FHA Loans in Alabama and Florida: What You Actually Need in 2026

An FHA loan is the most forgiving mortgage most buyers will qualify for. It's insured by the Federal Housing Administration, which is why lenders can say yes to credit profiles conventional financing turns down.

That flexibility is real. So is the cost. Here's what it takes to qualify in Alabama and Florida in 2026, what FHA actually costs you over the life of the loan, and the specific situations where it's the wrong choice even though you'd be approved.

FHA requirements at a glance

Requirement 2026 standard
Credit score — 3.5% down 580
Credit score — 10% down 500–579
Down payment 3.5% (or 10% below 580)
Maximum DTI Generally 43%, up to 50% with compensating factors
Upfront mortgage insurance 1.75% of the loan amount
Annual mortgage insurance 0.15%–0.75%; most borrowers pay 0.55%
Loan limit — all Alabama counties $541,287
Loan limit — most Florida counties $541,287
Loan limit — Monroe County, FL $990,150
Occupancy Primary residence only

Two things in that table do most of the work. The 500 credit score floor is why FHA exists. The annual mortgage insurance is why it costs what it costs.

Credit score: the two tiers that matter

FHA has two doors, and which one you walk through changes your down payment.

580 and above gets you the 3.5% down payment. This is the FHA everyone means when they say FHA.

500 to 579 still qualifies you — but the down payment jumps to 10%. That's a strange trade when you think about it: the borrowers with the weakest credit are asked for the most cash. In practice, buyers in this band are usually better served spending a few months on the score than trying to assemble 10%.

Below 500 there's no FHA loan at any down payment.

Worth knowing: FHA sets the floor, but individual lenders can require more. Many won't go below 580 or 620 regardless of what FHA permits. Those are overlays, and they're why one lender's no isn't the market's no — the same logic that applies when you're comparing mortgage lenders in Alabama and Florida.

What FHA mortgage insurance really costs

This is the part that gets skipped, and it's the part that decides whether FHA was the right call.

FHA charges mortgage insurance twice.

Upfront (UFMIP): 1.75% of the loan amount. Paid at closing, though it's almost always rolled into the loan. On a $300,000 loan that's $5,250 added to what you owe on day one.

Annual (MIP): most borrowers pay 0.55%, divided into monthly payments. The range runs 0.15% to 0.75% depending on loan amount, loan-to-value, and term.

Here's the part almost nobody explains clearly:

If you put less than 10% down on an FHA loan, mortgage insurance stays for the life of the loan.

Not until 80% equity. Not until 78%. For the entire 30 years, unless you refinance out of it.

Compare that to conventional, where PMI can be cancelled at 80% loan-to-value and terminates automatically at 78%. On a conventional loan, mortgage insurance is a temporary cost. On FHA with minimum down, it's permanent.

With 10% or more down, FHA mortgage insurance drops off after 11 years. Better, but still not the same as cancelling it the moment you hit 20% equity.

What this means practically: FHA is often the cheaper loan for the first few years and the more expensive one over a long hold. If you're confident you'll refinance or sell within five years, that math may not matter. If this is the house you're staying in, it matters a great deal. Run both before you choose — the full breakdown is in our guide to conventional loan requirements in Alabama and Florida.

Figures above are illustrative examples based on published FHA program rates. Not a rate quote or an offer of credit.

2026 FHA loan limits: Alabama and Florida

Alabama: $541,287 in every county. No exceptions. Alabama has no high-cost FHA areas, so the national floor applies from Huntsville to Mobile.

Florida: mostly $541,287, with real exceptions. Most counties sit at the floor. But several are designated high-cost:

  • Monroe County (the Keys): $990,150
  • Broward, Miami-Dade, and Palm Beach: roughly $667,000

That South Florida gap is significant. A purchase that's over the FHA limit in Tampa may be comfortably inside it in Fort Lauderdale.

Notice how much lower these are than conventional. Conventional conforming runs $832,750 in both states — nearly $300,000 higher than the FHA floor. On a mid-priced home, FHA can price you out where conventional wouldn't. That surprises people who assume FHA is the more accommodating program across the board. It's more accommodating on credit, not on price.

Debt-to-income, and why Florida insurance breaks it

FHA generally wants DTI at or under 43%, and will stretch toward 50% with compensating factors — strong reserves, a higher credit score, meaningful residual income.

That flexibility is one of FHA's real advantages. It's also where Alabama and Florida buyers get an unpleasant surprise.

Your homeowners insurance premium is part of your monthly payment, which makes it part of your DTI.

