The conforming jumbo loan limits, which allow homeowners in certain areas of the country to get government-backed loans of up to $729,750, have been extended for another year, according to the Mortgage Bankers Association.

Last night, H.R. 3081 passed the Senate and House – it contains provisions that extend the existing loan limits for Fannie Mae, Freddie Mac and the Federal Housing Administration (including FHA loans and reverse mortgage products, or HECMs) through September 30, 2011.

Additionally, it provides $20 billion in loan commitment authority for FHA’s General and Special Risk Insurance Fund.

“Extending the existing limits is essential to helping borrowers continue to have access to affordable long-term, fixed-rate mortgage credit in today’s struggling economy,” said Robert E. Story, Jr., Chairman of the Mortgage Bankers Association, in a release.

“The current limits have been a key component of keeping the mortgage market functioning, helping keep mortgage interest rates low for consumers who want to purchase a home or refinance an existing mortgage.

Without such an extension, larger loans would have fall into the jumbo loan category, resulting in interest rates a percentage point or more higher than conforming loans.

The traditional conforming loan limit is currently set at $417,000 for one-unit residential mortgages.

Conforming jumbo loan amounts ($417,001 to $729,750) price at a slight premium to conforming loan amounts, but well below jumbo loans amounts.