WASHINGTON (Reuters) - Two key leaders of the U.S. Senate Banking Committee have agreed to scrap a limit on the number of reverse annuity mortgages that a federal insurance program may underwrite, sources familiar with the discussions said Monday.

The mortgages, known as RAMs, are popular among older Americans because they allow them to draw income against the value of their property without having to leave their homes. Existing FHA rules cap the number of RAM loans at 275,000 but that would be eliminated under a compromise hatched in recent days between Christopher Dodd, chairman of the banking panel, and Sen. Richard Shelby, the panel's top Republican.

The RAM mortgage cap was also eliminated in a version of the bill passed by the House of Representatives financial services panel, meaning it will likely be scrapped in the final version of the bill.

In other elements of the compromise, FHA borrowers will have to offer a downpayment of at least 1.5 percent of the home value and the loan limit will be equal to that imposed on Fannie Mae FNM.N and Freddie Mac FRE.N, which is currently $417,000, sources familiar with the negotiations said.

Today, FHA borrowers must offer 3 percent cash to quality for a loan so the new language would cut that requirement in half.

Under existing rules, loans that exceed $362,000 are not FHA eligible which has effectively eliminated the program along the East and West Coasts.

The Federal Housing Administration, set up in 1934 during the Depression, helps borrowers win favorable loan terms by guaranteeing mortgage payments to lenders.

The Senate Banking committee is due to vote on FHA reform on Wednesday. This week, the full House of Representatives is due to vote on its own version of reform.

If reform measures pass both chambers, lawmakers will hammer out a compromise version of the bill to send to President George W. Bush for enactment.

In an official statement of policy released Monday, the White House said that it would oppose any effort to lift the loan limit above the level that Fannie and Freddie must abide.

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