Ginnie Mae removes VA mortgage loan limit.

The Government National Mortgage Association, better know as Ginnie Mae, announced it has eliminated the restriction on the size of mortgage loans guaranteed by the VA that can be used as collateral for Ginnie Mae securities.

Effective Sept. 1, Ginnie said it will no longer limit the size of VA-guaranteed loans that can back Ginnie Mae mortgage-backed securities to the conforming loan limit of $417,000.

Approximately 30 percent of the loans that back Ginnie Mae MBS are guaranteed by the VA, according to Michael J. Frenz, executive vice president of Ginnie Mae.

"We expect this change will expand the availability of low-cost financing and increase homeowner-ship opportunities for America's veterans, particularly in high-cost areas, by encouraging lenders to make more VA loans," said Frenz.

For example, said Frenz, although 10 percent of the nation's veterans live in California, less than 1 percent of the VA loans in the Ginnie Mae securities portfolio issued during the last two years were to California veterans, because loan limits were below most house prices in the state.

Ginnie Mae said it will continue to require that the amount of cash down payment, plus the amount of the VA guaranty, equals at least 25 percent of the value of the home.