Fannie, Freddie raise mortgage limit 7.8% to $359,650

REAL ESTATE WATCH

December 05, 2004|By Bloomberg News

Fannie Mae and Freddie Mac are raising by 7.8 percent the limit on the size of mortgages for single-family homes, increasing the pool of homebuyers who can qualify for lower-cost financing.

The new loan ceiling will be $359,650 in 2005, up from $333,700 this year, the Washington-based Office of Federal Housing Enterprise Oversight said in a statement last week. The government requires the federally chartered mortgage financiers to base annual increases for their maximum loan size on the percentage gain of average home prices in October from a year earlier.

Homebuyers who qualify for so-called "conforming loans," or those that Fannie Mae and Freddie Mac will buy to repackage as mortgage-backed securities, typically pay as much as a half a percentage point less for interest when compared with so-called "jumbo loans" that are above the limit.

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