Mortgage LLC · NMLS #2503896 · FL MBR6553 · Licensed Mortgage Broker · Equal Housing Opportunity · (305) 524-4400 · INQ@OptMtg.com · 7700 N Kendall Dr, Suite 402, Miami, FL 33156