Update - Higher loan limits passed House and Senate, read here.

Appropriations committees in the House and Senate are proposing to extend temporary higher limits on the size of home mortgages Fannie Mae (FNM) and Freddie Mac (FRE) can buy or guarantee as part of a stopgap funding legislation that could pass Congress as soon as this week said the Wall Street Journal.

According to a continuing resolution summary released earlier this week, the extension includes maintaining the home equity conversion mortgage (HECM) loan limits through the end of calendar year 2010.

“While those loan limits aren’t scheduled to go down to $625,500 until January 1, if not maintained at the higher level now, the mortgage industry will begin to plan for loans at the lower amount,” according to a joint press release by the chairs of the appropriations committees in both houses of Congress, Sen. Daniel Inouye (D-HI) and Rep. David Obey (D-WI).

The legislation, known as a continuing resolution, would fund the federal government through Dec. 18 at 2009 levels, giving lawmakers more time to complete appropriations measures.

The continuing resolution still must pass both the House and Senate.