Congress overcame Republican opposition to restore higher Federal Housing Administration mortgage loan limits last night, according to the Wall Street Journal, after the limit was lowered to pre-recession levels Oct. 1.
The Senate and House each voted to pass the bill Thursday, even though Republicans have insisted that the government reduce its role in the housing market. Ceding to those wishes, the higher limits only apply to FHA-backed loans, and not those originated by federally owned Freddie Mac and Fannie Mae.
The FHA will once again allow buyers in expensive markets to take out loans of up to $729,750, while only requiring a down payment of 3.5 percent. The limit had fallen to $625,500 last month, and many housing experts feared that would inflict further pain on a housing market already on life support. They worried people who would have potentially bought a home with the higher limits, would no longer have the means to purchase a home in New York, San Francisco, Washington, D.C. and other expensive markets under the reduced limit.
The Obama administration maintained that it still wants to reduce the government’s role in the home-loan market, but housing officials said because the housing market is still weak there is reason to stay involved. The FHA backed one-third of all new loans last year. [WSJ]
