
Borrowers face rising costs on FHA loans and the lower limits on what they can borrow, reducing the size of the borrower pool and increases the cost of debt. This will hinder efforts to reflate the housing bubble. I recently reported on how the FHA lowered the boom on Coastal California housing markets. A lower FHA loan limit affects houses priced in the $650,000 to $800,000 price range because borrowers looking to borrower more than $625,500 must use jumbo financing, which usually requires at least 20% down and higher FICO scores. Previously, a potential buyer of a $765,000 home only needed a $35,250 down payment to complete the sale. Now that buyer must come up with $153,000, and they are…[READ MORE]