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, staff writer

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NEW YORK ( -- 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
CA Bishop (Micropolitan Area)
Component County: Inyo
CA Los Angeles-Long Beach-Santa Ana (Metropolitan Area)
Component Counties: Los Angeles, Orange
CA Madera (Metropolitan Area)
Component County: Madera
CA Merced (Metropolitan Area)
Component County: Merced
CA Modesto (Metropolitan Area)
Component County: Stanislaus
CA Napa (Metropolitan Area)
Component County: Napa
CA Oxnard-Thousand Oaks-Ventura (Metropolitan Area)
Component County: Ventura
CA Phoenix Lake-Cedar Ridge (Micropolitan Area)
Component County: Tuolumne
CA Redding (Metropolitan Area)
Component County: Shasta
CA Riverside-San Bernardino-Ontario (Metropolitan Area)
Component Counties: Riverside, San Bernardino
CA Sacramento--Arden-Arcade--Roseville (Metropolitan Area)
Component Counties: El Dorado, Placer, Sacramento, Yolo
CA Salinas (Metropolitan Area)
Component County: Monterey
CA San Diego-Carlsbad-San Marcos (Metropolitan Area)
Component County: San Diego
CA San Francisco-Oakland-Fremont (Metropolitan Area)
Component Counties: Alameda, Contra Costa, Marin, San Francisco, San Mateo
CA San Jose-Sunnyvale-Santa Clara (Metropolitan Area)
Component Counties: San Benito, Santa Clara
CA San Luis Obispo-Paso Robles (Metropolitan Area)
Component County: San Luis Obispo
CA Santa Barbara-Santa Maria-Goleta (Metropolitan Area)
Component Couny: Santa Barbara
CA Santa Cruz-Watsonville (Metropolitan Area)
Component County: Santa Cruz
CA Santa Rosa-Petaluma (Metropolitan Area)
Component County: Sonoma
CA Stockton (Metropolitan Area)
Component County: San Joaquin
CA Truckee-Grass Valley (Micropolitan Area)
Component County: Nevada
CA Ukiah (Micropolitan Area)
Component County: Mendocino
CA Vallejo-Fairfield (Metropolitan Area)
Component County: Solano
CA Yuba City (Metropolitan Area)
Component Counties: Sutter, Yuba
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
CO Durango (Micropolitan Area)
Component County: La Plata
CO Edwards (Micropolitan Area)
Component Counties: Eagle, Lake
CO Greeley (Metropolitan Area)
Component County: Weld
CO Silverthorne (Micropolitan Area)
Component County: Summit
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
CT Hartford-West Hartford-East Hartford (Metropolitan Area)
Component County: Hartford, Middlesex, Tolland
DC Washington-Arlington-Alexandria, DC-VA-MD-WV (Metropolitan Area)
Component Areas (DC): District of Columbia
DE Philadelphia-Camden-Wilmington, PA-NJ-DE-MD (Metropolitan Area)
Component County (DE): New Castle
FL Key West (Micropolitan Area)
Component County: Monroe
FL Miami-Fort Lauderdale-Pompano Beach (Metropolitan Area)
Component Counties: Broward, Miami-Dade, Palm Beach
FL Naples-Marco Island (Metropolitan Area)
Component Counties: Collier
FL Sarasota-Bradenton-Venice (Metropolitan Area)
Component Counties: Manatee, Sarasota
GA Greene County $662,500
HI Honolulu (Metropolitan Area)
Component County: Honolulu
HI Kahului-Wailuku (Micropolitan Area)
Component County: Maui
HI Kapaa (Micropolitan Area)
Component County: Kauai
HI Kalawao County $716,250
ID Jackson, WY-ID (Micropolitan Area)
Component County: Teton
ID Blaine County $427,500
ID Valley County $462,500
MA Barnstable Town (Metropolitan Area)
Component County: Barnstable
MA Boston-Cambridge-Quincy, MA-NH (Metropolitan Area)
Component Counties (MA): Essex, Middlesex, Norfolk, Plymouth, Suffolk
MA Providence-New Bedford-Fall River, RI-MA (Metropolitan Area)
Component County: Bristol
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
MD Easton (Micropolitan Area)
Component County: Talbot
MD Ocean Pines (Micropolitan Area)
Component County: Worcester
