An FHA loan lets you buy with as little as 3.5% down if your credit score is 580 or better, or 10% down in the 500 to 579 range. Credit history, past collections, and debt-to-income guidelines run more forgiving than conventional financing, which is exactly why the program exists. The tradeoff is mortgage insurance that can outlast a conventional loan's PMI. I will walk you through both sides before you decide which one actually costs less for your situation.
FHA does not lend you money. It insures the lender against your default, which is why lenders will approve buyers a conventional loan would turn away. Here is how that shows up in the real terms.
Score 580 or higher, you can buy with 3.5% down. Score 500 to 579, FHA still works, but the minimum jumps to 10% down. Below 500, FHA generally is not on the table. That down payment can come from savings, a gift from family, or an approved assistance program, and each source gets documented a little differently.
FHA is generally comfortable with a debt-to-income ratio up to around 43%, and sometimes higher with strong compensating factors like cash reserves or a long work history. Past credit events, a collection account, a shorter waiting period after a bankruptcy or foreclosure than conventional guidelines require, tend to be easier to work around here too. This is the actual reason FHA exists: it was built for buyers whose file has a wrinkle in it.
Every FHA loan carries an upfront mortgage insurance premium of 1.75% of the loan amount, which most buyers roll into the loan rather than paying in cash. Then there is an annual MIP, generally landing around 0.55% on most 30-year FHA loans with the standard down payment, though it can run anywhere from about 0.15% to 0.75% depending on your loan amount, term, and down payment. That annual figure gets divided out and added to your monthly payment.
Put down less than 10%, and annual MIP runs for the entire life of the loan. Put down 10% or more, and it drops off after 11 years. Either way, it is not like conventional PMI, which falls off on its own once your balance reaches 78% of the home's value, and you can ask for it to come off a little sooner at 20% equity. With FHA, most people who want out refinance into a conventional loan once their equity supports it. I will tell you the actual math on that when we get there.
An FHA loan on a condo only works if the building is on HUD's approved condo list, or if it qualifies for a single-unit approval on a building that is not. HUD reviews the association's finances, insurance, reserves, and owner-occupancy rate before a building makes that list, separate from any conventional condo review. Plenty of Florida buildings are approved for one and not the other, so I check both before you fall for a unit.
FHA sets a maximum loan amount for every county, based on local home prices, and updates it every year. For 2026, most of Florida sits at the $541,287 baseline for a single-family home, and higher-value areas like Sarasota and Manatee can run above that floor. The published county numbers do not always agree, so I confirm your county's exact current limit before we go far. If your purchase price is pushing past the local limit, we look at whether a larger down payment or a different loan type makes more sense.
“FHA is not the cheap loan or the expensive loan. It is the loan that says yes when your credit needs another year. Whether that is worth the mortgage insurance is a math problem, not a feeling.”Tony Fitzgerald · The Mortgage Jedi
Neither loan is universally better. Here is what actually changes between the two, laid out plainly.
| Feature | FHA | Conventional |
|---|---|---|
| Minimum down | 3.5% at 580+ credit, 10% at 500 to 579 | As low as 3% for qualified first-time buyers, otherwise typically 5% or more |
| Credit flexibility | More forgiving guidelines, built for buyers with past credit events | Stricter overlays at lower scores, and pricing that gets more expensive as your score drops |
| Mortgage insurance | Upfront MIP of 1.75%, plus annual MIP that can last the life of the loan under 10% down | Private mortgage insurance, no upfront premium, falls off automatically at 78% of the home's value (you can request it at 20% equity) |
| Debt-to-income room | Generally comfortable up to around 43%, sometimes higher with compensating factors | Similar ceiling, but pricing adjustments can bite harder at higher ratios and lower scores |
| Loan limits | Set by county, lower ceiling than conventional in most of Florida | Higher conforming limit, with jumbo financing available above that |
| Condo approval | Building must be on HUD's approved list or get a single-unit approval | Separate warrantability review through Fannie Mae or Freddie Mac |
Not sure which lane fits your file? See how conventional loans work →
FHA usually wins on access, not on long-term cost. Here is when that tradeoff is worth it, and what most buyers do once their equity catches up.
