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: 5%. That gap is small in percentage terms but real in dollars — on a $500,000 Miami home it's about $7,500 more up front for conventional. FHA is also more forgiving about where the money comes from: gift funds from family are easier to document on FHA, which matters for the many Miami families where parents or relatives help with the purchase. More on FHA loans · More on conventional loans

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.