Both conventional and FHA loans are very popular options for Florida residents who want to finance a home purchase. But which option is the best for you? That’s not an easy question to answer, and it depends heavily on your personal situation. Let’s look at both types:

  • FHA mortgages are insured by the Federal Housing Authority (FHA), and can be issued by any FHA-approved lender. FHA loans are designed to help lower-income borrowers qualify for mortgages. Since they’re backed by the federal government, lenders are protected from people who default on their loans, and that means the lenders can offer more competitive interest rates to prospective borrowers.
  • Conventional mortgages are simply any mortgages that are not insured or guaranteed by the federal government. Because they’re not protected by the government, they tend to require borrowers to have better credit scores and higher down payments.

At a Glance

The chart below highlights some of the key differences between the conventional and FHA loans.

FHA Loans Conventional Loans
Lower down payment requirements (3.5% minimum) Higher down payment requirements (usually between 5-20%)
Approved gift funds can cover all closing costs and down payments Many more loan program lenders and loan options
Lower credit score requirements Higher credit score requirements
Lower mortgage rates Generally higher mortgage rates
Mortgage insurance is usually required and increases your costs Mortgage insurance may not be required
Less flexible (typically offers only 15- or 30-year fixed or adjustable-rate mortgage) More flexible (many more loan types and terms)
Only available on owner-occupied properties Can be used for second homes and investment properties
Not all properties (for example, some condominiums) are approved for FHA financing Can be used on all types of property
Usually no reserve requirement Reserves may be required to qualify

What’s the Right Answer for You?

Speaking very broadly, FHA loans are a good solution for people who can’t make a large down payment (or who need help from family members or other donors to make the down payment), and who have low credit scores. People with high credit scores and who are able to make a large down payment may benefit from conventional loans, because they can be very flexible and offer a wide range of potential options. Again, though, mortgage terms and conditions can vary widely, based on your individual situation, so you’ll need to sit down with an experienced mortgage expert who can help guide you to the loan that’s right for you.

Crunch the Numbers

If you’re thinking about purchasing a home in Florida, or even refinancing an existing loan, an experienced Florida mortgage professional can help you review your financial situation and choose the best mortgage option for you. Call 407-733-6425 to learn more about the differences between FHA and conventional loans and which one is the best fit for you.


Stephen Thaggard, NMLS 356309,  Sr Loan Officer, licensed in Florida

Embrace Home Loans, NMLS 2184,, 485 N Keller Road, Suite 550, Maitland, FL 32751