Loan Programs Explained · Updated July 2026

FHA vs. Conventional Loans: Which One Fits You?

Two of the most popular loan types in South Florida — but they serve different buyers. Here's the honest side-by-side, by Reinier Cancio, bilingual Miami loan officer, NMLS #1615071.

The basics

FHA loans are insured by the Federal Housing Administration and built for borrowers with lower credit scores or smaller down payments. Conventional loans aren't government-backed and typically deliver better long-term value for stronger credit profiles. Both are available throughout Miami-Dade, Broward, and Palm Beach counties.

Credit score requirements

FHA accepts scores as low as 580 with 3.5% down — or even 500 with 10% down. Conventional loans generally require 620 or higher, with the best rates reserved for 740+.

The practical rule: between 580 and 640, FHA is usually your path. Above 700, conventional pricing starts winning. In between, it depends on your down payment and debt-to-income ratio — that's the zone where running both scenarios matters most.

Down payment comparison

FHA minimum: 3.5%. Conventional minimum: 3% with first-time-buyer programs like HomeReady or Home Possible. The percentages are nearly identical — but FHA is more forgiving about where the money comes from. Gift funds from family are easier to document on FHA, which matters for many Miami families where parents or relatives help with the purchase.

Mortgage insurance — where the real cost difference lives

This is the deciding factor for most buyers, and it's the part lenders often gloss over:

• FHA: charges an upfront mortgage insurance premium of 1.75% of the loan (rolled into your balance) plus an annual premium (~0.55%) — and if you put less than 10% down, that annual premium lasts for the life of the loan. The only way out is refinancing to conventional later.
• Conventional: private mortgage insurance (PMI) costs vary with your credit score, and it cancels automatically at 22% equity (or on request at 20%). Your payment drops permanently once you get there.

On a $400,000 loan, FHA's upfront premium alone is $7,000 added to your balance. For buyers who plan to stay 5+ years, conventional often costs meaningfully less overall — if your credit supports it.

Miami-specific considerations

• Condos: FHA only works in FHA-approved buildings, and much of Miami's condo inventory isn't approved. Conventional covers far more buildings. Buying a condo in Miami Beach or Aventura? Check building eligibility before you offer.
• Loan limits: FHA caps loans lower than conventional in Miami-Dade. Higher-priced homes in Coral Gables or Pinecrest often exceed FHA limits entirely and need conventional or jumbo financing.
• Assistance stacking: Florida Hometown Heroes and Miami-Dade grants stack with both FHA and conventional — see my first-time buyer checklist for how they work.

Which should you choose?

Choose FHA if: your credit is below 680, your savings are limited, your debt-to-income ratio is high, or you're relying heavily on gift funds.

Choose conventional if: your credit is 700+, you can put 5–20% down, you're buying a condo that isn't FHA-approved, or you want mortgage insurance to eventually disappear without refinancing.

In practice, I run both scenarios side-by-side and show you the 5-year and 10-year total cost — monthly payment, insurance, and payoff balance. The right answer depends on your specific numbers, not a rule of thumb. Model your own payment with my mortgage calculator.