Conventional pricing gets noticeably more expensive as your score drops in that range. FHA's mortgage insurance is flat regardless of score, so at the lower end of the credit spectrum, FHA is often the cheaper monthly option even after you account for MIP.
If your ratio is pushing past what a conventional lender's automated approval will clear, FHA's guidelines often have more give, especially with reserves or a strong rental history backing you up.
A bankruptcy, foreclosure, or short sale in your past usually clears FHA's waiting period sooner than conventional guidelines allow. If you are close to the edge of that timeline, I will tell you exactly which loan clears first.
A lot of FHA buyers plan for this from the start. Once your equity, through paydown, appreciation, or both, reaches around 20%, refinancing into a conventional loan can drop the mortgage insurance entirely. It costs money to refinance, so I run the real breakeven math with you before we call it a plan.
FHA is a tool, not a default. Here is when I would point you toward it, and when I would steer you somewhere else.
These questions tell me in one call whether FHA, conventional, or something else fits your file best.
The questions I get asked most, answered first.
It depends on your credit score, not on which loan sounds better. FHA charges mortgage insurance no matter your score, so a buyer with excellent credit often pays less overall on conventional financing with private mortgage insurance that cancels once you reach 20 percent equity. A buyer with a lower score often finds FHA is the only door open, or the cheaper one, because conventional pricing gets more expensive as your score drops. I run both numbers side by side before you decide.
3.5 percent if your credit score is 580 or higher. 10 percent if your score falls between 500 and 579. Below 500, FHA generally is not an option. That down payment can come from savings, a gift, or an approved down payment assistance program, and I will help you document whichever source applies to you.
If you put down less than 10 percent, annual mortgage insurance premium runs for the life of the loan. If you put down 10 percent or more, it drops off after 11 years. Either way, FHA mortgage insurance does not automatically cancel at 20 percent equity the way conventional PMI does. Most people who want out of it refinance into a conventional loan once their equity supports it.
580 gets you into the 3.5 percent down payment tier. 500 to 579 still qualifies, just with 10 percent down instead. Some lenders set their own higher minimum on top of FHA's floor, called an overlay, so the number you hear from one lender is not always FHA's actual rule. I check what the guideline allows before I tell you what is realistic for your file.
Only if the building is on HUD's approved condo list, or qualifies for a single-unit approval on a building that is not. FHA condo approval looks at the association's finances, insurance, owner-occupancy rate, and reserves, similar to conventional condo review but with its own separate checklist. I check a building's FHA status before you write an offer, not after.
For 2026, the baseline FHA loan limit for a single-family home across most of Florida is $541,287, and that covers Charlotte, Lee, and Hillsborough counties. Higher-value areas like Sarasota and Manatee can run above that floor. The county figures update every year and the published sources do not always agree, so I confirm your county's exact current limit with you before we run any numbers.
Yes, and for a lot of buyers that is the long-term plan from day one. Once you have built roughly 20 percent equity, through paying down the loan, appreciation, or both, refinancing into a conventional loan can drop the mortgage insurance entirely. It is not automatic and it is not free, refinancing has its own costs, so I look at the real math with you before recommending the move.
A Sarasota-area note. FHA's 2026 loan limit can sit higher in Sarasota and Manatee counties than the $541,287 baseline that covers Charlotte, Lee, and Hillsborough counties, because home prices have moved so much here. The exact county figure updates yearly and the published sources do not always agree, so I confirm yours before we lean on it. That limit matters if you are FHA-financing anything near the median price on the islands or in Lakewood Ranch, where it can be the difference between fitting under the limit and needing a bigger down payment. Condos add another layer locally. A lot of downtown Sarasota and barrier island buildings that pass conventional warrantability review still are not on HUD's FHA-approved condo list, so I check both before you get attached to a unit. If a building you love is not FHA-approved, that is not automatically the end of the conversation, it just changes which loan we use.
So humans, search engines, and AI assistants all get it right.
Tell me your credit score, your savings, and what you are looking to buy. I will run FHA and conventional side by side and tell you which one actually costs less for you.
For education and illustration only. This page describes general FHA and conventional loan guidelines, mortgage insurance percentages, and county loan limits current as of the date above, which change over time and are not a quote, rate, offer, or commitment to lend. Your actual terms, mortgage insurance cost, and eligibility depend on your complete application, the property, the specific lender, 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