Fha announces plans to lower us mortgage caps

The Federal Housing Administration has announced plans to lower caps on the mortgages it will back.

The FHA, which insures lenders against losses, has said that it will be lowering the limits of the loans it will back, reducing eligibility in over 600 counties across the US. The biggest cap will fall from $729,750 to $625,000.

Caps will remain at their current levels for markets where property prices are lower, though, as the FHA intends to focus on supporting the lower end of homebuyers. Given the FHA raised its caps to support as many buyers as possible during the housing crisis, now leaving it facing mild financial problems of its own, the latest announcement has been taken by some as a sign the market is beginning to improve.

FHA Commissioner Carol Galante told CNN the new changes are "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".