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Conventional Home
Loans in Florida

Conventional Loans are one of the most popular mortgage programs for homebuyers in Florida. Ready to Get Started? 

Table of Contents


What is a Conventional Mortgage?

Just like the Florida Keys bridges, conventional loans serve to connect many Florida residents with their dream homes. A conventional loan, or “conforming” loan, refers to any mortgage that is not guaranteed or insured by the federal government.


 They might be either backed by private lenders or by government-sponsored entities such as Fannie Mae and Freddie Mac. Conventional loans are attractive for their flexibility in terms — they come in all shapes and sizes, adjustable or fixed rates, varying lengths, and with or without mortgage insurance.


Conventional Loan Requirements in Florida

Much like you’d need sunscreen, a love for all things beachy, and a knack for dodging ‘gators to fit right into Florida, there are certain requirements to qualify for a conventional loan in the sunshine state:

  • Good Credit Score – Typically, a FICO credit score of 620 or higher is needed for a conventional mortgage, although the best rates are generally available to those with 740 scores or higher.
  • Stable Income – Having a reliable source of income tells lenders you’re capable of consistent mortgage payments. You’ll be asked to provide pay stubs, income tax returns, and possibly bank statements.
  • Sufficient Down Payment – While down payments can go as low as 3% for some conventional loans, a down payment of 20% will skimp on the necessity for mortgage insurance.
  • Debt-to-Income Ratio – Lenders will typically want to see a debt-to-income ratio (DTI) under 43%. This calculates how much of your monthly income goes towards paying off debts.
  • Property Appraisal – Before the loan is secured, you’ll need a home appraisal which proves to the lender that the home is worth the amount of the loan.

Think of these requirements as a recipe, like for a Key Lime Pie — each ingredient fulfilling a specific role, making the whole application stronger.


Florida Conventional Loan Limits

Just as Florida isn’t limited to oranges and sunsets, conventional loan limits aren’t a one-size-fits-all. In Florida, the standard conventional loan limit for a single-family home as of 2022 is $647,200. However, in certain high-cost areas, these limits might be more generous. It’s always advisable to check with your lender or the Federal Housing Finance Agency for the most current numbers.


FHA vs. Conventional Loan

Choosing between an FHA and a conventional loan is like choosing between Florida’s Atlantic coast and Gulf coast — both are captivating in their own ways and your choice boils down to your personal situation and preference.

  • Minimum Down Payments: FHA loans have a lower bar for entry, asking for a minimum down payment of just 3.5%. Conventional loans can require as much as 20% down to avoid mortgage insurance but can accept as little as 3% in some cases.
  • Interest Rates: FHA loans generally offer lower interest rates than conventional loans, making them attractive to borrowers with less-than-stellar credit.
  • Mortgage Insurance: Both loans have unique mortgage insurance requirements. FHA loans require an upfront mortgage insurance premium and an annual premium. In contrast, conventional loans only need private mortgage insurance if you put less than 20% down, and the cost can be canceled once you reach 20% equity.
  • Loan Limits: Conventional loans typically have higher loan limits than FHA loans, which means they can accommodate larger loan sizes.
  • Credit Scores: Conventional loans typically require a higher minimum credit score than FHA loans.


Types of Conventional Loans

Florida’s diversity doesn’t end with its beautiful beaches, citrus groves, and Everglades; its conventional loan offerings are just as varied. Here are the main types available to Floridian borrowers:

  • Fixed-Rate Mortgages (FRM): Just like the Florida sunshine, the interest rates here are constant throughout the loan term. Regardless of the market stirrings, your rate will remain the same.
  • Adjustable Rate Mortgages (ARM): These whisk you along with the market’s ebb and flow, beginning with a fixed interest rate for an initial period4 (usually 3, 5, 7, or 10 years), then adjusting annually thereon. If you don’t plan to hold onto your home for a lifetime, ARM can be a financially sound choice.
  • Jumbo Loans: In high-cost areas, these come to the rescue where loan amounts exceed the limit set by the Federal Housing Finance Agency. Like a special edition Florida manatee, Jumbo Loans are a little more rare, but still definitely part of the conventional loans habitat.
  • HomeReady/Home Possible Loans: Designed for low- to moderate-income homebuyers, they mirror the structure of a typical conventional loan but allow for lower down payment and have relaxed income requirements.
  • Conventional 97 Loans: These loans are meant for those who can only afford a small baseline down payment (only 3% of the purchase price) but otherwise qualify for a conventional loan.
  • HomeStyle Renovation Loan: This type of standard conventional loan lets you bundle the purchase price with the cost of improvements.
  • Construction Loan: A type of conventional loan meant for home buyers looking to build a new house from the ground up.

Like the many attractions of Florida, each type of these conventional loans has its own unique flavors and advantages. Choose wisely based on your needs, wants, and eligibility.


Applying for a Conventional Loan in Florida

Acquiring a conventional loan in Florida is a tad more organized than gator-wrestling! Here’s how you navigate through the process:

  • Review your Options: Start by comparing the offerings of multiple lenders. Consider their terms, interest rates, and customer reviews.
  • Review Your Credit Score: Your credit score greatly influences your loan terms and interest rate, so make sure you’re aware of your score before you apply.
  • Get your Paperwork together: It’s time to dig out your W-2s, tax returns, recent pay stubs, and bank statements. You’ll need these to prove your income and assets.
  • Get your Property Appraised: This is an essential step to ensure the loan amount matches the property’s worth.
  • Get Pre-Approved: This step will give you an idea of how much you might be able to borrow.
  • Apply for the Loan: Once you’re preapproved, you can proceed to the formal loan application.


Bayou Mortgage: Florida’s Go-To Conventional Loan Lender

Choosing the right lender for your conventional loan is way more important than choosing the best Florida beach for your summer vacation! Just like every beach has its unique charm, every lender too has something different to offer. Bayou Mortgage stands tall among Florida lenders, here’s why:

  • Competitive Rates: Just as Florida offers the best sunsets, we offer some of the best rates in the industry. We’ll help you secure a loan that doesn’t break the bank!
  • Personalized Service: Just as Florida has a wide variety of attractions for everyone, we offer personalized mortgage options tailored to your needs.
  • Experienced Team: Our team has the experience and knowledge to guide you through the mortgage process. We’ve got you covered!
  • Local Expertise: Being Florida-based, we understand the local real estate landscape better than anyone else – well, except the alligators!

Florida Conventional Loan FAQ's

A conventional loan is a mortgage offered by private lenders such as credit unions, banks, or mortgage companies. Unlike government-backed loans, the government doesn't insure conventional loans.

In 2022, the standard conventional loan limit for a single-family home in Florida is $647,200. However, in some high-cost areas, these limits may be higher.

The potential downsides include stricter qualification requirements, larger down payments, and if less than 20% down payment is made, you'll need to pay for private mortgage insurance.

No, conventional loans can be obtained with as little as 3% down. However, if you put down less than 20%, you'll usually need to pay for private mortgage insurance.

There's no limit to the number of conventional loans you can have, though lenders may impose stricter requirements for second homes or investment properties.

You typically need a credit score of at least 620, a debt-to-income ratio under 50%, stable employment, and enough income to afford your monthly payments.

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