Action is needed to increase the homeownership odds when families apply for mortgage loans in California. With only 19 percent of households able to afford a median-priced home, which cost $460,370 in October, one solution is for the federal government to raise conforming loan limits to a level that will help more Californians purchase a home. However, the federal government's announcement this week to raise the limit to $359,650 from $333,700 hardly scratches the surface -- especially in San Diego County.

Since Fannie Mae and Freddie Mac are the largest purchasers of mortgage loans in the nation, banks charge borrowers less for these conforming loans by lending at lower interest rates. Home buyers save between one-quarter and one-half of a percent on the mortgage interest rate on a conforming loan, saving as much as $21,000 over the term of a typical 30-year loan.

But according to Fannie Mae's and Freddie Mac's federal charter, they are required to set conforming loan limits for the same amount for the entire United States, excluding only Hawaii, Alaska, Guam and the Virgin Islands. These four states are considered by the federal government to be "high cost," and receive a conforming loan limit that is 50 percent higher than the rest of the nation. Even though California's home prices are as high or higher than those in Hawaii and Alaska, California is still not considered a high-cost state, and our loans are limited to the same amount as those for Nebraska, South Dakota and Iowa, for example.

This year's loan limit increase is approximately $100,000 less than California's median home price. That is $100,000 more that Californians would have to pay in cash to get a conforming loan for the remaining amount -- hardly practical for most families, who instead end up paying higher "jumbo" loan rates. While this increase helped many people in less costly areas of the United States, only 12,960 California families were helped by this change. In a state with more than 34 million people, that hardly makes an impact.

In comparison, the "high-cost" states of Hawaii, Alaska, Guam and the Virgin Islands will receive a conforming loan limit of $539,475 for 2005.

This is ironic considering that the median home price in Oahu is $485,000 when more than 140 California cities have higher median home prices than Oahu, including Poway at $499,000, Carlsbad at $660,000, Encinitas at $678,000, San Marcos at $532,000 and Fallbrook at $550,000.

Conforming loans must be adjusted to more precisely reflect the high cost of housing in California. A more accurate change would increase access to homeownership for tens of thousands of Californians who cannot obtain financing through other means.

Despite the fact the federal government again missed a prime opportunity to help more Californians become homeowners, we must not give up the fight for fair and equitable access to homeownership. The California Association of Realtors and other housing activists will strongly advocate for urgently needed legislation seeking to raise the conforming loan limit in states with high-cost homes next year.

By continuing to urge the federal government to raise conforming loan limits, we will help teachers, firefighters, nurses and other working Californians enjoy the benefits of homeownership.

James Hamilton is president of the California Association of Realtors.