California voters have approved a new homebuying assistance program that would allow eligible buyers to purchase newly built homes with down payments as low as 3%, rather than the traditional 20%.
The Associated Press called the vote for Proposition 37 on Tuesday night after about 60% of voters supported the measure.
Under the proposition, the California Housing Finance Agency could borrow up to $25 billion from private investors and lend the money to middle-class Californians who can afford monthly mortgage payments but lack the funds for a 20% down payment.
The program would offer fixed-rate loans covering as much as 17% of a home’s purchase price. Buyers would still need to contribute at least 3% upfront, while the property’s price would have to remain below approximately $1.5 million.
CalHFA would raise the money by selling bonds to private lenders before issuing loans to eligible homebuyers. As borrowers repay the loans, the principal and interest would flow back to the bondholders.
Questions remain about how the program would operate and who would oversee it. Opponents, including the League of Women Voters of California and Reform California, contend that the state should not take on a role in mortgage lending.
Critics also argue that the measure would do little to address the underlying factors driving California’s high housing costs.
Proposition 37 does not make every California homebuyer eligible for assistance. The program includes a purchase-price limit: homes must cost less than roughly $1 million in inland areas and up to $1.5 million in Los Angeles, Orange County, and the Bay Area.
The property must also be newly constructed or newly converted into housing, meaning the borrower must be its first occupant. In addition, eligible buyers may earn no more than twice the median income for their area.
California voters considered 14 statewide ballot propositions on Nov. 3. Each measure would establish a new law requiring voter approval before taking effect.
