More homebuyers will be eligible for the government's major mortgage and home improvement program under higher loan limits issued earlier this week.

The U.S. Department of Housing and Urban Development has increased the limit in 27 or Washington's 39 counties.

In Cowlitz, Wahkiakum, Lewis and Pacific counties, the new limit is $200,160, a 15.9 percent increase over the previous cap. The new limit allows for the purchase of a $206,351 home with the required 3 percent down payment.

"This significant increase in FHA loan limits is in response to last year's rapid increases in the average price of housing in Washington and will help more people purchase or refinance homes," HUD Regional Director John W. Meyers said in a press release.



"Over the last several years we have been losing our market share, "said Pam Negri, HUD regional spokeswoman in Seattle.

FHA loans are made by banks but are 100 percent guaranteed by the federal government. That makes it possible for banks to offer loans and competitive interest rates to people with bad credit or bad debt-to-income ratios.

"It's definitely a good thing for those folks who need FHA financing. It gives them more buying power so they're still able to buy a home," Sue Lantz, owner of Windermere Allen & Associates, said of the new limit.

Cowlitz County home prices have been surging over the last year. Lantz said the new FHA loan cap "is trying to keep pace with the market."

However, Lantz said recently there has been a trend away from getting FHA loans as conventional loans become easier to obtain. "It's still a good opportunity, and it's good to have a choice."

David Thelin, real Estate agent with Coldwell Banker in Longview, said the new FHA limit will not have as much of an impact as in the past because of the competing programs available. "It does increase the number of people who can go to FHA for loans."

The number of FHA loans approved in Washington has steadily and sharply dwindled from 26,300 in 2001 to about 18,300 in 2004. Only 9,400 had been approved statewide through November last year.

The drop has not been as sharp in Cowlitz County, where FHA loans totaled 327 in 2001, 321 in 2002, 506 in 2003, 335 in 2004 and 228 through November last year, according to HUD.