Conventional Loan Requirements in Alabama and Florida (2026)

A conventional loan is the default setting of American mortgages. It isn't insured by a government agency the way FHA and VA loans are. Instead it's written to standards set by Fannie Mae and Freddie Mac, which is why the rules are consistent from lender to lender — and why the exceptions matter so much.

Here's what it actually takes to qualify in 2026, what's different between Alabama and Florida, and the one 2026 rule change that's catching Florida condo buyers by surprise.

The requirements at a glance

Requirement	2026 standard
Minimum credit score	620 (best pricing generally begins around 740)
Down payment — first-time buyer	As little as 3%
Down payment — repeat buyer	Typically 5%
Down payment to avoid PMI	20%
Maximum DTI	Commonly 43%–45%, higher with strong compensating factors
Conforming loan limit (AL, most of FL)	$832,750
Conforming loan limit (Monroe County, FL)	$990,150
Employment	Generally two years of documented history
Property types	Primary, second home, and investment all eligible

Those are the baseline standards. Individual lenders can add stricter requirements on top — the industry calls these overlays, and they're the reason two lenders can look at the same file and give you two different answers. Worth knowing when you're comparing mortgage lenders in Alabama and Florida.

Credit score: what 620 really means

620 is the floor, not the target.

Conventional pricing is risk-based, which means your credit score doesn't just decide whether you qualify — it changes the cost. A borrower at 620 and a borrower at 760 with identical income, identical down payment, and identical debt will not get the same terms. Pricing improvements generally start around 740, and the gap between a 620 file and a 760 file is real money over the life of the loan.

There's a second effect that's less obvious: your credit score also drives your PMI premium. If you're putting less than 20% down, a higher score reduces both the interest cost and the mortgage insurance cost. Two levers, one number.

If you're sitting in the 600s, it is often worth spending 60 days on the score before applying rather than 30 years paying for the score you had. That's a conversation worth having before you're under contract, not after.

If you're below 620: an FHA loan has more forgiving credit requirements and is frequently the better path. Eligible veterans and service members should look at a VA loan first regardless of score, since it allows zero down and carries no monthly mortgage insurance.

Down payment: 3%, 5%, or 20%

The "you need 20% down" belief is the single most expensive myth in home buying, and it keeps people renting for years longer than they need to.

3% down is available to qualified first-time buyers through conventional programs. In most cases first-time buyer means you haven't owned a principal residence in the past three years — which, notably, includes plenty of people who owned a home a decade ago.

5% down is the common floor for repeat buyers on a primary residence.

20% down isn't a requirement. It's the threshold where private mortgage insurance stops applying.

And you don't necessarily have to bring that money yourself. Alabama and Florida both run programs that can cover part or all of the down payment for eligible buyers — see down payment assistance programs in Alabama and Florida. Gift funds from family are also permitted on conventional loans within program rules.

PMI: how it works and how to get rid of it

If you put less than 20% down, you'll pay private mortgage insurance. Most articles stop there. The useful part is the exit.

PMI on a conventional loan is not permanent, and this is the single biggest structural advantage conventional has over FHA — where mortgage insurance generally lasts the life of the loan if you put less than 10% down.

Three ways conventional PMI ends

1. You request cancellation at 80% loan-to-value. Once your loan balance reaches 80% of the original value, you can request that PMI be removed. You have to ask — it doesn't happen on its own — and you'll generally need to be current on payments and may need an appraisal.
2. It terminates automatically at 78% LTV. Based on the original amortization schedule, PMI is scheduled to drop off automatically. No request needed, but you're waiting longer than option 1.
3. Your home appreciates. If values in your area have risen, a new appraisal may show you've crossed the 80% threshold much sooner than the payment schedule alone would suggest. Seasoning requirements apply. In parts of Alabama and Florida over the past several years, this has been the fastest route for a lot of homeowners.

The practical takeaway: putting 5% down and dropping PMI in year four is often a much better financial outcome than waiting four years to save 20% — because in most markets you were also paying rent and missing appreciation during those four years. Run both, don't assume.

Loan limits: the number that decides conventional vs jumbo

For 2026, the baseline conforming loan limit is $832,750 for a one-unit property. That's up $26,250 — about 3.3% — from $806,500 in 2025.

Alabama: $832,750 in all 67 counties. Alabama has no FHFA-designated high-cost areas, so the number is the same in Huntsville, Birmingham, Mobile, and everywhere else in the state.

Florida: $832,750 in most counties, with one exception — Monroe County (the Keys) is a high-cost area at $990,150.

Above those numbers you're in jumbo territory, which generally means tighter credit requirements, larger down payments, more reserve requirements, and different pricing. There's a planning move buried here that a lot of buyers miss: if a larger down payment brings your loan amount under the limit, you can stay conventional on a home priced above it. On a purchase near the threshold, that decision is worth running the math on.

