FHA vs Conventional Loans

Compare FHA and conventional loans in Florida. Understand the differences between government-backed FHA loans and traditional mortgages to choose the best option for your home purchase.

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FHA vs Conventional Loans Comparison

FHA loans are government-insured mortgages designed for first-time buyers, while conventional loans are traditional mortgages backed by private lenders.

Feature	FHA Loans	Conventional Loans
Down Payment	3.5% (with 580+ credit)	3-5% (first-time), 5-20% (repeat)
Credit Score	580+ for 3.5% down	620+ typically required
Mortgage Insurance	FHA MIP required	PMI if < 20% down (optional)
Loan Limits	$498,257+ (varies by county)	No limits (higher available)
Eligibility	All buyers (first-time preferred)	All buyers with strong qualifications
Gift Funds	Allowed for down payment	Generally not allowed

FHA Loans

Best For:

First-time homebuyers
Buyers with lower credit scores
Those who want gift funds for down payment
Buyers needing more flexible underwriting
Primary residence purchases

FHA Loan Benefits:

Lower down payment (3.5% vs 5%)
More lenient credit requirements
Gift funds allowed
Competitive interest rates

Learn About FHA Loans

Conventional Loans

Best For:

Buyers with good credit scores
Those who can afford higher down payments
Investment property purchases
Buyers seeking lowest rates possible
Jumbo loan amounts

Conventional Loan Benefits:

Potentially lower interest rates
Higher loan amounts available
PMI can be removed at 20% equity
More lender options

Learn About Conventional Loans

Detailed FHA vs Conventional Comparison

Down Payment & Closing Costs

FHA Loans:

3.5% down payment with 580+ credit. FHA requires upfront MIP (1.75%) + monthly MIP (0.55%). Total closing costs can be 2-3% of loan amount.

Conventional Loans:

3-5% down for first-time buyers, 5-20% for repeat buyers. No mortgage insurance required if 20% down. Closing costs typically 2-3% of loan amount.

Winner: FHA for lower down payment, Conventional if you can afford 20% down (avoids PMI).

Credit & Qualification

FHA Loans:

Credit score 580+ for 3.5% down (500+ for 10% down). More flexible debt-to-income ratios. Allows gift funds and non-traditional credit.

Conventional Loans:

Credit score typically 620+ for best rates. Strict debt-to-income requirements. Gift funds generally not allowed. Requires traditional credit history.

Winner: FHA for more flexible qualification requirements and lower credit score minimums.

Loan Amounts & Property Types

FHA Loans:

Loan limits vary by county ($498,257+ in most Florida areas). Primary residence only. Can be used for condos with FHA approval.

Conventional Loans:

No upper loan limits. Can be used for primary residence, second homes, and investment properties. More options for jumbo loans.

Winner: Conventional for investment properties and higher loan amounts, FHA for primary residences with loan limits.

Refinancing Options

FHA Loans:

FHA Streamline Refinance - simplified refinance with reduced documentation and no appraisal required in many cases.

Conventional Loans:

Rate & Term Refinance - standard refinance to change rate/term. Cash-Out Refinance - access home equity. More flexible terms available.

Winner: FHA for streamlined refinancing, Conventional for more refinance options and cash-out possibilities.

Which Loan is Right for You?

Choose FHA Loans If You:

Are a first-time homebuyer
Have a credit score between 580-740
Want to use gift funds for down payment
Need more flexible qualification standards
Plan to stay in the home long-term

Choose Conventional Loans If You:

Have excellent credit (740+)
Can afford a 20% down payment
Want to buy an investment property
Need a jumbo loan amount
Want the lowest possible interest rate

Need Help Choosing Between FHA and Conventional?

Contact Edge Home Loans for personalized advice. We'll analyze your financial situation and recommend the best loan option for your home purchase.

Call (855) 744-EDGE Schedule Consultation