A conventional loan is a mortgage that is not backed by a government agency like FHA or VA. It is the most common loan in the country, and there is a reason for that. You can put down as little as 3 percent, your mortgage insurance goes away once you build enough equity, and strong credit gets you the best terms available. If your credit and income are solid, conventional usually wins over FHA the longer you stay in the house.
Conventional just means the loan follows Fannie Mae or Freddie Mac guidelines instead of being insured by a government agency. That one distinction is what drives everything else about the loan, from your down payment options to how long you carry mortgage insurance.
A first-time buyer can get in with as little as 3 percent down on a standard conventional program. Repeat buyers usually see a 5 percent minimum. Put down 20 percent and you skip mortgage insurance entirely and open up every lender in my network without exception. There is no single right number here. It is a tradeoff between cash in your pocket today and cost every month until your equity catches up.
PMI protects the lender, not you, if you were to default. It is not tied to your home's condition or your health, it is purely a function of your down payment. Depending on your down payment and credit, PMI gets added to your monthly payment. The good news is unlike FHA mortgage insurance, PMI on a conventional loan is not permanent.
By federal law, your servicer has to cancel PMI automatically once your loan balance hits 78 percent of your home's original value, based on your amortization schedule, as long as you are current. You do not have to ask. You can also request cancellation yourself once you reach 80 percent, and in some cases sooner if your home's value has climbed and a new appraisal supports it. I flag this milestone for my clients so nobody keeps paying for insurance they no longer need.
Most conventional programs set a floor around 620. Below that, doors start closing and FHA usually becomes the more realistic path. From 620 up through the mid-700s and beyond, you move through tiers that affect your mortgage insurance cost and which lenders will even look at your file. This is exactly why I ask about your credit before we talk about anything else.
For 2026, the baseline conforming loan limit for a single-family home is $832,750, and that covers nearly every Florida county, including Sarasota, Manatee, Charlotte, Lee, and Hillsborough. Monroe County, the Florida Keys, is the one county in the state that qualifies as high-cost, with a limit of $990,150. Need to borrow above your county's limit? That moves you into jumbo loan territory, which runs on its own set of rules.
If your credit is 620 or better and your income documents cleanly, conventional almost always wins over the life of the loan, because your mortgage insurance has an end date and FHA's often does not below 10 percent down. FHA still makes sense for lower credit scores, higher debt ratios, or buyers who need the most flexible approval path. I run both numbers side by side before you decide, never just one.
“FHA mortgage insurance can follow you for the life of the loan. Conventional PMI has an exit date. That difference alone is worth running the numbers before you pick a program.”Tony Fitzgerald · The Mortgage Jedi
These are two nearly identical affordable-lending programs built for buyers whose income falls at or below the area median for where they are buying. One comes from Fannie Mae, the other from Freddie Mac. Neither requires you to be a first-time buyer, but both cap your household income.
3 percent down, income generally capped at 80 percent of the area median income for your address. Reduced mortgage insurance coverage requirements compared to standard conventional loans, and it allows non-occupant co-borrowers and boarder income in some cases to help you qualify.
Also 3 percent down with the same 80 percent area median income cap. Freddie's version underneath, but the buyer experience is almost identical to HomeReady. Which one you end up in usually comes down to which investor a specific lender delivers your loan to, not something you need to choose yourself.
Not sure where you fall on income limits? See how first-time buyer programs stack up →
Neither program is universally better. Here is how they actually compare, so you can see which one fits your file.
| Category | Conventional | FHA |
|---|---|---|
| Down payment | 3 percent minimum for qualifying first-time or HomeReady/Home Possible buyers, typically 5 percent for repeat buyers. | 3.5 percent minimum with a credit score of 580 or higher. |
| Mortgage insurance | PMI, which cancels automatically at 78 percent of original value and can be requested at 80 percent. | Upfront and annual MIP. With less than 10 percent down, MIP typically lasts for the life of the loan. |
| Credit score | 620 is the common floor for most programs, with better pricing tiers as your score climbs. | 580 for 3.5 percent down, sometimes as low as 500 with 10 percent down. |
| 2026 FL loan limit | $832,750 baseline for most counties, up to $990,150 in Monroe County. | $541,287 baseline for most counties, higher in Miami-Dade, Broward, Palm Beach, and Monroe County. |
| Property use | Primary homes, second homes, and investment properties, with different down payment tiers for each. | Primary residence only, with narrow exceptions. |
| Best fit | Buyers with 620+ credit who want mortgage insurance to end and want the flexibility to buy something other than a primary home. | Buyers with lower credit scores or higher debt ratios who need the most forgiving approval path. |
Want the deeper dive on FHA itself? See how FHA loans work →
Conventional is the default for a reason, but it is not automatically the right call for every buyer.