MD Philadelphia-Camden-Wilmington, PA-NJ-DE-MD (Metropolitan Area)
Component County (MD): Cecil
MD Washington-Arlington-Alexandria, DC-VA-MD-WV (Metropolitan Area)
Component Counties (MD): Calvert, Charles, Frederick, Montgomery, Prince George's
MD Garrett County $437,500
NC Elizabeth City (Micropolitan Area)
Component Counties: Camden, Pasquotank, Perquimans
NC Kill Devil Hills (Micropolitan Area)
Component Counties: Dare
NC Virginia Beach-Norfolk-Newport News, VA-NC (Metropolitan Area)
Component Counties: Currituck
NH Boston-Cambridge-Quincy, MA-NH (Metropolitan Area)
Component Counties (NH): Rockingham, Strafford
NJ Atlantic City (Metropolitan Area)
Component Counties: Atlantic
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
NJ Ocean City (Metropolitan Area)
Component Counties: Cape May
NJ Philadelphia-Camden-Wilmington, PA-NJ-DE-MD (Metropolitan Area)
Component Counties (NJ): Burlington, Camden, Gloucester, Salem
NJ Trenton-Ewing (Metropolitan Area)
Component County: Mercer
NM Santa Fe (Metropolitan Area)
Component County: Santa Fe
NV Gardnerville Ranchos (Micropolitan Area)
Component County: Douglas
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
NY Poughkeepsie-Newburgh-Middletown (Metropolitan Area)
Component Counties: Dutchess, Orange
OH Athens (Micropolitan Area)
Component County: Athens
OR Bend (Metropolitan Area)
Component County: Deschutes
OR Medford (Metropolitan Area)
Component County: Jackson
OR Portland-Vancouver-Beaverton, OR-WA (Metropolitan Area)
Component Counties (OR): Clackamas, Columbia, Multnomah, Washington, Yamhill
PA New York-Northern New Jersey-Long Island, NY-NJ-PA (Metropolitan Area)
Component County (PA): Pike
PA Philadelphia-Camden-Wilmington, PA-NJ-DE-MD (Metropolitan Area)
Component Counties (PA): Bucks, Chester, Delaware, Montgomery, Philadelphia
PA York-Hanover (Metropolitan Area)
Component County: York
RI Providence-New Bedford-Fall River, RI-MA (Metropolitan Area)
Component Counties (RI): Bristol, Kent, Newport, Providence, Washington
TN Nashville-Davidson--Murfreesboro--Franklin (Metropolitan Area)
Component Counties: Cannon, Cheatham, Davidson, Dickson, Hickman, Macon, Robertson, Rutherford, Smith,
Sumner, Trousdale, Williamson, Wilson
UT Heber (Micropolitan Area)
Component County: Wasatch
UT Salt Lake City (Metropolitan Area)
Component Counties (UT): Salt Lake, Summit, Tooele
VA Charlottesville (Metropolitan Area)
Component Counties: Albemarle, Fluvanna, Greene, Nelson
Component City: Charlottesville
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
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
VA Washington-Arlington-Alexandria, DC-VA-MD-WV (Metropolitan Area)
Component Counties (VA): Arlington, Clarke, Fairfax, Fauquier, Loudoun, Prince William, Spotslvania, Stafford,
Also Component Cities (VA): Alexandria, Fairfax, Falls Church, Fredericksburg, Manassas, Mannassas Park
VA Winchester, VA-WV (Metropolitan Area)
Component Counties (VA): Frederick
Also Component City (VA): Winchester
VA Lancaster County $545,000
WA Bremerton-Silverdale (Metropolitan Area)
Component County: Kitsap
WA Portland-Vancouver-Beaverton, OR-WA (Metropolitan Area)
Component Counties (WA): Clark, Skamania
WA Seattle-Tacoma-Bellevue (Metropolitan Area)
Component Counties: King, Pierce, Snohomish
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
WV Winchester, VA-WV (Metropolitan Area)
Component County (WV): Hampshire
WY Jackson, WY-ID (Micropolitan Area)
Component Counties (WY): Teton
GU Guam $651,250
MP Northern Islands Municipality
(MP-Marianas Islands)
MP Rota Municipality
(MP-Marianas Islands)
MP Saipan Municipality
(MP-Marianas Islands)
MP Tinian Municipality
(MP-Marianas Islands)

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