Real Estate

High-cost mortgages just got cheaper

Freddie and Fannie can now purchase loans worth as much as $793,000, while the FHA can insure loans for up to $729,000.

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By Les Christie, CNNMoney.com staff writer

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NEW YORK (CNNMoney.com) -- Mortgage costs just got cheaper for buyers in high-cost areas.

The size of loans that can be guaranteed by Freddie Mac and Fannie Mae was raised today by the Office of Federal Housing Enterprise Oversight. The new, higher loan limits will stay in effect through the end of the year, allowing the government sponsored enterprises (GSEs), to buy much higher-priced mortgages in some areas of the country.

Also today, the size of the loans that the Federal Housing Authority (FHA) can insure was raised by Housing and Urban Development (HUD).

Both moves will lower borrowing costs for buyers of higher priced homes, and aim to boost flagging real estate markets.

Previously, Fannie and Freddie could only insure mortgages of up to $417,000, called conforming loans. That meant, assuming a 20% down payment, that only buyers of homes costing $521,500 or less were eligible for mortgages with GSE backing.

The new loan limits for Fannie and Freddie vary by area based on local median home prices and go as high as $793,750 in Honolulu. (For details, see table below).

Loan limits for FHA-insured loans were even lower; no more than $362,790. Now mortgages of up to $729,750 will qualify for FHA insurance.

The problem was that there are whole swaths of the nation where the typical home cost far more than that, and non-conforming or "jumbo loans" carry interest rates of about a point higher. For a $500,000 mortgage, that's an additional spending of $330 a month.

In many parts of the country prices are much higher. In San Jose, Calif, the median priced home costs nearly $850,000, according to the latest figures from the National Association of Realtors. In San Francisco, the figure is nearly $780,000; in Anaheim, Calif.; $657,000; in Honolulu $625,000; and in the New York metro area, $525,000. That means more than half the loans in those markets would not qualify under conforming loan limits.

"Families in high-cost states have been priced out of FHA-backed loans," HUD Secretary Alphonso Jackson said earlier today, in a speech before the Las Vegas Association of Realtors. "This has created a vacuum, filled by exotic subprime loans."

During the liquidity squeeze that began during the summer of 2007, jumbo loans became very difficult to find even for well-qualified borrowers. that made it hard to buy homes in certain regions, freezing up real estate markets.

By making it easier for buyers to get loans, regulators hope to get these markets moving again.

The new loan limits affect 71 metropolitan areas, as well as 21 counties outside of those metro areas.  To top of page

