Conforming Loan Limit

Currently, for most of the country, the maximum limit for mortgage loan is $417,000. This limit is typically increased each year by the level of home-price inflation. The conforming loan maximum is the largest loan that can be purchased by mortgage giants Fannie Mae or Freddie Mac. Loans larger than the maximum, known as jumbo loans, typically carry higher interest rates by one-quarter to one-half a percentage point.

The Office of Federal Housing Enterprise Oversight (OFHEO) announced previously that the maximum conforming loan limit for U.S. mortgages will be frozen at current levels for a year, if home prices show a decline from October 2005 to October 2006. The data released yesterday showed that, from October 2005 to October 2006, a decline of $501, or 0.16%, was reported in the average price -- the first decline reported since 1992-1993. The average price was $306,759 in October 2005 and $306,258 in October 2006.

For mortgages on two-family properties, the loan limit will continue to be $533,850. The limit will hold at $645,300 for mortgages on three-family properties and $801,950 for mortgages on four-family properties. Properties in Alaska, Hawaii, Guam and the U.S. Virgin Islands are eligible for higher limits.