Fannie Mae and Freddie Mac have raised their loan limits, a move designed to make mortgage funds available and to ease the loan approval process for borrowers living in areas where housing prices are very high.

The new lending limits vary according to region, but typically allow for more borrowing power in areas where housing prices far exceed Fannie and Freddie’s previous loan limit of $417,000.  As an example, borrowers in Honolulu, HI may now qualify to borrow as much s $793,750 under the new loan limits.

This is great news, as it evens the playing field for borrowers and mortgage lenders in areas with astronomical home values. The ability to qualify for conforming mortgages can  ease the mortgage applicaton process and help borrowers save on financing costs associated with non-conforming jumbo loans.

Washington’s new economic stimulus plan, made public this week, contains key provisions designed to stimulate the housing market. The greatest impact of this proposal is expected to occur in those markets that need it the most, according to CNNMoney. The proposal submitted by Congress and the Bush administration would place the majority of the focus on the hardest-hit markets like California and Florida by making it easier to purchase a house with a selling price in the range of $417,000 to $625,000.

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