New conforming loan limits are good news for more than 28,500 households in California, but with a median home price that's 29 percent higher than those new levels, far more Californians remain unable to benefit from the new limits.

Freddie Mac and Fannie Mae this week announced the annual increase in the single-family mortgage loan limit for so-called "conforming" loans -- this time from $359,650 to $417,000 effective January 1, 2006.

Conforming loan interest rates can be 0.25 percent to 0.50 percent cheaper than so called "jumbo" rates for loans that are larger than conforming levels. The difference covers the potential for the added risk associated with a larger loan and makes the larger loan more expensive.

Some lenders have already factored the 2006 conforming loan level into some loans likely not to close until the new year or even later this year.

Conforming Loan Limits • 2004 to 2006

Property	2004	2005	2006
One-Family	$333,700	$359,650	$417,000
Two-Family	$427,150	$460,400	$533,850
Three-Family	$516,300	$556,500	$645,300
Four-Family	$641,650	$691,600	$801,950

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. The California Association of Realtors (CAR) says a home owner could save from $24,710 to as much as $39,660 over the life of a 30-year mortgage.

CAR and the National Association of Realtors (NAR) and other real estate associations have been lobbying U.S. Congress for years to get California and other high housing cost areas included along with Alaska, Hawaii, Guam and the U.S. Virgin Islands, which have conforming loan levels that are 50 percent higher than the limits for the rest of the country.

CAR says the original reasoning for the special "high-cost" designation -- largely lower incomes and economic costs associated with markets distant from the mainland -- is outdated.

"They are (conforming loan limits) well below what we need in California," said CAR economist Leslie Appleton-Young.

"It's nice to have the loan limit adjustments come through. It puts the spotlight on the issue. The increase is well below what most are paying in coastal California markets. It was 20 to 30 years ago when these (50 percent higher limits) were set and it's hard today to come up with any reasons to justify not including California in the high-cost areas," Appleton-Young said.

The increase in loan limits is based on the October 2004-to-October 2005 changes in average new and existing home prices published by the Federal Housing Finance Board (FHFB) and based on guidance issued by the Office of Federal Housing Enterprise Oversight (OFHEO).

Nationwide, the increase in the single-family mortgage loan limit makes it possible for an estimated 500,000 additional families to obtain lower cost mortgage financing, Freddie Mac says.

CAR expects the state's share of the half million increase to be 28,590 households, for all new loan limits an additional 72,070

CAR says the current median home price in California is $538,770, an increase of 17.2 percent compared to a year ago. California has 19 counties with a median-home price above the national conforming loan limit.

Regionally, only an additional 7,340 households in the San Francisco Bay Area and 12,510 households in the five-county Southern California region -- two of the state's most expensive housing markets -- will benefit from the increased loan limits, according to CAR.

Other new conforming loan limits for mortgages on two- to four-family properties are:

• $533,850 for mortgages on two-family properties, up from $460,400.

• $645,300 for mortgages on three-family properties, up from $556,500.

• $801,950 for mortgages on four-family properties, up from $691,600.