Florida Mortgage Guide 2026: Loan Types, Rates, and How to Get the Best Deal

Getting a mortgage in Florida involves the same national loan market as everywhere else, plus Florida-specific costs and some local market dynamics. Here's what to know in 2026.

The loan type decision

Conventional loans (Fannie Mae / Freddie Mac)

The most common mortgage for Central Florida buyers. Conventional loans conform to Fannie Mae and Freddie Mac guidelines, which allow them to be packaged and sold to investors — creating a deep, liquid market with competitive rates.

Key characteristics:

• Down payment: 3–20%+ (3% and 5% options available with PMI; 20% eliminates PMI)
• Credit score: 620 minimum; 700+ gets meaningfully better rates; 740+ gets the best
• PMI (Private Mortgage Insurance): Required if less than 20% down; automatically cancels when LTV reaches 80%. Typically 0.5–1.5% of loan amount annually, paid monthly
• Loan limits (2026): $806,500 for single-family homes in most Florida counties (conforming limit); "jumbo" loans above this have slightly different underwriting requirements
• Condo requirements: Stricter — the condo association must be lender-approved; many Florida condos are non-warrantable

FHA loans

Government-backed loans through the Federal Housing Administration. Easier to qualify for; require mortgage insurance for the life of the loan (or until refinanced).

• Down payment: 3.5% (580+ credit score); 10% (500–579)
• Mortgage insurance premium: 1.75% upfront (can be financed into the loan) + 0.55% annually
• Best for: First-time buyers with lower credit or down payment; buyers who will not put 20% down and plan to hold the loan long-term
• Condo requirements: FHA-approved condos only — many Florida condos are not on the FHA approved list, limiting options significantly

VA loans

For eligible veterans, active-duty service members, and surviving spouses. Among the best loan terms available — if you qualify, use them.

• Down payment: 0%
• Mortgage insurance: None (VA funding fee applies instead — typically 1.25–3.3% financed into the loan, waived for disability-rated veterans)
• Rate: Typically 0.25–0.5% below comparable conventional
• Best for: Any eligible veteran or service member — the no-down-payment and no-PMI advantages are significant

USDA loans

For properties in eligible rural and suburban areas — some Central Florida communities near the outer edges qualify. Check USDA property eligibility maps.

• Down payment: 0%
• Income limits: Below 115% of area median income
• Best for: Buyers in eligible areas who don't qualify for VA

Shopping for a lender

The lender makes a difference

The interest rate, origination fees, and speed of closing vary significantly by lender. For a $400,000 loan:

• A 0.25% rate difference costs approximately $10,000 in extra interest over 10 years (the typical holding period before sale or refinance)
• Origination fee differences of $2,000 add to your upfront costs

Compare at least two lenders: Federal law requires lenders to provide a Loan Estimate within 3 business days of receiving your application. Apply with 2–3 lenders in the same week (multiple mortgage inquiries within 14–45 days count as one inquiry for credit scoring purposes). Compare Loan Estimates line by line:

• Section A: Origination charges (lender-set, negotiable)
• Section B: Services you cannot shop for (appraisal, credit report — set by lender)
• Section C: Services you can shop for (title insurance, settlement agent)
• Total A+B+C is your true cost of borrowing beyond the down payment

Types of lenders in Central Florida:

• National banks (Wells Fargo, Bank of America, Chase): Consistent underwriting, good technology, sometimes slower closing. Rate competitiveness varies.
• Local community banks and credit unions: Often competitive rates for well-qualified buyers; sometimes faster and more flexible on edge cases.
• Mortgage brokers: Shop multiple wholesale lenders simultaneously; often find the most competitive rates; broker fee adds cost but may be offset by lower rates.
• Online lenders (Rocket, Better, loanDepot): Efficient technology, sometimes competitive rates, less local expertise and slower problem resolution.

What matters most in a lender:

1. Rate + fees (the actual cost of the loan)
2. Responsiveness and communication
3. On-time closing track record (a lender who misses closing deadlines costs you money and risks your deal)

Rate locks

When you go under contract, your lender will offer you a rate lock — a commitment to a specific interest rate for a specified period (30, 45, or 60 days typically).

Lock when you go under contract: Rates can move significantly in the weeks between contract and closing. Waiting to lock hoping for rates to fall is speculation — it can work in your favor, but it can also cost you significantly.

Lock extension fees: If your closing is delayed past the lock expiration, extensions cost 0.1–0.25% of the loan amount per extension period. Coordinate your expected closing date with your lock period when you lock.

Float down options: Some lenders offer a "float down" option — if rates improve after you lock by a specified amount, you can take the lower rate. Typically costs 0.1–0.3% upfront.

Seller-funded rate buydowns in 2026

As the market has shifted from the 2021–2022 extreme seller's market, rate buydowns have become a popular negotiating tool — sellers contribute funds at closing to buy down the buyer's interest rate.

2-1 temporary buydown: The most common. Seller contributes funds equal to approximately 2% of the loan amount. Buyer's rate is 2% lower in year 1, 1% lower in year 2, then full rate from year 3. The unused portion of the buydown fund is returned to the buyer if they sell or refinance before year 3.

Example: $400,000 loan at 7.0%

• Year 1: 5.0% rate → payment $2,147/month
• Year 2: 6.0% rate → payment $2,398/month
• Year 3+: 7.0% rate → payment $2,661/month

Seller cost: ~$11,000 in buydown funds

Permanent buydown: Seller contributes 1 point (1% of loan amount) to permanently reduce the rate by ~0.25%. On a $400,000 loan, 1 point = $4,000 reduces the rate from 7.0% to 6.75%, saving $67/month — breakeven at roughly 5 years.

When to negotiate a buydown vs. price reduction: A buydown lowers your monthly payment; a price reduction lowers your loan amount (affecting both rate and balance). For buyers who plan to hold for 5+ years, a permanent buydown is often worth more than an equivalent price reduction. For shorter holds, a price reduction may be preferable.

Florida-specific mortgage costs

Documentary stamp on mortgage: 0.35% of loan amount — a Florida state tax paid by the buyer. $1,400 on a $400,000 mortgage.

Intangible tax on mortgage: 0.20% of loan amount — another Florida state tax. $800 on a $400,000 mortgage.

These taxes don't exist in most states. Out-of-state buyers frequently omit them from closing cost estimates.

When to refinance

At today's rates, buyers who purchased in 2020–2022 at 3–4% rates are not candidates for refinancing. But buyers buying now in the 6.5–7.5% range may consider refinancing if rates drop to the 5.5–6.0% range. The general guideline: refinancing makes sense if the rate improvement saves enough monthly to recoup closing costs within 3 years (assuming you'll stay 3+ more years). A 0.75% rate improvement on a $400,000 loan saves approximately $200/month — 18 months to recoup typical $3,600 in refi closing costs.

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Ryan Solberg connects buyers with lenders who have strong track records in Central Florida's residential and luxury markets. Understanding your financing options before you make offers is essential — contact Ryan for a pre-purchase consultation that includes lender referrals matched to your specific situation.