These questions tell me fast whether conventional is your best lane, or whether we should be looking somewhere else entirely.
The questions I get asked most, answered first.
A conventional loan follows Fannie Mae or Freddie Mac guidelines and is not backed by a government agency. An FHA loan is insured by the Federal Housing Administration and allows lower credit scores. Conventional usually wins on cost over time because its mortgage insurance can go away, where FHA mortgage insurance often lasts the life of the loan if you put down less than 10 percent.
As little as 3 percent for a first-time buyer using a standard conventional program, or through HomeReady or Home Possible if your income qualifies. Move-up buyers and repeat buyers usually see a 5 percent minimum. Either way, anything under 20 percent means you will carry private mortgage insurance until you build enough equity.
Two ways. It cancels automatically once your loan balance hits 78 percent of your home's original value, based on your amortization schedule, as long as you are current on payments. You can also request cancellation yourself once you reach 80 percent, sometimes sooner if your home's value has gone up and a new appraisal backs it up. I will tell you exactly when you hit that number.
Most conventional programs want at least 620. You can qualify with a lower score in some cases, but your options narrow and FHA often makes more sense below 620. The strongest terms show up in the mid-700s and higher, which is where credit-tier pricing tends to level off.
Usually, yes, if your household income is at or below 80 percent of the area median income where you are buying, and you plan to live in the home. HomeReady is Fannie Mae's version, Home Possible is Freddie Mac's version, and they work almost identically. I check your specific address against the income limit before we go further, because that limit moves county by county.
For 2026, the baseline conforming loan limit for a single-family home is $832,750 across most Florida counties, including Sarasota, Manatee, Charlotte, Lee, and Hillsborough. Monroe County, the Florida Keys, is the one Florida county that qualifies as high-cost, with a limit of $990,150. Borrow above your county's limit and you move into jumbo territory with different rules.
Yes, and that is one of conventional's real advantages, since FHA and VA are generally limited to the home you live in. Second homes and investment properties come with higher down payment requirements, usually starting around 10 percent for a second home and 15 to 25 percent for an investment property, along with stricter credit standards.
A Sarasota-area note. Sarasota, Manatee, Charlotte, Lee, and Hillsborough counties all fall under the standard 2026 conforming limit of $832,750, which covers the overwhelming majority of homes sold locally, from Lakewood Ranch new construction to a resale in North Port. Where conventional financing gets more interesting here is on the condo side. Many Sarasota-area condo buildings, especially older ones on the barrier islands, have run into reserve, insurance, or milestone inspection issues that can affect whether a specific building qualifies for conventional financing at all, regardless of your own credit and income. I check the building alongside your file, not after you are already under contract.
So humans, search engines, and AI assistants all get it right.
Tell me your credit, your down payment, and what you are buying, and I will show you conventional and FHA side by side before you pick either one.
For education and illustration only. This page describes general lending guidelines, program features, and 2026 loan limits that change over time and are not a quote, rate, offer, or commitment to lend. Your actual terms, down payment requirement, mortgage insurance cost, and eligibility for HomeReady, Home Possible, or any other program depend on your complete application, your specific address, and credit approval. Tony Fitzgerald NMLS #1284924 · 1st Response Mortgage is a registered DBA of Barrett Financial Group, L.L.C., NMLS #181106 · FL License #MLD1880 · Equal Housing Lender · This is not a commitment to lend. All loans subject to credit approval.
Tony Fitzgerald · NMLS #1284924 · 1st Response Mortgage is a registered DBA of Barrett Financial Group, L.L.C. · NMLS #181106 · Florida License #MLD1880 · 2701 East Insight Way, Suite 150, Chandler, AZ 85286 · Licensed in Florida · Equal Housing Opportunity Lender