FHA vs. Conventional Loan in Florida: Which One Saves You More?

FHA vs conventional loan: on a typical South Florida purchase, a conventional loan with 3% down often costs less over the life of the loan if your credit is strong, because its mortgage insurance can be removed. An FHA loan tends to win when a lower credit score would make conventional pricing expensive. The deciding number is one only a lender can give you: your private mortgage insurance quote.

Think of mortgage insurance as a houseguest. With a conventional loan, it packs up and leaves once you have built enough equity. With an FHA loan and less than 10% down, it stays for the life of the loan unless you refinance. Everything below is about how long that guest stays and what it costs per night.

We ran both loans on the same $450,000 home so you can see the real monthly difference, with every assumption stated.

FHA vs conventional loan: the key differences at a glance

FHA loans are insured by the federal government and are easier to qualify for; conventional loans follow Fannie Mae and Freddie Mac rules and reward strong credit. Here is how they compare for a buyer in Broward or Palm Beach County in 2026.

Down payment and credit score: who qualifies for what

FHA asks for 3.5% down with a credit score of 580 or higher, and 10% down with a score between 500 and 579. Below 500, FHA is not an option. HUD reconfirmed these rules in Mortgagee Letter 2026-11 on Oct 8, 2026, which also allows FICO 10T and VantageScore 4.0 for FHA case numbers assigned on or after Jan 1, 2027.

Conventional loans can go as low as 3% down through programs such as Fannie Mae’s HomeReady, which requires homeownership education when all borrowers are first-time buyers and has income limits. On a $450,000 home, 3% down is $13,500, while FHA’s 3.5% is $15,750. So the conventional route can actually need less cash up front.

The catch is pricing. Fannie Mae charges loan-level price adjustments based on your credit score, loan-to-value ratio, occupancy and property type, including condos. A lower score and a small down payment stack up. FHA loans are not subject to those adjustments, which is why borrowers with fair credit often find FHA cheaper. If your score is the swing factor, read our guide to how your credit score changes your mortgage rate.

Mortgage insurance decides the winner

On a low-down-payment loan, the mortgage insurance, not the interest rate, usually separates FHA from conventional. FHA charges two premiums; conventional PMI is a single monthly charge that disappears with enough equity.

FHA: upfront plus annual premium

FHA adds an upfront mortgage insurance premium of 1.75% of the base loan, which you can pay at closing or roll into the loan. Then comes an annual premium paid monthly. For a 30-year loan of $726,200 or less, it is 0.55% a year when you put down less than 5%, and 0.50% with 5% to just under 10% down; in both cases it lasts for the life of the loan. Put down 10% or more and the 0.50% premium ends after 11 years.

Because the 2026 FHA limit in Broward and Palm Beach is $667,000, every FHA base loan here falls under that $726,200 line, so the 0.55% rate applies to every buyer who puts 3.5% down.

Conventional: PMI with an exit

Under the federal Homeowners Protection Act, you can ask your lender to cancel PMI when your balance reaches 80% of the home’s original value. It ends automatically at 78% if you are current on payments. On our example below, scheduled payments alone reach 80% in month 140 (about 11 years and 8 months) and 78% in month 151 (about 12 years and 7 months). Extra principal payments get you there sooner.

Worked example: a $450,000 home in Pompano Beach

On a $450,000 house, FHA with 3.5% down costs about $3,139 a month in principal, interest and mortgage insurance. Conventional with 3% down costs about $2,904 plus PMI, so conventional is cheaper whenever your PMI quote is under about $235 a month.

Assumptions: 30-year fixed at 7.00% for both loans (rates were around 7% in October 2026; Freddie Mac’s average for the week of Oct 15, 2026 was 7.40%), FHA upfront premium financed, annual MIP shown for year one. Taxes, insurance and HOA use our home budget calculator’s assumptions for a Pompano Beach house: 1.48% tax, $5,400 a year insurance and $220 a month HOA.

Two things the table does not show. First, the FHA premium keeps running after year 11, when the conventional PMI on this schedule is gone. Second, FHA and conventional rate quotes are rarely identical, and a lower FHA rate can close the gap. Price the house your way in our home budget calculator, which lets you switch between conventional and FHA.

2026 loan limits in Broward and Palm Beach

For 2026, the conforming limit for a one-unit home is $832,750, and the FHA limit in Broward and Palm Beach counties is reported at $667,000. Confirm the current FHA figure on HUD’s loan limit lookup before you shop.

Those caps matter more in some cities than others. Redfin’s September 2026 median sale price was $384,817 in Pompano Beach and $324,845 in Deerfield Beach, comfortably inside both limits. In Parkland, the median was $1,179,438, so many buyers there will need a loan above both limits or a larger down payment.

Condo buyers have one more check. FHA financing depends on the condo meeting FHA’s project requirements, so ask your lender to confirm the specific building before you write an offer. Our condo, townhome or house comparison covers the other condo costs to weigh.

When FHA wins, and when conventional wins

FHA usually wins on fair credit and thin savings; conventional usually wins on good credit and a long holding period. Use these signals as a starting point, then compare written Loan Estimates.

• FHA tends to win if your score is in the 580s or 600s, where conventional price adjustments cost more than they do for top scores, or between 500 and 579, where FHA still allows financing with 10% down.
• FHA can also win if your PMI quote comes back above roughly $235 a month on a loan like our example, or if you plan to refinance within a few years anyway.
• Conventional tends to win with a score of 700 or more, a plan to keep the home past the point where PMI drops off, or a loan above the $667,000 FHA limit.
• Conventional may also win for first-time buyers who qualify for HomeReady, where Fannie Mae waives loan-level price adjustments for eligible incomes.

Whichever loan you pick, budget for cash beyond the down payment. Our guide to closing costs in Florida for buyers shows what to expect at the table.

This guide is general information, not legal, tax or lending advice. Check current figures with your lender, insurer or the county property appraiser.