Florida Conventional Mortgage Loans: <span class='t-red'>How</span><span class='t-red'>to</span><span class='t-red'>Get</span><span class='t-red'>the</span><span class='t-red'>Best</span><span class='t-red'>Rates</span>

florida river chilling
florida river chilling

By Shahram Sondi


Considering a Florida move or eyeing investment property opportunities? Well, beyond the sunshine and sandy beaches, there’s a practical step – researching your mortgage loan options. Before setting up your Floridian base, make sure you’ve got the financial groundwork covered.

A conventional loan is a mortgage offered and backed by private sector lenders, distinguishing it from government-backed loans like FHA, VA, and USDA loans. Available through various lenders such as banks, credit unions, and online mortgage companies, conventional loans offer two main types: fixed-rate and adjustable-rate mortgages.

Loan term

30-yr fixed

View rate assumption disclosures

Types of Conventional Mortgage Loans

  1. Fixed-Rate Mortgages (FRM):

    • Description: These are your classic loans. The interest rate stays the same for the whole deal, whether it’s 15, 20, or 30 years.
    • Advantages: Predictable payments, long-term stability.
    • Consideration: Initial rates might be a tad higher.
  2. Adjustable-Rate Mortgages (ARM):

    • Description: Start with a fixed rate for 5, 7, or 10 years, then it can change based on the market.
    • Advantages: Lower starting rates, potential savings.
    • Consideration: Payments could go up if rates rise.
  3. Conforming Loans:

    • Description: These meet Fannie Mae and Freddie Mac rules, with set loan limits.
    • Advantages: Standard loan terms, competitive rates.
    • Consideration: Follow strict guidelines.
  4. Non-Conforming or Jumbo Loans:

    • Description: For pricier homes, going beyond the Fannie and Freddie limits.
    • Advantages: Big financing for big homes.
    • Consideration: Might come with higher rates and tougher rules.
  5. Conventional 97 Loan:

    • Description: A low down payment option, just 3% needed.
    • Advantages: Lower upfront cash needed.
    • Consideration: Has its own set of eligibility rules.
  6. HomeReady and HomePossible Loans:

    • Description: Special programs helping lower-income buyers with down payment help and easier credit terms.
    • Advantages: First-time buyer assistance, flexible eligibility.
    • Consideration: Specific income and location criteria.
  7. Renovation Loans:

    • Description: Finance your home improvements along with your mortgage.
    • Advantages: Upgrade without a separate loan.
    • Consideration: Extra paperwork and appraisal requirements.

Buying or refinancing in Florida? I can get you a lower loan rate than any bank or lender in the state. Give me a ring, or book a videocall.

Conventional Loan Requirements

Every mortgage lender is different, but here are some ways you can bag the best rate on your conventional mortgage:

  1. Solid Credit Score: Aim for at least 620, but the higher, the better. It helps you score sweet interest rates.
  2. Prove Your Income: Be ready to prove your income with pay stubs, W-2s, or tax returns. Lenders want to know you’ve got a steady cash flow.
  3. Job Stability: They like consistency. A solid work history for the past two years is the gold standard.
  4. Down Payment Dance: Typically 20% is the magic number, but there are 3% down payment options if you’re not swimming in cash.
  5. Keep Your DTI Low: Keep your Debt-to-Income ratio in check. The lower, the better.
  6. Home Appraisal: Your future home needs to pass the value check with an appraisal.
  7. PMI Factor: If your down payment is less than 20%, get ready to make friends with Private Mortgage Insurance (PMI). It’s like insurance for the lender, not you.
  8. Loan Limits: Watch out for loan limits set by the big shots, Fannie Mae and Freddie Mac. They can vary by where you’re setting up home base.

Examples of Who Might Qualify

Let’s say you’re looking to secure a conventional loan for a $300,000 home. The mortgage lender has a minimum credit score requirement of 620, a maximum debt-to-income ratio of 49.9%, and a down payment of 5%.

  • Credit Score: Your credit score is 650.
  • Debt-to-Income Ratio: Your total monthly debt payments are $2,000, and your gross monthly income is $5,000.


  • Credit Score: Since your credit score (650) meets the minimum requirement (620), you qualify in this aspect.
  • Debt-to-Income Ratio: Calculate DTI = (Total monthly debt / Gross monthly income) x 100
    • DTI = ($2,000 / $5,000) x 100 = 40%
    • Your DTI of 40% is below the maximum allowed (45%), making you eligible.

Now, let’s say you’re considering a conventional loan and an FHA loan for a $250,000 home.

