Yes. With a 620 credit score you can buy a Florida home with FHA at 3.5% down or with a Conventional loan at 3% down. Most lenders open Conventional lending at 620, so it's the first score where a buyer has a real choice between the two.
What changes at 620
Below 620, FHA does nearly all the work, along with VA for veterans. At 620, Conventional joins. Conventional loans follow Fannie Mae and Freddie Mac rules: 3% down on a single-family home through first-time buyer programs, 5% down on 2 to 4 units, and total debt-to-income up to 50% with an automated approval. Fannie Mae's Selling Guide requires 620 on manually underwritten fixed-rate loans, and most lenders, AAA Capital Funding included, treat 620 as the starting point for every Conventional loan.
The score carries more weight on Conventional than on FHA. A Conventional loan with less than 20% down carries private mortgage insurance (PMI), and PMI is priced by score. QualRate models it at about 1.50% a year near 620, falling to about 0.46% at 760 and up. Fannie Mae also charges loan-level price adjustments (LLPAs), fees set by score and loan-to-value that lenders usually build into the rate. FHA's mortgage insurance premium, called MIP, doesn't move with the score at all.
FHA and Conventional on a $280,000 home
Take a $280,000 single-family home in Volusia County at a 5.75% rate on a 30-year fixed, with taxes at 0.80% of the price and insurance at $240 a month, for a buyer with a 620 middle score.
| FHA, 3.5% down | Conventional, 3% down | |
|---|---|---|
| Down payment | $9,800 | $8,400 |
| Loan amount | $274,928.50 (includes $4,728.50 upfront MIP) | $271,600.00 |
| Principal and interest | $1,604.41 | $1,584.98 |
| Mortgage insurance | $123.84 (0.55% a year) | $339.50 (1.50% a year) |
| Taxes and insurance | $426.67 | $426.67 |
| Total payment | $2,154.92 | $2,351.15 |
At 620, FHA wins by $196.23 a month, or $11,773.80 over five years, even though the Conventional loan needs $1,400 less down. The LLPA widens the gap: Fannie Mae's grid charges 1.75% at scores below 640 with less than 5% down, which is $4,753 on this loan. Fannie Mae waives every LLPA for first-time buyers with income at or below 100% of the area median income (120% in high-cost areas), so for many 620 buyers that charge goes away.
When Conventional comes out ahead
Run the same Conventional loan at a 760 score and PMI drops to about 0.46% a year, or $104.11 a month. The total falls to $2,115.76, about $39 under FHA. Conventional PMI also comes off. You can ask to cancel it once the balance reaches 80% of the original value, and it ends automatically when the balance is scheduled to reach 78%. On this loan, with no extra payments, the 78% point arrives in month 135, a little over 11 years in. FHA's annual premium with 3.5% down stays for the life of the loan unless you refinance.
So a 620 buyer usually starts with FHA, and many refinance into Conventional later, once their score climbs and they hold about 20% equity. A buyer whose score is rising fast, or who plans to put more down, should see both quotes side by side. The FHA or Conventional page goes deeper on that choice.
Program by program at 620
- FHA: 3.5% down, FHA 100% financing available, debt-to-income up to 46.9% for housing and 56.9% total.
- Conventional: 3% down on one unit for first-time buyers, 5% on 2 to 4 units, total debt-to-income up to 50%.
- VA: $0 down for eligible veterans. VA sets no minimum score, and the funding fee is the same at every score.
- USDA: $0 down in eligible rural areas. USDA sets no minimum, and most lenders look for about 640, so a 620 buyer is close.
Getting more out of a 620 score
At 640, a buyer moves onto a better row of Fannie Mae's LLPA grid and into lower PMI pricing, so a 20-point gain is worth chasing when it's cheap to get. Paying down a high card balance before the credit pull is the usual route, and a rapid rescore can post the lower balance within days. A co-signer can add income on either program. On Conventional, a co-signer's non-taxable income such as Social Security is grossed up 25%, against 15% on FHA. Both programs price off the lowest middle score of everyone on the loan, so the co-signer's score should be at or above yours.
The affordability calculator puts FHA and Conventional next to each other for your income and price. For quotes on both loans from several wholesale lenders, call AAA Capital Funding at 888-601-8344.