Your credit score decides most of this, with your debt-to-income ratio (DTI, your monthly debt payments divided by your gross monthly income) and your down payment cash close behind. FHA is insured by the Federal Housing Administration and was built for buyers with average credit and real-world debts. Conventional loans follow Fannie Mae and Freddie Mac rules, and those rules reward a strong score more than any other program. Plenty of Florida buyers qualify for both, and the cheaper of the two is usually easy to spot once the numbers are side by side.
How the two loans compare
| FHA | Conventional | |
|---|---|---|
| Minimum credit score | 580 for 3.5% down, 500 to 579 with 10% down | 620 at most lenders, AAA included |
| Minimum down payment | 3.5% | 3% on a single-family home through first-time buyer programs |
| Total DTI with an automated approval | About 56.9% | Up to 50% |
| Upfront mortgage insurance | 1.75% of the base loan, added to the loan | None |
| Monthly mortgage insurance | 0.55% a year at 3.5% down, the same price at any score | PMI priced on your score, about 1.50% a year near 620 down to 0.46% at 760 and up |
| Removing mortgage insurance | Stays for the life of the loan with under 10% down | Can be cancelled at 80% of the original value |
| Seller-paid closing costs | Up to 6% of the price | 3% of the price with under 10% down |
| 2 to 4 unit down payment | 3.5% | 5% |
| Occupancy | Primary residence only | Primary, second home or investment |
FHA mortgage insurance (MIP) costs the same whether your score is 600 or 800. Conventional private mortgage insurance (PMI) is priced on your score and your loan-to-value ratio (LTV, the loan amount divided by the home's value), so it's expensive near 620 and cheap at 760. That one difference drives most of the decision.
The same $320,000 home on both loans
Here's a $320,000 single-family home at a 5.75% rate on a 30-year fixed, with property taxes at about 0.90% of the price a year ($240 a month) and homeowners insurance of $283 a month. On FHA, 3.5% down is $11,200, the base loan is $308,800, and the 1.75% upfront premium of $5,404 brings the loan to $314,204. On Conventional, 3% down is $9,600 and the loan is $310,400.
| Monthly cost | FHA, any score | Conventional, 620 score | Conventional, 760 score |
|---|---|---|---|
| Principal and interest | $1,833.61 | $1,811.41 | $1,811.41 |
| Mortgage insurance | $141.53 | $388.00 | $118.99 |
| Property taxes | $240.00 | $240.00 | $240.00 |
| Homeowners insurance | $283.00 | $283.00 | $283.00 |
| Total payment | $2,498.14 | $2,722.41 | $2,453.40 |
| Total DTI at $6,000 income and $300 of debts | 46.64% | 50.37% | 45.89% |
At a 620 score, FHA costs $224.27 less a month and is the approval, since Conventional lands just over its 50% ceiling. At a 760 score, Conventional saves $44.74 a month, needs $1,600 less down, and the PMI can come off later. The house and the income never changed; the score did.
When FHA is the stronger choice
- Your middle credit score is below about 740.
- Your total DTI runs between 50% and 56.9%, which only FHA allows with an automated approval.
- You want to bring $0 for the down payment. FHA 100% financing pairs a 96.5% FHA first mortgage with a down payment assistance second that covers the 3.5%, from a 580 score.
- You had a bankruptcy or foreclosure. FHA's waits are 2 years after a Chapter 7 discharge and 3 years after a foreclosure, against 4 and 7 years on Conventional.
- You need the seller to pay more than 3% of the price toward your closing costs.
- You're buying a duplex, triplex or fourplex with 3.5% down.
When Conventional is the stronger choice
- Your score is about 740 or higher, where PMI gets cheap.
- You can put 20% down, which removes mortgage insurance entirely.
- You want mortgage insurance with an end date. Under the Homeowners Protection Act you can ask to cancel PMI once your balance reaches 80% of the original value, and it ends on its own at 78%.
- You're buying a second home or a rental, which FHA doesn't finance.
- You need a larger loan. In most Florida counties the 2026 FHA limit for one unit is $541,287, while the Conventional baseline is $832,750.
If you're close to the line
A credit score can climb within a month or two. Paying a credit card balance down before the lender pulls credit, or a rapid rescore after a payoff, can lift a score enough to change which program wins. Many buyers take FHA now and refinance into Conventional once they hold about 20% equity, which drops the FHA premium for good.
The price check tool lines up FHA and Conventional on a real address and price. Before you write an offer, call AAA Capital Funding at 888-601-8344 and we'll price both programs on your actual score, debts and down payment.