The Office of Federal Housing Enterprise Oversight (OFHEO) announced on Tuesday
that new limits
will apply for loans that can be purchased by
the two Government Sponsored Enterprises for which it has oversight.
Effective January 1, 2006, Freddie Mac and Fannie Mae will be able to purchase
single family home mortgages up to a limit of $417,000. This is an increase
of 16+ percent from the $357,650 cap for 2005.
The increase was in keeping with figures released earlier in the day by The
Federal Housing Finance Board (FHFB) reporting that, nationally, the average
cost of a one-family house October was $306,759, an increase of 15.96 percent
since October 2004.
Mortgages that meet the purchase criteria of Freddie Mac and Fannie Mae are
called 'conventional loans' and generally carry
lower borrowing costs than non-conventional loans. In addition to the maximum
loan amount conventional loans must meet other underwriting standards such as
the credit of the borrower.
Other loan limits announced by OFHEA for multi-family houses
and the corresponding figures for 2005 are as follows:
The limit on conforming second mortgages was raised from $179,825
The high cost areas of Alaska, Guam, Hawaii, and the U.S. Virgin Island come
under a separate schedule with limits 50% higher than for corresponding properties
in the continental United States. Second mortgages in those high cost areas
will be limited to $208,500.
If tradition holds, the Veterans' Administration and the Federal Home
Administration will shortly announce new loan limits which will closely reflect
the OFHEO changes.