FHA vs. Conventional Loan in Florida (2026 Comparison)

Choosing between an FHA loan and a conventional loan is one of the first — and most consequential — decisions FL home buyers face. The right answer depends on your credit score, down payment, the property type, and how Florida's AS IS contract market affects your leverage as a buyer.

Side-by-Side Comparison: FHA vs. Conventional in Florida 2026

FHA Loan Limits in Florida by County (2026)

FHA loan limits are set by HUD annually based on area median home prices. In 2026, most Florida counties fall in the standard limit, with high-cost coastal counties receiving higher limits:

Note: FHA loan limits are set by HUD each year. Verify current limits at hud.gov or with your lender — limits above reflect 2026 published figures and may be subject to mid-year adjustment.

MIP vs. PMI: The Long-Term Cost Difference

Mortgage insurance is where FHA loans often lose the financial comparison in Florida over time.

FHA Mortgage Insurance Premium (MIP)

FHA charges two types of mortgage insurance:

• Upfront MIP (UFMIP): 1.75% of the loan amount, charged at closing. On a $400,000 loan, this is $7,000 — added to your loan balance (you don't pay it out of pocket, but it increases your loan).
• Annual MIP: Currently 0.55% per year for most 30-year loans with less than 10% down (as of 2026, following FHA's 2023 premium reduction). Divided by 12 and added to your monthly payment. On a $400,000 loan, this is approximately $183/month.

The critical FHA MIP rule: if you put less than 10% down, MIP lasts for the entire loan term (30 years). The only ways to eliminate it are to refinance into a conventional loan or sell the home. If you put 10% or more down, MIP drops after 11 years.

Conventional PMI (Private Mortgage Insurance)

Conventional PMI is cancelable — by law (Homeowners Protection Act), lenders must cancel PMI automatically when your loan balance reaches 78% of the original purchase price. You can also request cancellation at 80% LTV. PMI rates vary based on credit score, down payment, and property type, but generally range from 0.2%–2% of the loan amount annually. For a buyer with a 700 credit score and 5% down, PMI might be approximately 0.5–0.7% — similar to FHA's 0.55% but with the key advantage that it ends.

FHA Property Condition Requirements in Florida

FHA appraisals are not just value assessments — they are health and safety inspections. FHA appraisers are required to flag and require correction of specific conditions before the loan can close. In Florida's AS IS market, this creates friction:

• Peeling or chipping paint (exterior or interior, especially in pre-1978 homes — lead paint concern)
• Missing or damaged handrails on stairs and decks
• Roof with remaining life under 2 years (appraiser judgment)
• Exposed wiring or electrical hazards
• Inoperable HVAC during the appraisal visit
• Evidence of water intrusion or active leaks
• Broken windows or doors
• Missing appliances that are considered fixtures (range/oven in a residential property)

If the appraiser flags these items, the lender typically requires the seller to repair them before closing — a condition many Florida sellers on AS IS contracts will refuse. This can kill the deal or force the buyer to choose a different financing type.

FHA Condo Approval: A Thin List in Florida

If you are buying a condo with an FHA loan, the condo project (not just the unit) must be on HUD's approved condo list. As of 2026, the list of FHA-approved condo projects in Florida is significantly thinner than the total condo market — primarily because:

• Many FL condo associations have allowed their FHA approval to lapse
• Projects with more than 50% investor-owned units may not qualify
• Projects with active litigation against the association are often ineligible
• New construction projects (less than 12 months old with <90% sold) face additional restrictions

FHA does allow "Single Unit Approval" (SUA) for individual condo units in non-approved projects if certain criteria are met, but this adds appraisal complexity and lender processing time. Conventional loans through Fannie Mae's warrantable condo guidelines have a significantly larger eligible pool in Florida.

Seller Concessions: FHA vs. Conventional

Seller concessions — closing cost credits from the seller to the buyer — are capped differently between loan types:

• FHA: Maximum 6% of the purchase price regardless of down payment
• Conventional (less than 10% down): Maximum 3%
• Conventional (10–25% down): Maximum 6%
• Conventional (more than 25% down): Maximum 9%

FHA's 6% seller concession cap can be advantageous in markets where sellers are contributing to closing costs. In a buyer's market with motivated sellers, FHA buyers can potentially receive more in concessions than low-down-payment conventional buyers.

When to Choose FHA vs. Conventional in Florida

Choose FHA if:

• Your credit score is 580–619 (conventional typically requires 620+ minimum)
• You have limited cash reserves and need to keep your down payment as low as possible (3.5% vs. 5%)
• You have a higher debt-to-income ratio (FHA allows up to 57% with compensating factors vs. conventional's typical 45–50%)
• You had a past bankruptcy (FHA allows purchase 2 years after Chapter 7 discharge vs. 4 years for conventional)
• You plan to refinance within 5–7 years anyway (eliminating the MIP-for-life issue)

Choose Conventional if:

• Your credit score is 680+ (PMI rates are competitive; overall costs often lower than FHA)
• You can put 20% down (no PMI at all)
• You are buying a condo (much broader eligible project list)
• You are buying a property that needs work (conventional appraisal has fewer repair requirements)
• You want to be competitive in multiple-offer situations (FL sellers prefer conventional)
• The purchase price is above the FHA loan limit for your county

Frequently Asked Questions