Home loan ceiling raised to $322,700 starting next year

Fannie Mae and Freddie Mac announced last week that they will increase their single-family mortgage loan limits from $300,700 to $322,700 effective Jan. 1.

The 7.3% increase in the ceiling is consistent with the increase in the national average home price from Oct. 2001 to Oct. 2002 as recorded by the Federal Housing Finance Board.

Freddie Mac estimated that the higher conforming loan limit would enable an additional 250,000 home buyers to obtain lower cost mortgage financing and that a borrower with a typical 30-year mortgage at the new conforming loan limit would save about $37,700 in interest over the life of a loan.

Fannie Mae estimated that the higher ceiling would allow 210,000 more home buyers to obtain a Fannie Mae mortgage. The company said buyers would save up to $23,500 over the life of a 30-year mortgage at the current difference between rates for a Fannie Mae mortgage and a jumbo mortgage.

Other new loan limits for Freddie Mac and Fannie Mae mortgages after Jan. 1 will be $413,100 for two-unit properties, $499,300 for three-unit properties and $620,500 for four-unit properties.