What's new in 2026: the condo rules Florida buyers need to know

If you're buying a condo in Florida, this may matter more than anything else in this article.

Fannie Mae and Freddie Mac have rolled out coordinated condo policy changes, and there are two dates that matter:

• Limited Review ended August 3, 2026. For loan applications dated on or after that date, the streamlined condo review pathway is no longer available for projects with more than 10 units. Nearly every Florida condo now requires full project review.
• Reserve funding rises to 15% on January 4, 2027. For applications dated on or after that date, associations will need to fund replacement reserves at 15% of the annual budget, up from 10%.
• Warrantable status isn't permanent. A project can lose it over reserve shortfalls, delinquency rates, new litigation, or deferred structural work — even if a different buyer closed in that same building six months ago.

Layer that on top of Florida's own requirements. Condo buildings three habitable stories or taller must complete a Structural Integrity Reserve Study (SIRS), and buildings that haven't completed a required SIRS or milestone inspection are generally treated as non-warrantable by Fannie Mae and Freddie Mac.

Non-warrantable means conventional financing on that unit is difficult or unavailable — no matter how strong the borrower is.

Associations have also lost the ability to waive or reduce reserves for structural components, which has driven HOA dues up sharply in a lot of buildings. That's not just a lifestyle cost. Higher HOA dues count in your debt-to-income ratio, so a dues increase can shrink the loan you qualify for.

What to do about it: if you're considering a Florida condo, confirm the building's SIRS and milestone inspection status and its reserve funding before you write an offer. A strong pre-approval and a non-warrantable building produce a dead deal — and you'd rather find that out in week zero than in week five. We pull the condo questionnaire early precisely so this doesn't surface during your inspection period.

Alabama vs Florida: what actually differs

The underwriting standards are federal, so credit, DTI, and down payment rules are identical in both states. Four things are not.

Loan limits

Same $832,750 baseline, except Monroe County, FL at $990,150.

Property insurance

This is the big one. Coastal Florida and coastal Alabama both face a difficult homeowners insurance market — wind mitigation reports, roof age scrutiny, 4-point inspections, and premiums that can materially change what you qualify for. Insurance is part of your monthly payment, so it's part of your DTI. Get a real quote early; an estimate off a listing can be off by hundreds a month.

Condos

Florida's SIRS and milestone requirements make condo warrantability a live issue in a way it generally isn't in Alabama.

Closing process

Alabama closings are commonly handled by a closing attorney; Florida closings are typically handled by a title company. It doesn't change your qualification, but it does change who you're dealing with in the final two weeks.

How to get approved without drama

1. Get pre-approved before you shop — a real pre-approval with documents reviewed, not a five-question prequalification.
2. Don't touch your credit. No new cards, no financed furniture, no car. Every new account re-prices your file.
3. Don't move money between accounts. Underwriters have to source large deposits, and "I moved my own savings" still generates a condition and a delay.
4. Get an insurance quote early, especially coastal. It's part of your payment and your DTI.
5. Respond to document requests the same day. Most closings that slip, slip here — not because underwriting is slow, but because a document sat for four days.

Ready to see what you qualify for? Get a quote from Mountain Mortgage, or start with our conventional loans page for the full program details.

Frequently asked questions

What credit score do I need for a conventional loan in Alabama or Florida?

620 is the typical minimum. Pricing improves as your score rises, with the best terms generally starting around 740. Below 620, an FHA loan is usually the better path.

Can I get a conventional loan with 3% down?

Yes, if you're a qualified first-time buyer — generally meaning you haven't owned a principal residence in the last three years. Repeat buyers typically start at 5% down.

What is the conventional loan limit in Alabama for 2026?

$832,750 in every Alabama county. The state has no high-cost designated areas.

What is the conventional loan limit in Florida for 2026?

$832,750 in most counties. Monroe County is a high-cost area at $990,150.

How do I get rid of PMI on a conventional loan?

You can request cancellation once your loan reaches 80% loan-to-value, and it terminates automatically at 78% based on the original amortization schedule. Appreciation can get you there faster than payments alone, subject to seasoning rules.

What is the maximum DTI for a conventional loan?

Commonly 43%–45%, though strong compensating factors like significant reserves or a high credit score can support more.

Can I buy a Florida condo with a conventional loan in 2026?

Often yes, but the building has to be warrantable. Buildings that haven't completed a required Structural Integrity Reserve Study or milestone inspection are generally treated as non-warrantable, which makes conventional financing difficult or unavailable. Confirm the building's status before you write an offer.

Is a conventional loan better than FHA?

It depends on your credit and down payment. Conventional usually wins on total cost if your score is strong, largely because PMI can be removed while FHA mortgage insurance often lasts the life of the loan. FHA usually wins if your credit is lower or your file has recent blemishes.

Do I need two years on the same job?

Generally two years of documented employment history, not two years at the same employer. Job changes within the same field are typically fine; changing industries or moving to commission-based pay gets more scrutiny.