FHA vs conventional · first-time buyers · Florida and Georgia
FHA or conventional for your first home?
If your credit score is lower, your savings are thin, or you've had a bankruptcy in the last few years, FHA usually opens the door sooner. If your score is strong and you plan to stay in the home, a conventional loan often costs less over time because you can drop its mortgage insurance. Most first-time buyers should price both before choosing.
500
FHA's lowest credit score under HUD rules.
78%
Where conventional PMI ends on its own, measured against the home's original value.
2 vs 4
Years to wait after a Chapter 7 discharge: FHA vs conventional.
The quick comparison
Credit score: FHA starts at 500 under HUD rules. Conventional has no fixed floor for loans run through Fannie Mae's automated system, but your score drives the price.
Mortgage insurance: FHA charges an upfront premium plus an annual premium that often lasts the life of the loan. Conventional charges private mortgage insurance (PMI) only when your loan is more than 80% of the home's value, with no upfront premium, and you can remove it later.
Seller help: FHA allows seller contributions up to 6% of the price. Fannie Mae allows 3%, 6% or 9%, depending on your down payment.
Debt-to-income: both can go higher for strong files. Fannie Mae's automated system tops out at 50%.
After bankruptcy: two years after a Chapter 7 discharge for FHA, four years for conventional.
The home: FHA covers your primary home only. Conventional also covers second homes and rentals.
Credit score: where FHA pulls ahead
HUD lets you buy with a score as low as 500. Between 500 and 579, HUD limits the loan to 90% of the home's value. At 580 and up, you can use HUD's maximum financing. The FHA mortgage insurance premium stays the same whatever your score is.
Conventional loans used to stop at a 620 score. Fannie Mae removed that hard floor for loans run through its Desktop Underwriter system for files created on or after November 16, 2025. A lower score still raises both the loan's pricing and the PMI premium on a conventional loan, so the gap between the two programs widens as your score drops.
Read the details in our FHA loan requirements guide.
Mortgage insurance: the biggest long-term difference
FHA: every FHA loan carries two premiums. The upfront premium usually gets added to your loan, and the annual premium comes out monthly. With a small down payment, the annual premium lasts for the life of the loan, and you'd remove it by refinancing later. See how FHA mortgage insurance works, or try the numbers in our FHA calculator.
Conventional: PMI applies only when your loan is more than 80% of the home's value. Under the federal Homeowners Protection Act, you can ask your servicer to cancel PMI once your balance reaches 80% of the home's original value. It ends automatically at 78% if you're current on payments.
If you plan to stay put and build equity, that cancellation right often decides it.
Down payment, gifts and seller help
Both programs allow a small down payment, and both accept gift money from family when you document it. The rules split on help from the seller:
• FHA: the seller can pay up to 6% of the price toward your closing costs.
• Conventional (Fannie Mae): the cap is 3% when you put the least down, then 6%, then 9% as your down payment grows.
In a market where sellers pay closing costs, FHA's 6% can matter more than the down payment itself. Your loan officer can show you both versions side by side. For state programs and grants that work with FHA, see FHA down payment assistance.
Debt-to-income
Your debt-to-income ratio compares your monthly debts, including the new house payment, with your gross monthly income. Fannie Mae's Desktop Underwriter approves ratios up to 50% when the rest of your file is strong. HUD's TOTAL Scorecard can also approve higher ratios. When a file needs manual review, HUD publishes fixed limits, and our requirements guide lists them.
After a bankruptcy or foreclosure
Chapter 7 bankruptcy: FHA 2 years from discharge; conventional 4 years.
Chapter 13 bankruptcy: FHA after 12 months of on-time plan payments, with the bankruptcy court's written permission; conventional 2 years from discharge.
Foreclosure: FHA generally 3 years; conventional 7 years.
Short sale or deed in lieu: FHA generally 3 years; conventional 4 years.
