Who this is for
Conventional loans are the default for buyers with credit scores in the high 600s or better, a couple of years of stable income, and at least a few percent to put down. They're not government-backed (no FHA, VA, or USDA) — they're sold to Fannie Mae or Freddie Mac, which means standardized rules and competitive rates if you fit the box.
If you're a W-2 employee with clean credit buying a primary, second home, or investment property in Florida, this is almost certainly the conversation we should be having. If you're self-employed and write off most of your income, or your credit took a hit recently, we'll usually look at FHA, bank statement, or DSCR instead.
What you actually need to qualify
Underwriting comes down to four buckets — credit, income, assets, and the property itself. The headline numbers:
- Credit score: 620 minimum to qualify, but pricing improves meaningfully at 680, 720, and 740. Below 700, expect to see a noticeable rate hit.
- Debt-to-income (DTI): Generally 45% back-end, sometimes up to 50% with strong reserves and credit. Front-end (housing alone) usually capped at 36-43%.
- Down payment: 3% minimum for first-time buyers, 5% for repeat buyers, 10-25% for second homes and investment property depending on units and lender.
- Reserves: 2-6 months of PITI in savings after closing for primaries, more for second homes and investment.
- Documentation: Two years W-2s or tax returns, 30 days of pay stubs, two months of bank statements. Self-employed need two years of personal and business returns plus a YTD P&L.
Down payment & PMI
Putting 20% down eliminates private mortgage insurance (PMI). That's the rule everyone knows. The interesting question is whether 20% is the right number for you.
If you can put down 5% with PMI at 0.4% of the loan, and the cash you keep earns 4-5% in a money market or pays down higher-interest debt, the math often favors keeping the cash. PMI also drops automatically once you hit 78% loan-to-value (or you can request removal at 80% with a clean payment history) — it's not forever.
Where 20% wins clearly: very high price points where PMI dollars are large, or buyers who'd otherwise stretch into a payment they can't comfortably absorb.
Quick down-payment scenarios
3% down, conventional
Available through HomeReady (Fannie) and Home Possible (Freddie) for borrowers under area median income. Comes with PMI but lower than FHA's MIP and removable.
5-10% down
The most common range. PMI is real but modest at 0.3-0.7%. Lender-paid PMI (LPMI) is sometimes worth running the numbers on.
20% down
No PMI, best rate tier, simplest underwriting. Often the right move on lower-priced homes where 20% is achievable without draining reserves.
15-25% down
Conventional investment property requires more skin in the game. Single-family typically 15-20%; 2-4 unit can require 20-25%. Rates are 0.5-1% higher than primary.
Florida-specific notes
The conventional program is national, but a few Florida quirks shape how it actually works here:
- Insurance impacts your DTI. Florida homeowners insurance is two to four times the national average in coastal counties. Underwriting uses the actual quoted premium, which can shrink the loan amount you qualify for. Get an insurance quote early — like, before you offer.
- Wind and flood are separate. Lenders require coverage for whatever risk the property has. If it's in a flood zone (Zone A or V), you'll need flood insurance, and that's not in your standard policy.
- Condo financing is fussier than it used to be. Post-Surfside, Fannie and Freddie tightened condo project requirements. A condo with deferred maintenance, special assessments, or insufficient reserves can flip from "warrantable" to "non-warrantable" — which kills conventional financing on it. We pull the project review before we waste your appraisal money.
- Homestead exemption affects taxes, not your loan directly. But filing it by March 1 of the year after you close is worth real money — capped at $50,000 off assessed value plus the Save Our Homes 3% annual cap on increases.
When conventional isn't the move
Conventional is the right answer most of the time. Here's when it isn't:
- Credit under 680 with limited reserves — FHA usually prices better and is more forgiving on past credit issues.
- VA-eligible — 0% down, no PMI, often lower rates. If you can use a VA loan, you should at least price it.
- Heavy self-employment write-offs — bank-statement loans use deposits instead of net taxable income, which usually qualifies you for materially more.
- Pure rental investor scaling a portfolio — DSCR loans qualify the property, not you, and don't count against your DTI for future purchases.
- Above the conforming limit — jumbo financing is its own world, often with better rates than people expect if you have the asset profile.