FHA to lower maximum mortgage amount next year
The federal government announced Friday it's lowering home loan limits in many areas across the country next year.
The change takes effect Jan. 1, the U.S. Department of Housing and Urban Developmentsaid.
"As the housing market continues its recovery, it is important for FHA to evaluate the role we need to play," Federal Housing Administration Commissioner Carol Galante said in a statement. "Implementing lower loan limits is an important and appropriate step as private capital returns to portions of the market and enables FHA to concentrate on those borrowers that are still underserved."
FHA loans, with their low down payments, are popular with first-time homebuyers.
"Anything you do to make it harder for people to get loans is going to have an impact on the marketplace," said Jim Heidisch, a broker in Pompano Beach, Fla.
Roughly 650 counties nationwide will see lower limits, according to HUD, which oversees FHA. The higher limits were part of the 2008 economic stimulus package designed to help the country during the Great Recession.
HUD said the lower limits were meant to take effect in 2009, but Congress delayed implementation because of the ongoing lending crisis.