FHA Loans in Alabama and Florida
An FHA loan is the most forgiving path to a mortgage in Alabama and Florida. Lower credit score, smaller down payment, and more room for debt than a conventional loan allows. The tradeoff is mortgage insurance that usually sticks around — and knowing that going in is the difference between a good decision and an expensive one.
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2026 FHA loan limits in Alabama and Florida
| Where | 2026 one-unit FHA limit |
|---|---|
| Every county in Alabama | $541,287 (the national floor) |
| Most Florida counties | $541,287 |
| Higher-cost Florida metros | Above the floor — varies by county |
| Monroe County, FL (the Keys) | $990,150 |
Alabama sits entirely at the national floor because median home prices statewide fall below the threshold for an elevated limit. Florida varies county by county. Ask us to check your specific county before you assume the floor applies — a few thousand dollars of limit can decide whether FHA works for your purchase.
FHA loan requirements
| Requirement | What it takes |
|---|---|
| Credit score | 580 for 3.5% down. 500–579 is possible with 10% down, though few lenders go there. |
| Down payment | 3.5% minimum, and it can be gifted in full by a family member. |
| Debt-to-income | Often approved above 50% with strong compensating factors. Considerably more room than conventional. |
| Mortgage insurance | Upfront premium (financed into the loan) plus an annual premium in your monthly payment. |
| Property condition | Must meet FHA minimum property standards. The appraiser checks condition, not just value. |
| Occupancy | Primary residence only. No second homes, no investment property. |
The part that costs people money: FHA mortgage insurance
FHA charges mortgage insurance two ways, and the second one is the one that matters.
Upfront (UFMIP). A one-time premium rolled into your loan balance. You do not write a check for it, but you do finance it and pay interest on it for the life of the loan.
Annual (MIP). Charged monthly as part of your payment. On most FHA loans with the minimum down payment, this never goes away. It stays for the full 30 years unless you refinance out of FHA entirely.
That is the single biggest structural difference between FHA and conventional. Conventional loans in Alabama and Florida carry PMI you can cancel at 80% loan-to-value and that terminates automatically at 78%. FHA does not work that way.
What this means in practice: FHA is frequently the right loan to buy with and the wrong loan to keep. Plenty of our clients use FHA to get into the house, then refinance to conventional once their credit and equity improve. That is a legitimate strategy, not a failure.
FHA or conventional? A straight comparison
| FHA | Conventional | |
|---|---|---|
| Minimum credit score | 580 | 620 |
| Minimum down payment | 3.5% | 3% (first-time) / 5% |
| Mortgage insurance | Usually for the life of the loan | Cancellable at 80% LTV |
| Debt-to-income flexibility | Higher | Lower |
| Property condition standards | Stricter | Standard appraisal |
| Investment property | No | Yes |
| Seller-paid closing costs | Up to 6% | Typically 3% at low down payments |
Rough rule: under a 640 score, or with debt-to-income above 45%, FHA usually wins. At 680 and above with manageable debt, conventional usually wins on total cost. Between those, it depends on your specific numbers — and we price both before you decide.
Two things that trip up FHA buyers here
Alabama: property condition
FHA appraisers flag peeling paint on pre-1978 homes, missing handrails, active roof leaks, and non-functioning systems. Alabama has a lot of beautiful older housing stock, and these repairs must be completed before closing. Know this before you write an offer on a fixer.
Florida: condo approval
FHA financing on a condo requires the entire project to be on the FHA-approved list, or to qualify for single-unit approval. Many Florida condo projects are not approved. Check before you write the offer, not during your inspection period.
Why buyers choose Mountain Mortgage for FHA
- We price FHA against conventional every time. No one should end up in a lifetime-MIP loan without having seen the alternative side by side.
- Underwriting up front. Fast Pass underwriting puts your file through a real underwriter before you shop — which matters more with FHA, where listing agents are sometimes wary of the offer.
- Closing cost help. FHA allows up to 6% in seller concessions, and our $5,000 lender credit toward closing costs can stack on top.
- Licensed in both states, and familiar with FHA condo approval in Florida and property-condition repairs in Alabama.
Get your quote — no credit pull to start.
FHA loan FAQ
What credit score do I need for an FHA loan in Alabama or Florida?
580 qualifies you for the 3.5% down payment. Between 500 and 579 you need 10% down, and most lenders will not write that loan. Above 620 you should also price a conventional loan before committing.
What is the FHA loan limit in Alabama for 2026?
$541,287 for a one-unit property in every Alabama county. The state has no high-cost designated areas, so the national floor applies throughout.
What is the FHA loan limit in Florida for 2026?
$541,287 in most counties, with higher limits in more expensive metros and $990,150 in Monroe County. Limits are set county by county, so check yours specifically.
Does FHA mortgage insurance ever go away?
On most FHA loans made with the minimum down payment, no. The annual premium stays for the life of the loan. Removing it generally requires refinancing into a conventional loan once you have enough equity and credit.
Can I use an FHA loan for an investment property?
No. FHA financing is limited to your primary residence. You can buy a two-to-four unit property with FHA if you live in one of the units.
Can my down payment be a gift on an FHA loan?
Yes. The entire 3.5% can be gifted by a family member, with a documented gift letter and a paper trail for the funds. This is one of FHA's most useful features.
Is it harder to get an offer accepted with an FHA loan?
Sometimes, because of the property-condition standards. The fix is an underwritten approval rather than a basic pre-approval, which tells the listing agent your financing is real.
Ready to see your numbers?
Tell us your price range and we will send back a written estimate showing FHA and conventional side by side — down payment, monthly payment, and total cash to close for each.