Federal regulators have raised the amount of money that home buyers can borrow while still qualifying for more flexible mortgage terms, starting next year. In 2006 a cap was placed on conventional loans for single-family homes of $417,000. The Federal Housing Finance Agency has announced an increase of just over $424,000, in most parts of the country. This is approximately a 1.7 percent bump in the baseline conforming loan!
"Today’s conforming loan limit increase is a much-needed recognition of rising home prices in high-cost markets, and a help to first-time and lower-income borrowers looking to utilize an FHA mortgage,” said NAR President William E. Brown. “Credit remains tight, but this decision will help more qualified buyers address the hurdles and high costs standing between them and the dream of home ownership.”
Fannie Mae or Freddie Mac, the government agencies that acquire and ensure the money of the mortgage market, set the underwriting guidelines. This modest increase is a signal that the housing market is recovering. These loans are less risky for lenders allowing more borrowers to buy a home as prices rise . Elizabeth Ann Stribling-Kivlan, president of Stribling & Associates in New York City said, " The move might provide a psychological boost for home shoppers. It gives extra confidence that one can buy a home.
Source: The New York Times