FHA loan limit and downpayment change coming

 Senate legislation to revamp the Federal Housing Administration mortgage program has finally moved out of committee and is expected to be passed in the next couple of days when it comes up for a full floor vote. The bill would reduce the required down payment on FHA-insured mortgages to 1.5 percent from 3 percent and open the program to pricier housing markets by letting the agency insure mortgages up to $417,000. With nontraditional mortgage originations on the decline, the FHA anticipates a surge in applications to 1.4 million this year from close to 680,000 in 2006. The bill, intended to provide borrowers with a less risky alternative to subprime loans, will qualify hundreds of thousands of minority and low-income borrowers for low-cost, low-down-payment loans backed by the U.S. government.