Senate Panel OKs Hike in FHA Limit

The Senate Appropriations Committee has unanimously approved a new Federal Housing Administration loan limit of $197,620 for high-cost areas.Passed as part of an appropriations bill, the legislation also establishes a floor of $109,032 and simplifies the downpayment formula for obtaining an FHA-insured loan. Current FHA loan limits range from $86,317 to $170,362. The committee action fell short of the Clinton administration's budget proposal to create a single, nationwide loan limit of $227,150 -- the same as the limit on loans purchased by Fannie Mae and Freddie Mac. However, debate over this issue is far from over, since the House must approve its own VA-HUD spending bill. "Expanding the FHA loan ceiling to $197,620 will go a long way toward reestablishing housing as a national priority," said Donald Martin, president of the National Association of Home Builders. The FHA loan limit increase was approved as part of a $24 billion HUD appropriations bill. The legislation now moves to the full Senate, where debate over increasing the loan limit is expected to be contentious. Meanwhile, the Clinton administration says it "appreciates" the committee's action to increase the FHA loan limit. "The administration urges the Congress to provide even greater homeownership opportunities by increasing FHA's loan limit to the 'conforming' limit ($227,150)," according to Jacob Lew, acting director of the Office of Management and Budget.