Who this is for
Conventional loans are mortgages that are not insured or guaranteed by a government agency (FHA, VA or USDA). Most are underwritten to Fannie Mae or Freddie Mac rules, which means standardized guidelines for credit, income, assets and the property.
They fit borrowers with documented income and established credit who are buying or refinancing a primary home, second home or investment property in Florida. If you're self-employed and your tax returns understate your income, or your credit took a recent hit, we will usually compare FHA, bank statement or DSCR options as well.
What you actually need to qualify
Underwriting comes down to four buckets: credit, income, assets and the property itself.
- Credit score: Fannie Mae's automated underwriting (DU) no longer uses a hard minimum score for new loan files (since November 2025); it weighs the whole credit profile. Most lenders still apply their own minimum, commonly 620. Higher scores generally get better pricing.
- Debt-to-income (DTI): Automated underwriting (DU or Freddie Mac's LPA) can approve up to 50% total DTI depending on the rest of the file. Manually underwritten loans are held to 36%, or up to 45% with stronger credit and reserves. There is no separate agency cap on the housing payment alone.
- Down payment: Low down payment options exist for primary homes, including first-time buyer programs. Second homes and investment properties need more down, and requirements rise with the number of units.
- Reserves: Set by the automated underwriting findings. Expect larger reserve requirements on second homes, investment properties and when you own other financed properties.
- Documentation: Usually recent pay stubs, W-2s, and bank statements. Self-employed borrowers typically provide personal and business tax returns. The underwriting findings decide exactly what's needed.
Down payment & PMI
When the loan is more than 80% of the home's value, conventional loans carry private mortgage insurance (PMI). The cost depends on your credit, loan-to-value and coverage level, and it shows up on your Loan Estimate. How much to put down is a trade-off between the PMI cost and keeping cash in reserve for repairs, insurance deductibles and emergencies.
Borrower-paid PMI is not permanent. Under the federal Homeowners Protection Act, it ends automatically when your balance is scheduled to reach 78% of the home's original value, if you're current on payments. You can ask to cancel it once you reach 80% of the original value with a good payment history (the servicer may require proof the value hasn't dropped). Lender-paid mortgage insurance is built into the rate and can't be cancelled this way.
Common conventional scenarios
Low down payment, conventional
HomeReady (Fannie Mae) and Home Possible (Freddie Mac) are for borrowers with income at or below 80% of area median income. They have reduced mortgage insurance coverage, and PMI can be cancelled under the same rules as other conventional loans.
Loan above 80% of value
PMI applies. Borrower-paid PMI drops off over time; lender-paid PMI is built into the rate. We can show both side by side on your Loan Estimates.
Loan at or below 80% of value
No mortgage insurance. Weigh it against how much cash you'll have left for reserves, Florida insurance deductibles and repairs.
Investment property
Larger down payment and reserve requirements than a primary home, and pricing is higher. Gift funds can't be used. 2-4 unit properties have stricter requirements.
Florida-specific notes
The conventional program is national, but a few Florida quirks shape how it actually works here:
- Insurance affects your DTI. Underwriting uses the actual homeowners premium (including wind) and any flood premium in your housing payment, so a high quote can reduce what you qualify for. Get insurance quotes before you make an offer, and ask about roof age and the wind mitigation report.
- Wind and flood are separate. Lenders require hazard coverage that includes windstorm. If the home is in a FEMA Special Flood Hazard Area (zones starting with A or V), federal law requires flood insurance on the loan, and a standard homeowners policy doesn't include it.
- Condos need a project review. Fannie Mae reviews the condo project as well as the unit. Established projects generally need a Full Review (or FHA project approval). Small projects of 2-10 units can qualify for a waiver of project review, with limits on 5-10 unit projects that are part of a larger development. Projects with unresolved critical repairs or significant deferred maintenance aren't eligible until the work is done. Master policy wind deductibles and your HO-6 coverage are also checked. Florida milestone inspections and structural integrity reserve studies (SIRS) apply to condo buildings with three or more habitable stories, and their findings and any special assessments feed into the review. We request the condo questionnaire and these reports before you pay for an appraisal.
- Homestead affects your taxes and escrow, not your loan approval. The Florida homestead exemption takes up to $50,000 off assessed value (the second $25,000 doesn't apply to school taxes). You qualify for a tax year if you own and live in the home on January 1; apply with the county property appraiser by March 1 of that year. Save Our Homes then limits yearly assessed-value increases to 3% or the CPI change, whichever is lower. The cap resets on sale, so your taxes are based on the new assessment, not the seller's bill.
When conventional isn't the move
Conventional fits many borrowers. Here's when we will usually compare other options:
- Lower credit scores or recent credit events - FHA can be more flexible on credit history.
- VA-eligible - VA loans have no monthly mortgage insurance. If you're eligible, compare a VA loan.
- Self-employed with heavy write-offs - bank statement loans use deposits instead of taxable income.
- Investors who want to qualify on rent - DSCR loans qualify on the property's rental income rather than your personal income. Fannie Mae also caps borrowers at 10 financed properties.
- Above the conforming limit - jumbo financing has its own underwriting.