Conventional Loan in Florida: Down Payment, PMI and Who It Suits
A conventional loan Florida buyers use needs as little as 3% down. Here is how PMI works, when it drops off, and when FHA beats it instead.
Educational content only. This article is for informational purposes and does not constitute financial, legal, or lending advice. Loan programs, rates, and eligibility requirements change frequently. Consult a licensed mortgage professional before making any borrowing decision. Mortgage Capital | NMLS# 1859012 | Licensed in Florida.
A conventional loan Florida buyers take is any mortgage not insured by FHA, VA or USDA. It is the most common path for buyers with solid credit, and it usually prices better than FHA above roughly 680.
The headline advantage is removable mortgage insurance. Once you reach 80% loan-to-value, PMI comes off. On most current FHA loans it never does. Our conventional loan page covers the full guideline set.
How little you can put down
Three percent, if you qualify as a first-time buyer under HomeReady or Home Possible. Five percent for most other buyers.
Those two programs also price mortgage insurance more favorably at the same loan-to-value. See HomeReady and Home Possible for the income limits, which are county-based and higher in South Florida than many buyers assume.
Twenty percent avoids PMI entirely, but it is not required and rarely the best use of cash in a market where prices move.
What PMI actually costs
PMI runs roughly 0.3% to 1.2% of the loan annually, driven by credit score and loan-to-value together. The two compound, so twenty points of credit score can move the premium noticeably.
On a $400,000 loan at 0.55%, that is about $183 a month. Model your own figure on the PMI calculator.
You can request cancellation at 80% of original value and it terminates automatically at 78%. Florida appreciation has let plenty of owners get there early with a new appraisal.
When FHA is the better choice
Below about 660, conventional pricing deteriorates faster than FHA does, and FHA mortgage insurance stops looking expensive by comparison.
FHA is also more forgiving after a recent credit event. If a bankruptcy or foreclosure sits inside conventional seasoning windows, look at FHA loans or our recent credit event loans.
Florida-specific things to check
Property taxes reset when you buy. The seller's bill reflects their homestead cap, and yours will not, so underwrite the non-homestead figure.
Insurance is the other trap. Get a real quote for the specific address rather than a rule of thumb, then run it through the conventional loan calculator.
Fannie Mae publishes its eligibility rules openly at Fannie Mae's HomeReady page if you want the source. We shop the file across lenders and show you the spread.