Both programs allow shorter waits for documented hardships beyond your control. FHA's clock runs faster in almost every case. Sources: HUD Handbook 4000.1; Fannie Mae Selling Guide B3-5.3-07. Read the FHA details in FHA after bankruptcy or foreclosure.
The home itself
• Occupancy: FHA requires you to live in the home. Conventional also finances second homes and investment property.
• Condition: an FHA appraiser checks HUD's minimum property standards for safety and soundness, so a home with a failing roof or peeling paint may need repairs before closing. Conventional appraisals focus more on value.
• Condos: FHA usually needs the building on HUD's FHA-approved condo list (opens in a new tab). Not on the list? FHA also allows a single-unit approval, often called a spot approval, if the building meets HUD's conditions. Conventional uses its own condo review, so a building FHA hasn't approved may still work. A licensed loan officer can check the building with both programs.
• Loan limits for 2026: FHA runs from $541,287 to $1,249,125 for a one-unit home, depending on the county (HUD). The conventional baseline is $832,750, up to $1,249,125 in high-cost areas (FHFA).
Which one fits you?
• Your score is under the low 600s, or you've had a recent bankruptcy: start with FHA.
• Your score is strong and you plan to stay five years or more: price conventional first, because you can cancel PMI.
• The seller will pay closing costs: compare FHA's 6% seller help against the conventional cap for your down payment.
• You're buying a condo: check the building with both programs before you make an offer.
• You want a second home or a rental: only conventional covers it.
A licensed loan officer can run both on your actual credit report and show you the total cost over the years you expect to own the home.
Florida and Georgia
HUD and Fannie Mae rules apply the same way in both states. Florida buyers often run into condo approval and flood insurance questions, and some can add Florida Hometown Heroes down payment help. In Georgia, an attorney handles your closing and you sign a security deed; see our guide to FHA loans in Georgia. FLO Mortgage arranges FHA loans through partner lenders and helps buyers anywhere in Florida and Georgia. Start with our FHA loan overview.
FHA vs conventional: common questions
Is FHA or conventional better for a first-time buyer?
It depends on your credit score, savings and how long you'll stay. FHA accepts lower scores and shorter waits after bankruptcy. Conventional lets you cancel mortgage insurance later and covers second homes. Most buyers should price both.
What credit score do I need for a conventional loan?
Fannie Mae removed its hard 620 minimum for loans run through Desktop Underwriter for files created on or after November 16, 2025. Lenders still weigh your score, and a lower score raises conventional pricing and mortgage insurance costs.
Can I remove FHA mortgage insurance?
If your loan starts above 90% of the home's value, FHA's annual premium lasts for the life of the loan, so you'd refinance to drop it. At 90% or below, it ends after 11 years.
When does PMI come off a conventional loan?
Under the Homeowners Protection Act, you can request cancellation when your balance reaches 80% of the home's original value, and it ends automatically at 78% if you're current.
Can the seller pay my closing costs?
Yes, within limits. FHA allows up to 6% of the price. Fannie Mae allows 3%, 6% or 9% depending on your down payment.
How long after bankruptcy can I get each loan?
FHA: two years after a Chapter 7 discharge. Conventional: four years after a Chapter 7 discharge. Both allow shorter waits for documented hardships.
Not sure which one fits?
A licensed loan officer can price FHA and conventional side by side on your real numbers. Prefer to talk? Call (386) 882-9980.
This page is general education, not a commitment to lend or an offer of specific terms. All loans are subject to credit approval, underwriting guidelines and property eligibility. Not all applicants will qualify. FLO Mortgage arranges FHA loans through partner lenders and does not underwrite or fund them. Program rules come from HUD Handbook 4000.1, HUD Mortgagee Letter 2026-11, the Fannie Mae Selling Guide, FHFA and the CFPB, checked October 22, 2026, and may change. FLO Mortgage is licensed as a mortgage lender in Florida (MLD2621) and Georgia (#1835856), Company NMLS #1835856; Broker Owner Joy McCoy Flores, NMLS #1096400. Equal Housing Opportunity. Licensing & Disclosures.