New loan limits for Fannie and Freddie
State Metro Area - County Limit 1-Unit
AZ Flagstaff (Metropolitan Area)
Component County: Coconino
$450,000
CA Bishop (Micropolitan Area)
Component County: Inyo
$437,500
CA Los Angeles-Long Beach-Santa Ana (Metropolitan Area)
Component Counties: Los Angeles, Orange
$729,750
CA Madera (Metropolitan Area)
Component County: Madera
$425,000
CA Merced (Metropolitan Area)
Component County: Merced
$472,500
CA Modesto (Metropolitan Area)
Component County: Stanislaus
$423,750
CA Napa (Metropolitan Area)
Component County: Napa
$729,750
CA Oxnard-Thousand Oaks-Ventura (Metropolitan Area)
Component County: Ventura
$729,750
CA Phoenix Lake-Cedar Ridge (Micropolitan Area)
Component County: Tuolumne
$437,500
CA Redding (Metropolitan Area)
Component County: Shasta
$423,750
CA Riverside-San Bernardino-Ontario (Metropolitan Area)
Component Counties: Riverside, San Bernardino
$500,000
CA Sacramento--Arden-Arcade--Roseville (Metropolitan Area)
Component Counties: El Dorado, Placer, Sacramento, Yolo
$580,000
CA Salinas (Metropolitan Area)
Component County: Monterey
$729,750
CA San Diego-Carlsbad-San Marcos (Metropolitan Area)
Component County: San Diego
$697,500
CA San Francisco-Oakland-Fremont (Metropolitan Area)
Component Counties: Alameda, Contra Costa, Marin, San Francisco, San Mateo
$729,750
CA San Jose-Sunnyvale-Santa Clara (Metropolitan Area)
Component Counties: San Benito, Santa Clara
$729,750
CA San Luis Obispo-Paso Robles (Metropolitan Area)
Component County: San Luis Obispo
$687,500
CA Santa Barbara-Santa Maria-Goleta (Metropolitan Area)
Component Couny: Santa Barbara
$729,750
CA Santa Cruz-Watsonville (Metropolitan Area)
Component County: Santa Cruz
$729,750
CA Santa Rosa-Petaluma (Metropolitan Area)
Component County: Sonoma
$662,500
CA Stockton (Metropolitan Area)
Component County: San Joaquin
$488,750
CA Truckee-Grass Valley (Micropolitan Area)
Component County: Nevada
$562,500
CA Ukiah (Micropolitan Area)
Component County: Mendocino
$512,500
CA Vallejo-Fairfield (Metropolitan Area)
Component County: Solano
$557,500
CA Yuba City (Metropolitan Area)
Component Counties: Sutter, Yuba
$425,000
CA Alpine County $547,500
CA Amador County $443,750
CA Calaveras County $462,500
CA Mono County $462,500
CO Boulder (Metropolitan Area)
Component County: Boulder
$460,000
CO Durango (Micropolitan Area)
Component County: La Plata
$443,750
CO Edwards (Micropolitan Area)
Component Counties: Eagle, Lake
$729,750
CO Greeley (Metropolitan Area)
Component County: Weld
$417,500
CO Silverthorne (Micropolitan Area)
Component County: Summit
$729,750
CO Garfield County $425,000
CO Hinsdale County $557,500
CO Ouray County $482,500
CO Pitkin County $729,750
CO Routt County $675,000
CO San Juan County $425,000
CO San Miguel County $651,250
CT Bridgeport-Stamford-Norwalk (Metropolitan Area)
Component County: Fairfield
$708,750
CT Hartford-West Hartford-East Hartford (Metropolitan Area)
Component County: Hartford, Middlesex, Tolland
$440,000
DC Washington-Arlington-Alexandria, DC-VA-MD-WV (Metropolitan Area)
Component Areas (DC): District of Columbia
$729,750
DE Philadelphia-Camden-Wilmington, PA-NJ-DE-MD (Metropolitan Area)
Component County (DE): New Castle
$420,000
FL Key West (Micropolitan Area)
Component County: Monroe
$729,750
FL Miami-Fort Lauderdale-Pompano Beach (Metropolitan Area)
Component Counties: Broward, Miami-Dade, Palm Beach
$423,750
FL Naples-Marco Island (Metropolitan Area)
Component Counties: Collier
$531,250
FL Sarasota-Bradenton-Venice (Metropolitan Area)
Component Counties: Manatee, Sarasota
$442,500
GA Greene County $662,500
HI Honolulu (Metropolitan Area)
Component County: Honolulu
$793,750
HI Kahului-Wailuku (Micropolitan Area)
Component County: Maui
$790,000
HI Kapaa (Micropolitan Area)
Component County: Kauai
$773,750
HI Kalawao County $716,250
ID Jackson, WY-ID (Micropolitan Area)
Component County: Teton
$693,750
ID Blaine County $427,500
ID Valley County $462,500
MA Barnstable Town (Metropolitan Area)
Component County: Barnstable
$462,500
MA Boston-Cambridge-Quincy, MA-NH (Metropolitan Area)
Component Counties (MA): Essex, Middlesex, Norfolk, Plymouth, Suffolk
$523,750
MA Providence-New Bedford-Fall River, RI-MA (Metropolitan Area)
Component County: Bristol
$475,000
MA Dukes County $729,750
MA Nantucket County $729,750
MD Baltimore-Towson (Metropolitan Area)
Component Counties: Anne Arundel, Baltimore, Carroll, Harford, Howard, Queen Anne's
Also Component City: Baltimore
$560,000
MD Easton (Micropolitan Area)
Component County: Talbot
$443,750
MD Ocean Pines (Micropolitan Area)
Component County: Worcester
$437,500
MD Philadelphia-Camden-Wilmington, PA-NJ-DE-MD (Metropolitan Area)
Component County (MD): Cecil
$420,000
MD Washington-Arlington-Alexandria, DC-VA-MD-WV (Metropolitan Area)
