FHA vs Conventional Loans:
Which Is Right for You?

The Two Main Loan Types

When you sit down with a lender in Jacksonville, the first question they'll usually ask is whether you're thinking about an FHA or conventional loan. For most first-time buyers — and many repeat buyers — these are the two options that matter most. Each has real advantages and real limitations, and the right choice depends on your specific credit score, savings, and long-term plans.

The short version: FHA loans are easier to qualify for but come with mortgage insurance that's harder to remove. Conventional loans require stronger credit but give you more flexibility and lower long-term costs if your credit is good. Let's go deeper on both.

FHA Loans: What You Need to Know

FHA loans are insured by the Federal Housing Administration, which allows lenders to offer more lenient qualification standards. They were designed specifically to help people with limited savings or less-than-perfect credit become homeowners.

FHA key requirements

• Minimum credit score: 580 for 3.5% down; 500–579 requires 10% down
• Minimum down payment: 3.5% with a 580+ score
• Debt-to-income ratio: Up to 57% with strong compensating factors
• Mortgage insurance: Required — both upfront (1.75% of loan) and annual (0.55%–1.05%)
• Seller concessions: Up to 6% of purchase price toward buyer's closing costs
• Property condition: Home must meet FHA appraisal standards (stricter than conventional)

On a $300,000 Jacksonville home, a 3.5% FHA down payment is $10,500 — significantly lower than the $15,000–$60,000 required for a 5%–20% conventional down payment. For buyers with limited savings, that difference is often decisive.

The tradeoff is mortgage insurance. FHA loans require an upfront mortgage insurance premium (MIP) of 1.75% of the loan amount — added to your loan balance — plus an annual MIP of 0.55%–1.05% paid monthly. Unlike PMI on conventional loans, FHA MIP typically stays for the life of the loan if you put down less than 10%. The only way to eliminate it is to refinance into a conventional loan once you have 20% equity.

Conventional Loans: What You Need to Know

Conventional loans aren't backed by a government agency — they follow guidelines set by Fannie Mae and Freddie Mac. They're the most common loan type overall and the preferred choice for buyers with strong credit profiles.

Conventional key requirements

• Minimum credit score: 620 (though 740+ gets the best rates)
• Minimum down payment: 3% (with some programs); more commonly 5%–20%
• Debt-to-income ratio: Up to 45%–50% in most cases
• PMI: Required if down payment is less than 20%, but automatically cancels at 80% LTV
• Seller concessions: 3%–9% depending on down payment amount
• Property condition: More lenient appraisal standards than FHA

The biggest advantage of conventional over FHA: PMI drops off automatically when your loan-to-value ratio reaches 80% — either through paydown or appreciation. You can also request cancellation at 80% LTV without waiting for automatic termination. For buyers who plan to stay in their home and build equity, this saves significant money over time.

Side-by-Side Comparison

When to Choose FHA

FHA is usually the right call if:

• Your credit score is between 580 and 659
• You have less than 10% saved for a down payment
• You have a higher debt-to-income ratio (student loans, car payments)
• You're a first-time buyer and want the most accessible path to ownership
• You can negotiate the seller to cover some or all closing costs (FHA allows up to 6%)

When to Choose Conventional

Conventional is usually the better choice if:

• Your credit score is 700 or higher
• You can put down 10%–20% or more
• You want to avoid long-term mortgage insurance costs
• You're buying a condo (FHA has stricter condo approval requirements)
• You're buying a fixer-upper or home with deferred maintenance (FHA appraisers are strict)
• You plan to build equity and want PMI to drop off automatically

Florida-Specific Considerations

Florida has several down payment assistance programs that work with both FHA and conventional loans — including the Florida HFA Preferred and Florida First programs. These can provide up to $10,000 toward your down payment as a 0% deferred second mortgage. If you're a first-time buyer in Jacksonville, it's worth asking your lender specifically about these programs.

Florida also has no state income tax — which improves many buyers' debt-to-income ratios compared to what they'd see moving from high-tax states. That can make conventional financing more accessible than buyers initially expect.

Use the mortgage calculator to compare your estimated monthly payment under FHA vs conventional scenarios — adjusting down payment, rate, and PMI to see the full picture.