The Federal Housing Administration has raised its mortgage limits in Deschutes County for the third time in 10 months – a side effect of local home prices that have continued to rise, on average, through most of the year, despite rising inventories and a cooling national real estate market.

The FHA’s new limit on Des-chutes County loans stands at $298,300, FHA spokeswoman Pam Negri said – up 17 percent since January, and now the highest loan limit in the state.

Counties in the Portland-Vancouver-Beaverton area rank second, with limits set at $284,600.

Combined with the minimum 3 percent down payment that’s required on all FHA-backed loans, the new Deschutes County limit would allow a buyer to afford a $307,500 house.

Median home prices in Bend stood at $351,016 at the end of September, according to the Central Oregon Multiple Listing Service, up more than 30 percent from the same time last year despite inventories of single-family homes for sale that have risen 259 percent since Jan. 1.

The median is the point at which half the homes cost more and half cost less.

In Redmond, median prices reached $259,975 by the end of September, up 36.3 percent from September 2005.

The FHA, a division of the U.S. Department of Housing and Urban Development, guarantees the repayment of loans made by private lenders to borrowers who qualify. Most FHA-backed loans go to first-time buyers, although it also backs refinancing loans, loans for energy efficient home improvements, and reverse mortgages, which can be used by homeowners aged 62 or older to take money out of their houses.

FHA loan limits in most markets are reviewed once a year, but limits in rapidly appreciating areas can be adjusted more often, Negri said.

The agency uses a three-month average of median home prices to adjust its loan caps, aiming to set the cap at 95 percent of the countywide median.

The agency also bumped up its loan limits in Tillamook, Lincoln, Jackson, Josephine and Lane counties.

On the market

The FHA’s new limit on Deschutes County loans:

$298,300

Median home prices at the end of September,

in Bend:

$351,016

in Redmond:

$259,975

Source: Central Oregon Multiple Listing Service