Component Counties (MD): Calvert, Charles, Frederick, Montgomery, Prince George's
$729,750
MD Garrett County $437,500
NC Elizabeth City (Micropolitan Area)
Component Counties: Camden, Pasquotank, Perquimans
$729,750
NC Kill Devil Hills (Micropolitan Area)
Component Counties: Dare
$460,000
NC Virginia Beach-Norfolk-Newport News, VA-NC (Metropolitan Area)
Component Counties: Currituck
$428,750
NH Boston-Cambridge-Quincy, MA-NH (Metropolitan Area)
Component Counties (NH): Rockingham, Strafford
$523,750
NJ Atlantic City (Metropolitan Area)
Component Counties: Atlantic
$453,750
NJ New York-Northern New Jersey-Long Island, NY-NJ-PA (Metropolitan Area)
Component Counties (NJ): Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic,
Somerset, Sussex, Union
$729,750
NJ Ocean City (Metropolitan Area)
Component Counties: Cape May
$487,500
NJ Philadelphia-Camden-Wilmington, PA-NJ-DE-MD (Metropolitan Area)
Component Counties (NJ): Burlington, Camden, Gloucester, Salem
$420,000
NJ Trenton-Ewing (Metropolitan Area)
Component County: Mercer
$440,000
NM Santa Fe (Metropolitan Area)
Component County: Santa Fe
$427,500
NV Gardnerville Ranchos (Micropolitan Area)
Component County: Douglas
$468,750
NY New York-Northern New Jersey-Long Island, NY-NJ-PA (Metropolitan Area)
Component Counties (NY): Bronx, Kings, Nassua, New York, Putnam, Queens, Richmond, Rockland, Suffolk, Westchester
$729,750
NY Poughkeepsie-Newburgh-Middletown (Metropolitan Area)
Component Counties: Dutchess, Orange
$443,750
OH Athens (Micropolitan Area)
Component County: Athens
$432,500
OR Bend (Metropolitan Area)
Component County: Deschutes
$447,500
OR Medford (Metropolitan Area)
Component County: Jackson
$422,500
OR Portland-Vancouver-Beaverton, OR-WA (Metropolitan Area)
Component Counties (OR): Clackamas, Columbia, Multnomah, Washington, Yamhill
$418,750
PA New York-Northern New Jersey-Long Island, NY-NJ-PA (Metropolitan Area)
Component County (PA): Pike
$729,750
PA Philadelphia-Camden-Wilmington, PA-NJ-DE-MD (Metropolitan Area)
Component Counties (PA): Bucks, Chester, Delaware, Montgomery, Philadelphia
$420,000
PA York-Hanover (Metropolitan Area)
Component County: York
$425,000
RI Providence-New Bedford-Fall River, RI-MA (Metropolitan Area)
Component Counties (RI): Bristol, Kent, Newport, Providence, Washington
$475,000
TN Nashville-Davidson--Murfreesboro--Franklin (Metropolitan Area)
Component Counties: Cannon, Cheatham, Davidson, Dickson, Hickman, Macon, Robertson, Rutherford, Smith,
Sumner, Trousdale, Williamson, Wilson
$432,500
UT Heber (Micropolitan Area)
Component County: Wasatch
$431,250
UT Salt Lake City (Metropolitan Area)
Component Counties (UT): Salt Lake, Summit, Tooele
$729,750
VA Charlottesville (Metropolitan Area)
Component Counties: Albemarle, Fluvanna, Greene, Nelson
Component City: Charlottesville
$425,000
VA Richmond (Metropolitan Area)
Component Counties: Amelia, Caroline, Charles City, Chesterfield, Cumberland, Dinwiddie, Goochland, Hanover,
Henrico, King and Queen, King William, Louisa, New Kent, Powhatan, Prince George, Sussex
Also Component Cities: Colonial Heights, Hopewell, Petersburg, Richmond
$528,750
VA Virginia Beach-Norfolk-Newport News, VA-NC (Metropolitan Area)
Component Counties (VA): Gloucester, Isle of Wight, James City, Mathews, Surry, York
Also Component Cities (VA): Chesapeake, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk,
Virginia Beach, Williamsburg
$428,750
VA Washington-Arlington-Alexandria, DC-VA-MD-WV (Metropolitan Area)
Component Counties (VA): Arlington, Clarke, Fairfax, Fauquier, Loudoun, Prince William, Spotslvania, Stafford,
Warren
Also Component Cities (VA): Alexandria, Fairfax, Falls Church, Fredericksburg, Manassas, Mannassas Park
$729,750
VA Winchester, VA-WV (Metropolitan Area)
Component Counties (VA): Frederick
Also Component City (VA): Winchester
$475,000
VA Lancaster County $545,000
WA Bremerton-Silverdale (Metropolitan Area)
Component County: Kitsap
$475,000
WA Portland-Vancouver-Beaverton, OR-WA (Metropolitan Area)
Component Counties (WA): Clark, Skamania
$418,750
WA Seattle-Tacoma-Bellevue (Metropolitan Area)
Component Counties: King, Pierce, Snohomish
$567,500
WA Jefferson County $437,500
WA San Juan County $593,750
WV Washington-Arlington-Alexandria, DC-VA-MD-WV (Metropolitan Area)
Component County (WV): Jefferson
$729,750
WV Winchester, VA-WV (Metropolitan Area)
Component County (WV): Hampshire
$475,000
WY Jackson, WY-ID (Micropolitan Area)
Component Counties (WY): Teton
$693,750
GU Guam $651,250
MP Northern Islands Municipality
(MP-Marianas Islands)
$605,000
MP Rota Municipality
(MP-Marianas Islands)
$473,750
MP Saipan Municipality
(MP-Marianas Islands)
$610,000
MP Tinian Municipality
(MP-Marianas Islands)
$613,750

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