Conventional Loans in Alabama and Florida
A conventional loan is the default path to a mortgage in Alabama and Florida — and for most buyers with decent credit, it is the cheapest one. It is not backed by the government, which means fewer overlays, no upfront funding fee, and mortgage insurance you can actually get rid of. Here is exactly what it takes to qualify in 2026.
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2026 conventional loan limits in Alabama and Florida
A conventional loan is “conforming” when it fits inside the limit set each year by the Federal Housing Finance Agency. Go one dollar over and you are in jumbo territory, with different rules and pricing.
| Where | 2026 one-unit limit |
|---|---|
| Every county in Alabama | $832,750 |
| Florida — 66 of 67 counties | $832,750 |
| Florida — Monroe County (the Keys) | $990,150 |
The 2026 baseline rose $26,250 from 2025. Monroe County is Florida’s only high-cost designation, which matters if you are buying in Key West, Marathon, or Islamorada.
Conventional loan requirements at a glance
| Requirement | What it actually takes |
|---|---|
| Credit score | 620 minimum. 680+ meaningfully improves pricing and PMI cost. 740+ is where the best terms live. |
| Down payment | 3% for a qualifying first-time buyer, 5% standard, 20% to skip mortgage insurance entirely. |
| Debt-to-income | Commonly up to 50% with an automated approval. 45% is the comfortable zone. |
| Mortgage insurance | Required under 20% down — and removable later. That is the key difference from FHA. |
| Employment history | Two years documented. Job changes inside the same field are usually fine. |
| Property types | Primary residence, second home, or investment property. Condos require project review. |
How much you really need to put down
The 20% figure is the most expensive myth in real estate. On a $350,000 home in Alabama or Florida, the difference between 5% down and 20% down is $52,500 in cash you either keep or hand over at the table.
You are trading cash today for mortgage insurance you can cancel in a few years. For most buyers, keeping the cash wins — especially in Florida, where the first year of homeowners insurance and property tax escrow hits harder than people budget for. We break the math down side by side in how 5% down compares to 20% down.
If cash to close is the real constraint rather than the down payment itself, ask about the $5,000 lender credit toward closing costs.
Figures above are illustrative examples. Not a rate quote or an offer of credit.
How to get rid of PMI on a conventional loan
This is the part almost nobody explains properly, and it is worth thousands of dollars.
Request cancellation at 80%
Once your loan balance reaches 80% of the original property value, you can ask your servicer in writing to cancel PMI. You need to be current on payments with a clean recent history. This does not happen automatically — you have to request it.
Automatic termination at 78%
At 78% of the original value, the servicer must drop PMI on its own, provided the loan is current. If you do nothing at all, this is your backstop.
Cancel early using a new appraisal
If your home appreciated, you may be able to cancel based on current value rather than the original purchase price. Seasoning requirements apply, and the LTV threshold is stricter than 80% in the first few years — but in the Alabama and Florida markets of the last several years, this has taken PMI off loans years ahead of schedule.
FHA loans do not work this way. On most FHA loans, mortgage insurance stays for the life of the loan unless you refinance. That single difference is the strongest argument for going conventional when you qualify.
Conventional or FHA? The honest answer at a 620–680 score
Both are available to you in that band, and the right one is not obvious.
| Choose conventional if… | Choose FHA if… |
|---|---|
| Your score is 680 or above | Your score is under 640 |
| You want mortgage insurance you can remove | You need a higher DTI than conventional allows |
| Your debt-to-income is 45% or lower | You have recent credit blemishes |
| You are buying a second home or investment property | You are putting down close to the 3.5% minimum with thin reserves |
Between roughly 640 and 680 it genuinely goes either way, and it comes down to your specific PMI quote against FHA’s premium structure. We run both and show you the two side by side — the same discipline we describe in how to compare mortgage lenders in Alabama and Florida.
Buying a Florida condo in 2026? Read this first.
Condo financing in Florida changed substantially this year, and it catches buyers and agents off guard weekly.
- Limited Review is gone. For loan applications dated on or after August 3, 2026, 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 requirements are rising to 15%. Applications dated on or after January 4, 2027 will require associations to fund replacement reserves at 15%, up from 10%.
- Eligibility is not permanent. A project can lose warrantable status over reserve shortfalls, delinquency rates, new litigation, or deferred structural work — even if a different buyer closed there six months ago.
The practical takeaway: get the project reviewed before you write the offer, not after. We pull the condo questionnaire early precisely so this does not surface during your inspection period.
Why buyers in Alabama and Florida close with Mountain Mortgage
- Underwriting up front. Our Fast Pass underwriting puts your file through a real underwriter before you shop, so your offer reads like cash to a listing agent.
- Two states, one team. We are licensed in Alabama and Florida and know both closing cultures — the attorney-state rhythm in Alabama and the title-company rhythm in Florida.
- Structure options, not one product. Conventional, and if it fits you better, something else. We will tell you when conventional is not the answer.
- Straight numbers. A written estimate you can hold against any other lender’s, line by line.
Get your quote — no credit pull required to start the conversation.
Conventional loan FAQ
What credit score do I need for a conventional loan in Alabama or Florida?
620 is the floor. At 680 you will see better pricing and lower mortgage insurance, and 740 and above earns the strongest terms. If you are sitting just below a threshold, it is often worth a few weeks of targeted credit work before applying — we will tell you if that is your situation.
Can I get a conventional loan with 3% down?
Yes, if you qualify as a first-time buyer under the program definition and meet income and property requirements. Otherwise 5% is the standard conventional minimum on a primary residence.
What is the conventional loan limit in Florida for 2026?
$832,750 in 66 of Florida’s 67 counties. Monroe County, covering the Keys, is the sole high-cost exception at $990,150. Above those figures you are looking at a jumbo loan.
What is the conventional loan limit in Alabama for 2026?
$832,750 in every Alabama county. Alabama has no high-cost designated areas, so the baseline applies statewide.
How do I remove PMI from a conventional loan?
Request cancellation in writing once the balance hits 80% of the original value, or let it terminate automatically at 78%. If your home has appreciated, you may be able to cancel earlier using a new appraisal, subject to seasoning rules.
Is a conventional loan better than FHA?
Usually, if you qualify — mainly because conventional mortgage insurance can be removed and most FHA mortgage insurance cannot. Below a 640 score or with a high debt-to-income ratio, FHA often wins. The only reliable answer comes from pricing both.
Can I use a conventional loan for an investment property in Alabama or Florida?
Yes. Conventional financing covers primary residences, second homes, and investment properties. Investment purchases require a larger down payment and carry different pricing, and reserve requirements are stricter.
Should I choose a fixed or adjustable rate on a conventional loan?
It depends on how long you realistically expect to hold the loan. We walk through the tradeoff in our guide to fixed-rate and adjustable-rate mortgages.
Ready to see your numbers?
Tell us the price range and we will send back a written estimate with the down payment, monthly payment, and full cash to close. No obligation and no credit pull to begin.