WASHINGTON (AP) _ Fannie Mae said today third-quarter earnings rose 16 percent, the result in large part of growth in its mortgage portfolio and declines in credit costs.

The nation's largest home mortgage financer reported earnings of $991 million, or 94 cents per share, compared with $857.4 million, or 81 cents per share, for the same quarter in 1998.

Interest income for the quarter came to $1.24 billion, up from $1.07 billion a year ago.

Fannie Mae's mortgage portfolio passed the half-trillion dollar mark during the third quarter, and rose by $89 billion over the first nine months of the year, Franklin Raines, Fannie Mae's chairman and chief executive officer, said in a statement.

``With these results, the company is on a pace to achieve the ambitious earnings objectives I set at our biennial investor conference in May,'' Raines said. At the conference, he said he expected growth in Fannie Mae's earnings per share over the next five years to match or exceed the previous five-year average of 13.6 percent. He also set a goal to double Fannie Mae's earnings per share by the end of 2003.

The company also reported that credit-related expenses fell sharply in the third quarter, totaling $20.8 million, compared with $40.3 million in the second quarter.

For the first nine months of the year, Fannie Mae reported earnings of $2.87 billion, or $2.73 per share, up from $2.53 billion, or $2.39 per share, for the same period in 1998.

Interest income came to $3.59 billion, up from $3.13 billion.