Zero Costs to Taxpayers
October 6, 2026
The measure authorizes a second-mortgage program (known as a “middle-class homeownership loan”), to be administered by CalHFA, which is intended to assist qualified prospective homebuyers with their purchase of a new home. Funding for the proposed program comes from the proceeds of revenue bonds sold to investors. Below, we provide more detail on the proposal and program eligibility.
Use of Revenue Bonds to Fund Second-Mortgage Program. Under this measure, CalHFA could issue up to $25 billion in revenue bonds. (This amount is in addition to the revenue bonds CalHFA already issues for other programs it administers.) The measure specifies that CalHFA would determine the interest rates on the bonds and the repayment terms for investors. CalHFA would use the proceeds from these bond issuances to offer a second mortgage of up to 17 percent of a home’s sales price to persons meeting specified requirements and buying specified homes, as described below. CalHFA would be required to set interest rates and repayment terms for these second mortgages such that, “to the greatest extent possible,” they pay back investors (the bondholders) as well as cover CalHFA’s costs to administer the program. While the measure requires CalHFA to move forward with implementing the program within a year of enactment, the measure gives CalHFA discretion over how much in bonds to issue (up to $25 billion) and over what time period. The measure also directs CalHFA to sell the bonds “in a manner that minimizes interest costs and encourages broad investor participation.”