Regulators plan to lower the maximum size of mortgages that can be backed by Freddie Mac and Fannie Mae, which is now $417,000 in much of the country and as much as $625,500 in expensive areas.
The Federal Housing Finance Agency said the change would probably take effect at the end of the year.
It's unclear what effect lowering the cap might have. Some trade groups representing mortgage bankers and real-estate brokers have argued that the housing markets still have not stabilized enough to begin lowering limits.
But the move would come as the market for jumbo mortgages — those too big to be purchased or guaranteed by Fannie and Freddie — has been booming.