In coastal Florida and coastal Alabama, that premium isn't a rounding error. Wind mitigation reports, roof age, 4-point inspections, carriers declining to write at all — a quote can come back several hundred dollars a month above what the listing suggested. Every one of those dollars pushes your DTI up and your buying power down.

The failure looks like this: pre-approved comfortably in March, under contract in May, insurance quote arrives in week three, and suddenly the file doesn't fit.

Get a real insurance quote before you write the offer on any coastal property or any home with a roof over 15 years old. It is the single highest-value 20 minutes in a Florida transaction.

Florida condos and FHA: a harder road than conventional

If you're buying a condo with FHA financing in Florida, know this going in: FHA condo approval is its own process, and it's stricter than conventional's.

The project has to be FHA-approved, or qualify through single-unit approval. That's on top of Florida's own requirements — buildings three habitable stories or taller must complete a Structural Integrity Reserve Study, and buildings that haven't completed a required SIRS or milestone inspection are generally treated as non-warrantable.

A building can be perfectly financeable conventionally and still not work for FHA. Confirm the project's status before you write the offer, not during your inspection period.

When FHA is right, and when it isn't

FHA is usually the better choice when:

  • Your credit score is under 640
  • You have recent credit events — collections, a late-payment stretch, a past bankruptcy or foreclosure now seasoned
  • Your DTI needs to run above 45%
  • You're buying with a co-borrower whose credit drags the file down

Conventional is usually better when:

  • Your credit is 680 or above
  • You expect to stay in the home long-term — because PMI comes off and MIP doesn't
  • You're buying above the FHA limit in your county
  • You're buying a second home or investment property, which FHA doesn't allow at all

And check VA loans first if you're eligible. Zero down, no monthly mortgage insurance at all. For a veteran or active-duty service member, VA beats FHA in nearly every scenario worth comparing.

Getting the down payment together

FHA's 3.5% is small, but it isn't nothing — on a $300,000 home, that's $10,500 plus closing costs.

You may not need to bring all of it. Alabama and Florida both run assistance programs that can cover part or all of the down payment for eligible buyers. Start with down payment assistance programs in Alabama and Florida and our first time homebuyer programs breakdown.

Gift funds from family are also permitted on FHA within program rules — and FHA is notably more flexible about gift sources than conventional.

One more lever: sellers can contribute up to 6% of the sales price toward your closing costs on an FHA loan. That's a meaningfully higher cap than conventional allows at low down payments, and in a market where sellers are negotiating, it's real money most buyers never ask for.

Five things that get FHA files approved without drama

  1. Get pre-approved with documents reviewed, not a five-question prequalification.
  2. Get the insurance quote early. Coastal property, older roof — this is a day-3 task.
  3. Don't touch your credit. No new accounts, no financed furniture, no car.
  4. Don't move money between accounts. Underwriters have to source deposits, and moving your own savings still creates a condition.
  5. Respond to document requests the same day. Most delayed closings stall here, not in underwriting.

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

Frequently asked questions

What credit score do I need for an FHA loan in Alabama or Florida?

580 for the 3.5% down payment. 500–579 qualifies with 10% down. Below 500 there's no FHA option. Individual lenders may require higher scores than FHA's minimums.

What is the FHA loan limit in Alabama for 2026?

$541,287 in every Alabama county. The state has no high-cost designated areas.

What is the FHA loan limit in Florida for 2026?

$541,287 in most counties. Monroe County is $990,150, and Broward, Miami-Dade, and Palm Beach are around $667,000.

Does FHA mortgage insurance ever go away?

With less than 10% down, no — it stays for the life of the loan unless you refinance. With 10% or more down, it drops off after 11 years. This is the biggest structural difference between FHA and conventional.

How much is FHA mortgage insurance in 2026?

1.75% of the loan amount upfront, plus an annual premium between 0.15% and 0.75%. Most borrowers pay 0.55% annually, divided into monthly payments.

Can I use an FHA loan for an investment property?

No. FHA is for primary residences only. Consider a conventional loan for a second home or investment property.

Can I buy a condo with an FHA loan in Florida?

Sometimes, but the project needs FHA approval or single-unit approval, and it must also meet Florida's SIRS and milestone inspection requirements. FHA condo approval is harder to clear than conventional. Check before you write the offer.

How much can the seller pay toward my closing costs on an FHA loan?

Up to 6% of the sales price toward closing costs, prepaid expenses, and discount points.

Is FHA better than conventional?

It depends on your credit and how long you'll own the home. FHA wins on access — lower scores, higher DTI, past credit events. Conventional usually wins on total cost, because its mortgage insurance can be removed and FHA's typically can't.

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