The largest mortgages the federal government will guarantee will drop on October 1, as language to extend the higher limits (in place since 2008) did not make it into the House spending bill.

NAR and VAR — along with a number of industry groups representing home builders, mortgage lenders, and others attached to the housing market — had lobbied to have those higher limits extended.

Because of this, come October 1 potential home buyers will find it harder to get mortgages. While the press has focused on the absolute highest amount guaranteed — $729,750 — the loan limit will vary by region. In Frederick County for example, the conforming loan limit will drop from $475,000 to $271,050. (Other regions of the state will see varying drops.)

Despite the bad news, there is some hope: Representatives have already said they hope to introduce an extension for the higher loan limits later in the year when Congress considers a larger spending bill.

FHA had said it wanted the limits reduced in the hopes that it would provide an opportunity for private capital to return to the secondary mortgage market.

Click here to read a great NY Times article explaining the importance of the higher loan limits.