The Bush administration supports an increase in loan limits, and it is even promoting the elimination of the down payment requirement.
"FHA's existing 3% down payment requirement does not meet the demands of today's marketplace, where most first-time homebuyers put down 2% or less," says Stephen O'Halloran, a HUD spokesman.
But it's doubtful that this last bit will fly in Congress. Sen. Richard Shelby, R-Ala., the ranking member on the Senate banking committee, has already expressed concern about lowering the down payment limit, though he is expected to reach a compromise with Dodd when the committee drafts its version of an FHA reform bill.
"While the subprime market has witnessed considerable stress, the losses in that market are borne by investors," Shelby said at a hearing on FHA reform last month. "Were those same losses to occur in FHA programs, it is likely they would be borne by the taxpayer."