Mortgage limit raised to $523,750 in Boston area

The federal government today released new, higher limits for conforming mortgages that can be purchased by Fannie Mae and Freddie Mac.

In the Boston area, the limit has been increased to $523,750 for a single-family home, according to the Office of Federal Housing Enterprise Oversight. The previous limit was $417,000. The new limits, which vary by geographic area, are pegged to area's median income.

By raising the limits, Congress hoped to boost the nation's slumping housing market, particularly in high-cost cities such as Boston where a large portion of all home purchases exceeded the prior limit.

Interest rates for jumbo mortgages -- those that exceeded the $417,000 limit -- have surged to near 7 percent during the credit crunch. That is a full percentage point higher than rates for conforming mortgages that fell under the old limit.

The new limit is $670,500 for two-family properties; $810,450 for three-families; and $1,007,200 million for four-unit properties.
(By Kimberly Blanton)