Complete Conventional Loan Guide
Written by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
A conventional loan is a mortgage that is not backed by a government agency and instead follows guidelines set by Fannie Mae and Freddie Mac. It is the most common loan type in Florida, offering flexible terms, competitive rates for strong credit, and the ability to drop mortgage insurance once you reach 20% equity.
This guide covers conventional loan requirements, private mortgage insurance, loan limits, and how conventional compares with FHA. It is written by Mortgage Capital, NMLS# 1859012, for Florida buyers weighing their options.
How conventional loans work
Conventional loans are funded by private lenders and usually sold to Fannie Mae or Freddie Mac, which sets the underwriting rules. Loans that fit those rules are called conforming and get the best pricing.
Because there is no government insurance, your credit, income, and down payment carry more weight. Strong borrowers are rewarded with lower rates and lower mortgage insurance than FHA.
Credit and down payment requirements
Most conventional loans require a 620 minimum score, though pricing improves sharply as you climb past 680 and 740. First-time buyers can put down as little as 3% through programs like HomeReady and Home Possible.
A larger down payment lowers your rate and your mortgage insurance. At 20% down you avoid private mortgage insurance altogether.
Private mortgage insurance
When you put down less than 20%, conventional loans require private mortgage insurance, or PMI. Unlike FHA insurance, PMI can be canceled once your loan balance reaches 80% of the original value, and it automatically terminates at 78%.
PMI is priced on your credit score and down payment, so strong-credit borrowers often pay less for PMI than they would for FHA's annual premium.
Conforming loan limits in Florida
The 2026 conforming loan limit sets the line between conventional and jumbo financing. In most Florida counties the standard limit applies; loans above it become jumbo loans with their own guidelines.
If your purchase is just over the limit, a larger down payment can bring the loan under the cap and keep conforming pricing.
Conventional versus FHA
FHA shines for lower credit and minimal down payment. Conventional shines for strong credit because it offers cancelable mortgage insurance and often a lower total payment once your score is in the 700s.
Many Florida buyers run both options side by side. We provide a clear comparison so you can choose based on your real numbers, not assumptions.
Complete Conventional Loan Guide: step by step
Frequently asked questions
What credit score do I need for a conventional loan?
Most require a 620 minimum, but rates and PMI improve significantly with scores above 680 and again above 740.
How much down do I need for a conventional loan?
As little as 3% for qualifying first-time buyers, though 5% to 20% is common. 20% down removes PMI.
Can I cancel PMI on a conventional loan?
Yes. You can request cancellation at 80% of original value, and it terminates automatically at 78%.
Is conventional better than FHA?
It depends. Conventional is usually better with strong credit because PMI is cancelable. FHA is better for lower scores and minimal down.
What is the conforming loan limit in Florida?
It is set annually. Loans above the limit become jumbo loans. We confirm the current figure for your county.
Can I use a conventional loan for an investment property?
Yes. Conventional financing is available for second homes and investment properties, with higher down payment and rate.
How long does a conventional loan take to close?
Typically 30 to 40 days in Florida, depending on appraisal and conditions.
Can the seller pay closing costs on a conventional loan?
Yes, within limits that depend on your down payment and occupancy, generally 3% to 9% of the price.