Feds Boost Mortgage Limits

Ceiling on loans backed by Fannie Mae, Freddie Mac goes to $729K in 70 counties
By Nick McMaster,  Newser Staff
Posted Mar 6, 2008 6:10 PM CST
The Fannie Mae building in Washington, in this May 2, 2007 file photo, in Washington. (AP Photo/Manuel Balce Ceneta, file)   (Associated Press)
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(Newser) – Government-backed mortgage guarantors Fannie Mae and Freddie Mac can now back loans up to $729,750, the Wall Street Journal reports, after the Federal Housing Administration put into effect that provision of the federal economic stimulus package today. More than 70 counties in the US are subject to the new limit, and ceilings will rise from the previous cap of $417,000 in many others.

Officials hope raising the mortgage giants’ limits will bring down interest rates on the biggest loans (more than $417,000), which are currently as much as a percentage point higher than smaller loans. "Families all over the US will benefit from this access to credit, and increasing these loan limits will inject much-needed liquidity into the housing market," the FHA commissioner said.