Conventional Loan + Down Payment Assistance in Florida — 2026 Guide

Most Tampa Bay buyers who ask about down payment assistance assume they have to use an FHA loan. That assumption is understandable — FHA loans are flexible, widely known, and do pair well with DPA programs. But limiting your search to FHA means you could be missing Florida's most financially powerful down payment assistance structure: the HFA Preferred conventional loan with a forgivable second mortgage. For buyers who qualify, it removes the FHA mortgage insurance trap and can save thousands of dollars over the life of the loan.

What Makes Conventional Loans Different from FHA When Using DPA?

The core mechanical difference comes down to mortgage insurance. FHA loans require an upfront mortgage insurance premium of 1.75 percent of the loan amount — added directly to your loan balance — plus an annual MIP that runs between 0.55 and 0.85 percent depending on your loan term, down payment, and loan size. That MIP stays on an FHA loan for the entire 30-year term unless you put down 10 percent or more, in which case it cancels after 11 years.

Conventional loans use private mortgage insurance (PMI) when the borrower puts down less than 20 percent, but PMI is not permanent. It can be removed once your equity reaches 20 percent — either through payments, appreciation, or a combination of the two. PMI rates are also credit-score driven, so a borrower with a 720+ credit score typically pays significantly less than the FHA annual MIP rate.

For buyers with solid credit who want the cheapest possible long-term mortgage cost, a conventional loan often wins — especially when paired with Florida's forgivable DPA structure.

What Is the HFA Preferred Program in Florida?

The HFA Preferred program is a conventional first mortgage offered through the Florida Housing Finance Corporation (FHFC) and available exclusively through FHFC-approved lenders. It uses Fannie Mae guidelines, meaning a minimum 620–640 credit score, debt-to-income ratios in line with conventional standards, and a minimum 3 percent down payment for first-time buyers (5 percent for repeat buyers in most cases).

The key feature is how it pairs with down payment assistance. Two second-mortgage structures are available alongside HFA Preferred:

HFA Preferred PLUS: This is the forgivable option. You receive a second mortgage equal to 3, 4, or 5 percent of the first mortgage amount. That second mortgage is forgiven at 20 percent per year over five years — meaning if you stay in the home for five years without selling or refinancing, the entire DPA balance disappears. You pay nothing back. On a $400,000 purchase with a 5 percent DPA second mortgage, that is $20,000 that is completely forgiven if you remain in the home. No other mainstream DPA structure in Florida matches this.

FL HLP (Florida Homeownership Loan Program): This is a fully amortizing second mortgage that carries a 3 percent interest rate over 30 years. It provides up to $12,500 toward down payment and closing costs. Unlike PLUS, this does carry a monthly payment — approximately $52 to $53 per month — but any remaining balance is deferred until sale or payoff.

For most Tampa Bay buyers choosing between HFA Preferred options, the PLUS forgivable structure is the superior choice if they plan to stay in the home at least five years.

How Does Florida Hometown Heroes Work with Conventional Loans?

Florida Hometown Heroes is Florida's largest DPA program and it operates in two versions: a Bond version and a TBA (To Be Announced) version. The Bond version of Hometown Heroes uses HFA Preferred as its conventional first mortgage option.

Under Bond Hometown Heroes with HFA Preferred, qualified borrowers receive up to 5 percent of the loan amount — capped at $35,000 — as a zero-interest deferred second mortgage toward down payment and closing costs. This is not forgivable (unlike HFA Preferred PLUS), but the zero-interest structure means you repay only the principal amount when you eventually sell or refinance. No interest accumulates over time.

To qualify for the Bond version with Hometown Heroes, income is evaluated differently than the TBA version — household income from all occupants age 18 and older is counted, not just the borrowing household members. Income limits for Tampa Bay counties in 2026 generally fall between $115,000 and $150,000 depending on household size. See our full breakdown of Hometown Heroes income limits by county.

Who Qualifies for Conventional DPA in Florida?

Eligibility for conventional DPA programs in Florida generally requires:

A minimum credit score of 640 for most HFA Preferred programs (some lenders require 660 or higher for best pricing). Debt-to-income ratios within Fannie Mae guidelines — typically a maximum back-end DTI of 45 to 50 percent depending on compensating factors. Income that does not exceed the program's county-specific limit. First-time homebuyer status for most programs (defined as not having owned a home as a primary residence in the last three years — though Hometown Heroes waives this requirement for eligible occupations).

Unlike FHA loans, conventional loans are more sensitive to credit score when it comes to pricing. A borrower with a 680 credit score will pay a higher PMI rate and may receive a slightly higher interest rate than a borrower with a 740. If your credit score is below 660, FHA with down payment assistance may offer more favorable terms even accounting for the MIP differential.

When Does Conventional DPA Make More Financial Sense Than FHA DPA?

The conventional path typically wins in three scenarios:

Higher credit scores. Buyers with scores above 700 will generally find conventional pricing more favorable than FHA. The PMI rate drops substantially, the rate itself may be lower, and the removal option on PMI creates long-term savings that FHA's permanent MIP cannot match.

Buyers who want to avoid the FHA upfront premium. FHA's 1.75 percent upfront MIP adds $7,000 to your loan balance on a $400,000 purchase. That increases your principal from day one. Conventional loans have no equivalent upfront cost.

Buyers who plan to build equity quickly. If you anticipate home appreciation, a pay raise, or the ability to make extra principal payments, conventional PMI will be removable sooner than FHA's MIP timeline. Getting to 20 percent equity and dropping PMI entirely is faster under conventional than under FHA.

If your score is below 640 or your debt-to-income ratio is higher, FHA remains the more accessible loan type and should not be dismissed. The best approach is to run a side-by-side comparison with an experienced lender who works with both programs.

What Are the Purchase Price Limits for Conventional DPA Programs?

Florida Housing Finance Corporation programs set maximum purchase price limits that vary by county. For most Tampa Bay counties in 2026, the limits fall between $450,000 and $475,000 for existing homes. New construction may have different caps in some programs. Our complete breakdown of Florida's DPA purchase price limits by county covers every county in the Tampa Bay region.

If your target price exceeds the program caps, you may need to look at private DPA programs, bank grant programs, or county SHIP funds that occasionally have higher purchase price ceilings for targeted neighborhoods.

Can You Stack Conventional DPA with County SHIP Funds?

In some cases, yes — but the stacking rules are strict. HFA Preferred PLUS is generally not combinable with other second-mortgage DPA programs, since the forgivable second already satisfies the DPA layer. However, in some situations, county SHIP funds may be structured as grants or soft seconds that do not conflict with HFA Preferred guidelines.

For buyers exploring stacking possibilities, the SHIP stacking guide covers which combinations are currently permitted. Always confirm with your lender before assuming any combination is allowed — program rules change and lender overlays vary.

First-time buyers just beginning to explore their options will find detailed program comparisons at firsttimehomebuyertb.com, which covers both conventional and FHA DPA paths side by side. If you are also exploring available homes in Tampa Bay while you research programs, nowtb.com offers full neighborhood search with filters that match DPA purchase price limits.

Barrett Henry, REALTOR® with REMAX Collective, has spent more than 23 years helping Tampa Bay buyers navigate both FHA and conventional down payment assistance paths. Barrett coordinates free DPA consultations with FHFC-approved lenders who can run a true side-by-side comparison for your credit profile, income, and target purchase price. Call (813) 733-7907 to find out which loan type works harder for your situation.