  • Conventional Loan: Requires a 5% down payment.
  • FHA Loan: Requires a 3.5% down payment.


  • Conventional Loan Down Payment: 5% of $250,000 = $12,500
  • FHA Loan Down Payment: 3.5% of $250,000 = $8,750

In this example, the conventional mortgages requires a higher down payment, illustrating the difference in down payment requirements between the two loan types.

How to Apply for a Conventional Loan

Applying for a conventional mortgage loan involves several key steps. Here’s a general overview to guide you through the process:

  1. Check Your Credit:

    • Take a peek at your credit report and see where you stand.
    • Shoot for a decent credit score – it makes a big difference in rates and approvals.
  2. Assess Your Finances:

    • Look at your wallet and crunch the numbers – figure out what you can realistically handle in terms of a mortgage.
  3. Save for a Down Payment:

    • Put some cash aside for that down payment. Usually, it’s like 3% to 20% of the home’s price.
  4. Research Lenders:

    • Shop around for lenders – banks, credit unions, mortgage companies. Check rates, fees, and what people are saying about them.
  5. Pre-Qualification or Pre-Approval:

    • Get pre-qualified or pre-approved. It’s like a financial sneak peek to know your budget better.
  6. Gather Documentation:

    • Find those pay stubs, W-2s, tax returns – basically, all the money paperwork. Lenders love paperwork.
  7. Submit the Loan Application:

    • Fill out that loan application. Be honest about your money and the place you’re eyeing.
  8. Wait for Loan Processing:

    • Chill out while they process your application. They’ll check your info, appraise the place, and give your credit a once-over.
  9. Appraisal and Underwriting:

    • Someone checks if the house is worth what you’re paying. Underwriting is just a fancy term for them digging into your finances.
  10. Loan Approval:

    • If all’s good, they give you the green light – but there might be some conditions.
  11. Closing Disclosure:

    • You get a Closing Disclosure, which is like the cheat sheet for your final costs and terms.
  12. Closing Day:

    • Show up on closing day, sign the papers, and officially call that place yours.

Keep in mind, the specifics can change a bit depending on who you’re working with, so don’t be shy about asking questions along the way.

Pros and Cons of Conventional Loans


  1. Loan Flexibility: Conventional loans let you pick your flavor with terms like 15, 20, or 30 years, so you can find a plan that fits your wallet.
  2. No Upfront Mortgage Hurdles: Unlike some other loans, you don’t have to drop a bunch of cash upfront for mortgage insurance. Score one for your wallet.
  3. Lower Monthly Insurance Bills: If you can swing at least a 20% down payment, you can dodge private mortgage insurance (PMI) or at least keep the monthly cost on the down-low.
  4. Big Borrowing Power: Conventional loans often give you the green light for higher loan amounts, making them handy for those eyeing pricier properties.
  5. Speedy Processing: Need to move fast in a hot market? Conventional loans often get the paperwork done quicker than some other options.


  1. Credit Checkup: They’re a bit pickier about credit scores. The better your score, the sweeter the deal. But if it’s on the lower side, it might mean higher interest rates or a tougher time getting approved.
  2. Down Payment Dance: You’ll need to bring some cash to the party. It’s usually at least 3%, but if you can swing 20%, you’ll dodge the PMI bullet.
  3. Debt-to-Income Dance: They might side-eye your debts more than some other loans, which could be a downer if you’re juggling a lot.
  4. Home Standards: Your dream home might need to meet some high standards to get the green light. If it’s a fixer-upper, conventional loans might give you a bit of side-eye.
  5. Interest Rate Rollercoaster: Your interest rate could play the market. If rates are high when you’re ready to roll, your mortgage rate might not be as budget-friendly.
  6. First-Time Buyer FOMO: If you’re a first-time buyer, you might miss out on some of the perks and help that come with government-backed loans.

Alternatives to Conventional Home Loans

For borrowers with lower credit scores or difficult income scenario, alternative non-conventional loans like Non-QM loans might be considered. These options have more forgiving standards, offering solutions for individuals facing credit history or income documentation challenges in qualifying for conventional loans.

Discover more loan types

Conventional loans are a popular choice for homebuyers, thanks to their versatility and wide range of options. While the application process might be more rigorous, the benefits of financing various property types, controlling mortgage insurance, and exploring diverse loan structures make conventional loans a great option for those who meet the criteria.

Understanding the nuances of conventional loans empowers you to make informed decisions on their path to homeownership.

Need help deciding which loan to choose? Or simply want to get the best possible rate on your loan? Give me a call anytime.

Need more guidance or inspiration? Keep exploring mortgage content.