Freddie Mac and Fannie Mae will raise their loan limits starting Jan. 1, 2006, with single-family mortgage loan limits rising to $417,000, the government-sponsored enterprises announced today.

The new loan limits means that more people will be eligible for conforming loans. As a result of the new loan limits, Fannie Mae estimates that in 2006, as many as an additional 466,326 homeowners would be eligible.

Conforming loan limits may adjust annually. The conforming loan limits adjustments are based on the October-to-October changes in the average home price, as published by the Federal Housing Finance Board (FHFB). The FHFB figures come from its monthly survey of lenders. Both new and existing homes are included in the survey.

Limits for multi-unit loans for 2006 will be as follows: two-family loans $533,850, three-family loans $645,300, and four-family loans $801,950. 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 percent higher than the limits for the rest of the country.

Most loans Fannie Mae purchases are well below the conforming limit. Our average loan size for single-family properties in the first three quarters of 2005 is about $172,000.

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.

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Send tips or a Letter to the Editor to janis@inman.com or call (510) 658-9252, ext. 140.

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