California proposes $25 billion loan program to reduce home down payments

Proposition 37 would authorize California's Housing Finance Agency to lend up to $25 billion to help middle-income homebuyers purchase newly constructed homes and condos by covering up to 17 percent of the purchase price. The program would enable buyers to put down as little as 3 percent while private lenders bear the default risk, with eligibility capped at twice the area's median income. Supporters say it makes homeownership accessible without costing taxpayers, though opponents contend it does not address underlying housing cost drivers.

Proposition 37 targets a specific segment of California's housing market: newly constructed homes and condos priced below approximately $1.5 million. The measure emerged from collaboration between real estate developers and construction unions, suggesting broad industry support for expanding homeownership pathways. The program's structure places financial responsibility on private lenders rather than the state, meaning mortgage payments—not tax revenue—would repay the borrowed funds.

The income eligibility threshold set at twice the area's median income is designed to serve middle-class households while preventing higher-income buyers from accessing the program. This targeting reflects an attempt to balance accessibility with fiscal responsibility, though the actual median incomes in high-cost California regions may still exclude many working families.