HousingWire has a good piece on what will happen if the FHA drops its maximum loan limit on October 1. The National Association of Home Builders ran the numbers, and it turns out that more than 17 million home loans are valued above the lower limit. That means that if any of those owners want to sell, buyers won’t be eligible for an FHA loan.

The maximum limit on mortgages that can be guaranteed or bought by the Federal Housing Administration, Fannie Mae and Freddie Mac will drop to $625,500 from $729,950. This ceiling varies from county to county. Proponents say allowing the drop will enable private capital to move in and fund more of the jumbo-mortgage market.

In some places, of course, someone buying a $700K home wouldn’t be looking to FHA anyway. But that’s certainly not true everywhere — there are areas of Northern Virginia, for example, where that kind of money will only buy a modest home. So considering all the other things making it hard to buy a home, the last thing we need is another roadblock.