Senate Panel OKs FHA Hike

A Senate Appropriations panel has unanimously approved an increase in the Federal Housing Administration loan limit in high-cost areas to $197,000, or 87% of the $227,150 Fannie Mae/Freddie Mac conforming loan limit.President Clinton supports a single nationwide FHA loan limit of $227,150, but Sen. Christopher Bond, R, Mo., has advanced a compromise approach that would increase the FHA loan ceiling in high-cost areas from $170,000 to $197,000. The floor on FHA loans would be increased from $86,000 to $109,000, or 48% of the Fannie/Freddie limit. The increase proposed by Sen. Bond, along with a provision that simplifies the FHA downpayment calculation, is now part of the Department of Housing and Urban Development and Department of Veterans Affairs appropriations bill. Sen. Bond, who chairs the VA-HUD appropriations subcommittee, concedes that the FHA increase is controversial, while opponents say it will face "tough sledding" in full committee and the Senate floor. Nevertheless, Sen. Bond contends that the increase is necessary so that first-time homebuyers can get financing for newly constructed homes, especially in rural and non-urban areas.