Lower loan limits could constrain home sales

By Marcie Geffner - Virginia Association of Realtors

Home buyers will face greater difficulty obtaining relatively larger mortgages when maximum loan sizes shrink Sept. 30, 2011. This new constraint on credit is expected to be yet another hardship for housing markets and, consequently, homeowners.

These maximum sizes or amounts, known as "loan limits," apply to two types of mortgages: conforming loans lenders can sell to Fannie Mae and Freddie Mac and FHA loans insured by the Federal Housing Administration (FHA). Fannie Mae and Freddie Mac are two quasi-government entities that purchase loans to be securitized and resold to investors.

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