Fannie Mae, Freddie Mac Higher 2006 Loan Limits Make More Consumers Eligible for Lower-Cost Financing

WASHINGTON - Fannie Mae and Freddie Mac both announced their plans to increase their single-family mortgage loan limit to $417,000 for 2006, effective Jan. 1. The increase in conforming loan limits as determined by the Office of Federal Housing Enterprise Oversight is based on federal data on average home prices. In 2005 the loan limit for a single-family mortgage loan was $359,650, and in 2004 it was $333,700. Also effective Jan. 1, the new loan limits for multi-unit loans will be: two-family loans $533,850, up from $460,400 in 2005; three-family loans $645,300, up from $556,500 in 2005; and four-family loans $801,950, up from $691,600. The 2006 loan limit for second mortgages will be $208,500. The maximum amounts for one-to-four-family mortgages and second mortgages in Alaska, Hawaii, Guam and the U.S. Virgin Islands are 50% higher than the limits for the rest of the U.S. Freddie Mac estimates that total mortgage interest savings for a borrower with a typical 30-year fixed-rate mortgage at the new conforming loan limit is as much as $24,700 over the life of the loan. As a result of the new loan limit, Fannie Mae estimates that in 2006 as many as an additional 466,326 homeowners would be eligible for a conforming loan.