California mortgages: Prop 13 taxes, CalHFA help and the FAIR Plan

#California’s price problem in one ratio

The median owner-occupied home in California is worth $759,500, the 2nd-highest among the states and DC and 2.1 times the national median of $360,600. Incomes are high too — $100,149 for the median household — but not high enough to close the gap. The median home costs 7.6 times the median income, the 2nd-highest ratio in the country, against 4.4 nationally.

Only a modest majority of California households own: 55.8% of occupied homes are owner-occupied, the 3rd-lowest share among the states and DC. Renting isn’t an escape from high costs either — the median gross rent of $2,104/mo is the highest in the country. The rent vs buy calculator compares both with California’s median price and rent.

#Proposition 13: why the seller’s tax bill isn’t yours

Proposition 13 limits the general property tax to 1% of a home’s assessed value, plus whatever is needed to repay voter-approved bonds. The assessed value starts at the purchase price and can then rise by no more than 2% a year until the home sells again or new construction is completed.

That is why Census figures understate what a new buyer pays. The median California tax bill is $5,369 a year — 0.71% of median value — because many owners bought long ago at lower assessed values. A buyer of the median home is reassessed at the purchase price and starts at $7,595 a year at the base rate alone, $2,226 more than the median bill, before bonds and special assessments.

File the homeowners’ exemption claim with the county assessor once you move in; claims filed by February 15 get the full exemption for that year. Ask the title company or the county tax collector for the full rate in the home’s tax rate area, since bonds and Mello-Roos or other special assessments can add meaningfully to the 1% base.

#Monthly payment on the median California home

Change the inputs in the mortgage payment calculator. To keep this payment within Freddie Mac’s 30% guideline, a household would need about $237,700 a year. At the state median income, the guideline supports about $320,000 — $439,500 short of the median home. The affordability calculator runs your own figures.

#Wildfire, insurance and the California FAIR Plan

Lenders require homeowners insurance before they fund a loan, and in high wildfire-risk areas some buyers can’t get a policy from a regular insurer. The California FAIR Plan exists for them. According to the California Department of Insurance, it was created by the Governor and Legislature but is a private association run by insurance companies, and it is meant for people who cannot get coverage elsewhere.

• What it covers. A limited fire policy, with residential limits of up to $3,000,000 per location. Homeowners who harden their property against wildfire can get a discount on the wildfire part of the premium.
• What it doesn’t. Water damage, liability, theft and additional living expenses require a separate difference-in-conditions (DIC) policy from another insurer.
• How to apply. The Department recommends shopping the regular market first, then applying through a licensed agent or broker — ideally one registered to sell FAIR Plan coverage.

#CalHFA MyHome and Dream For All

The California Housing Finance Agency (CalHFA) lends through approved loan officers. Its programs pair a CalHFA first mortgage with a deferred junior loan:

Dream For All runs in rounds. CalHFA’s page says the latest application period closed March 16, 2026, so check its status before counting on it. Compare these with federal and local programs in the first-time buyer programs guide.

#Transfer taxes are local in California

California has no statewide transfer tax (0%) and no state mortgage tax. Counties charge a documentary transfer tax, and some cities add their own, which can be larger than the county’s. Check the city and county where you are buying; our Los Angeles and San Diego guides cover those markets, and the closing cost estimator adds lender, title, escrow and prepaid costs.