Freddie Mac and Fannie Mae have announced that they will raise the limit on conventional loans for single-family homes from $240,000 to $252,700.
The 5.3 percent change was made to keep pace with the increase in the national average home price between October 1998 and October 1999 as recorded by the Federal Housing Finance Board.
Freddie Mac estimates that the higher loan limit will allow more than 150,000 additional families to qualify for conventional loans.
The increase takes effect Jan. 1.
Fannie Mae and Freddie Mac buy mortgages issued by banks, thrift institutions and other mortgage lenders, and then package the loans and sell them to investors as mortgage-backed securities.
When Fannie Mae and Freddie Mac buy mortgages from lenders, they provide lenders with funds needed to issue new mortgages.
The new limits on two- to four-family properties will be: $323,400 for mortgages on two-family properties (up from $30,100); $390,900 for three-family properties (up from $371,200); and $485,800 for four-family properties (up from $461,350).
