FHA vs Conventional
FHA may be better for buyers with lower credit scores or higher DTI, while conventional may win for buyers with stronger credit who want more property flexibility and the ability to remove PMI later.
Loan Types & Strategies
Conventional (Conforming) Loans
Conventional loans are the “workhorse” of home financing. They follow guidelines from Fannie Mae and Freddie Mac and work well for many Central Florida buyers with decent credit and a stable income.
What is a Conventional Loan?
A conventional loan is a mortgage that:
- Meets the standard “conforming” guidelines for credit, income and documentation
- Stays at or below the county’s conforming loan limit
- Is not insured by FHA, VA or USDA
Most loans you hear about on the news are conventional loans. They offer flexible terms, fixed or adjustable rates, and can be used for primary residences, second homes and many investment properties.
Typical Conventional Loan Requirements
Credit & Scores
- Minimum scores usually start around 620+
- Better pricing with 680–740+ scores
- Fewer recent late payments or collections is best
Down Payment
- As low as 3–5% down for many owner-occupied purchases
- Second homes often require 10%+ down
- Investments typically 15–25% down depending on the scenario
Debt-to-Income (DTI)
- DTI caps often around 45%, sometimes higher with strong files
- We look at all monthly debts on the credit report plus the new housing payment
- Use the Existing DTI Checker on this site as a starting point
Private Mortgage Insurance (PMI)
With less than 20% down, most conventional loans require private mortgage insurance (PMI). This protects the lender, not the buyer, but it allows you to purchase a home with a smaller down payment.
How PMI Works
- Added as a monthly cost, built into your payment
- Amount depends on credit score, down payment and loan type
- We shop different PMI options when available
How to Get Rid of PMI
- Automatically falls off when you reach certain equity levels
- You may request removal once your loan balance is low enough vs value
- Refinancing into a new loan with 20%+ equity may also remove PMI
Strategy Tip
Sometimes it is better to buy sooner with PMI than to wait years to save 20% down while prices and rents climb. We’ll run the numbers both ways.
Pros & Cons of Conventional Loans
Advantages
Flexible and widely accepted. Works for many property types and price ranges.
- Strong choice for buyers with good credit and stable income
- Multiple down payment options, including low-down programs
- PMI can eventually be removed
- Great for second homes and many investment properties
Potential Drawbacks
Less forgiving of weak credit than FHA, and may cap DTI a bit lower than FHA.
- Higher rates or PMI for lower credit scores
- Can require larger down payments for multi-units or investments
- May not work well if you are just rebuilding credit
When It May Not Be Ideal
- Recently damaged credit or short credit history
- Higher debt ratios that push beyond conventional limits
- Situations where VA, FHA or USDA offer a clear advantage
How Conventional Compares to Other Programs
VA vs Conventional
If you are VA-eligible, we will always compare VA side-by-side with conventional. VA often wins on overall cost, especially with no PMI and flexible guidelines.
USDA vs Conventional
USDA can offer zero-down in eligible areas but has income and location limits. Conventional may be better if you prefer a different area or price range.
Jumbo vs Conventional
If your desired loan amount is above the conforming limit, we look at jumbo options or creative structures that combine a conforming first mortgage with a second.
Is a Conventional Loan Right for You?
The fastest way to know is to pair your real numbers with these guidelines. We’ll run a quick comparison of conventional vs any other programs you might qualify for.
- Review income, credit, debts and price range
- Estimate payment and cash to close under different scenarios
- Create a realistic plan and timeline to get you in position