Restoring FHA Mortgage Limits?

voting expected todayIt is expected that both the House and Senate will vote today on restoring the FHA mortgage limits. FHA mortgage limits, both the 125% calculation and the $729,750 maximum, should be restored for two years until December 31, 2013.


Assuming the Congress acts today, we believe the bill will be signed quickly and the limits could be effective next week. As a sign of the view of Fannie/Freddie in Washington, the Fannie/Freddie limits will stay where they are today and not be restored to the higher limits.

Source:  First Capital Mortgage

My thoughts:  This will help states like California where coastal real estate prices and incomes justify higher loan limits.  More entry level Newport Beach, Laguna Beach, and Costa Mesa area buyers will be able to afford the available inventory with the additional approximate $100K back in place for the larger conforming loans.  Without that, buyers were required to come up with much larger down payments, which in turn limits their reserves.  It so happens that banks are requiring more and more reserves, so this is a welcome development if the vote passes. – Grant Bixby