By Les Christie, CNNMoney.com staff writer

Last Updated: March 7, 2008: 12:23 PM EST

NEW YORK (CNNMoney.com) — Mortgage costs just got cheaper for buyers in high-cost areas.

The size of loans that can be guaranteed by Freddie Mac and Fannie Mae was raised today by the Office of Federal Housing Enterprise Oversight. The new, higher loan limits will stay in effect through the end of the year, allowing the government sponsored enterprises (GSEs), to buy much higher-priced mortgages in some areas of the country.

Also today, the size of the loans that the Federal Housing Authority (FHA) can insure was raised by Housing and Urban Development (HUD).

Both moves will lower borrowing costs for buyers of higher priced homes, and aim to boost flagging real estate markets.

Best time to buy a home in four years

Previously, Fannie and Freddie could only insure mortgages of up to $417,000, called conforming loans. That meant, assuming a 20% down payment, that only buyers of homes costing $521,500 or less were eligible for mortgages with GSE backing.

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Tags: FHA, Fannie Mae, Freddie Mac, GSEs, HUD, buyers, economy, financing, foreclosure, investing, lending, loans, mortgages, real estate, real estate outlook, when to buy, where to buy by Aria
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