It doesn’t matter if you’re a resident of Florida, in the market for your first home or relocating to the state, it’s important to understand your loan options.
For many people, it all starts with a conventional mortgage.
A conventional mortgage is a conforming loan, which means that it meets Fannie Mae or Freddie Mac requirements.
Both of these are government-sponsored organizations that purchase mortgages from lenders and sell them to investors. This approach allows lenders to qualify more buyers.
Let’s look at the requirements for a conventional mortgage in Florida, as well as the pros and cons.
Enter your zip code to get started.Conventional loan requirements
As a general rule, conventional loans have stricter credit requirements than government-backed loans. But don’t let that scare you away. Many homebuyers find that the requirements are easy to meet.
Down payment
The down payment requirement varies based on your personal finances, the type of loan you’re seeking, and the type of property you’re buying.
Let’s look at some down payment specifics:
- 3% down payment is possible
- 5% down payment required for non-first-time buyers
- 5% down payment required for those who earn 80% or less of the area’s median income
- 15% down payment for non-single family residences, such as condos or a duplex
- 10% down payment required for second homes
- 5% down payment required for adjustable-rate mortgages
Understanding the down payment requirement is critical to deciding if a conventional mortgage in Florida is right for you.
Tip: Use a mortgage payment calculator to calculate the impact of a down payment on your monthly payment.
Private mortgage insurance
If you put down less than 20%, you’re required by your lender to purchase private mortgage insurance (PMI). This protects the lender in the event that you default on your loan.
The cost of PMI is calculated using factors such as the size of your loan, the size of your down payment, your loan type, and your credit score. As for paying PMI, it can be included in your monthly payment or you can pay an upfront lump sum.
Once you have 20% equity in your home, you’re eligible to get rid of PMI.
While your down payment is the most important detail of securing a conventional mortgage in Florida, other requirements include:
- Credit score of 620 or above to qualify for a conventional loan
- Must meet the conforming loan limit of a single-family home, $647,200
- Debt-to-income ratio (DTI) of 50% or less
The pros and cons of conventional loans in Florida
On the surface, a conventional mortgage may sound like what you’re looking for. However, you shouldn’t make a final decision until you understand the pros and cons.
Pros of a conventional mortgage
- Various mortgage types and terms to choose from (use our loan comparison tool to learn more)
- 20% down payment isn’t required
- Borrow more than the conforming loan limit if you qualify for a jumbo loan
Cons of a conventional mortgage
- A DTI of 50% or high could disqualify you
- Strict credit score requirements
- Past foreclosure or bankruptcy makes it more difficult to secure a conventional mortgage.
Documents needed to qualify for a conventional mortgage
The documents needed to qualify for a conventional mortgage are similar to any other type.
It’s best to collect these as soon as possible so that you can provide the lender with everything they require upfront and make the process quick and efficient.
Gather the following documents:
- Tax returns for the last two years
- Proof of income, such as pay stubs and W-2s
- Bank statements
- Photo identification
- Rental history
Note: Your lender may require additional documentation during the application process. Turn it around as quickly as possible to keep the process moving forward.
The Florida housing market
While there’s no way to definitively predict what the Florida housing market will look like in 2023, there’s plenty of current data that may point toward continuing trends.
- Home prices in Florida were up 14.2% year-over-year in October 2022.
- The number of homes sold in October 2022 declined 26.7% year-over-year.
- The number of homes for sale in October 2022 increased 13.3% year-over-year.
These numbers show that home prices remain high, but that buying activity is slowing down. Conversely, more homes are reaching the market. With all this in mind, it’s looking like a buyer’s market is right around the corner.
Find your perfect home with Homescout.How to apply for a conventional mortgage loan in Florida
If you’re certain that a conventional mortgage loan is right for you—or if you want to learn more—AAA Banking makes it simple to get started.
In addition to starting the mortgage application process, our partnership with HomeScout allows you to find and compare homes in your target area.
For those with additional questions, contact us via phone at (844) 897-2265 M-F; 8-8 EST.
One of our experienced mortgage professionals will provide you with the guidance you need to make an informed and confident decision.
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