What Is Prop 37, and Could It Help You Buy a New Home in North County?

by Zach Arrington

Updated October 2026

Proposition 37 would let the California Housing Finance Agency (CalHFA) sell up to $25 billion in revenue bonds to make fixed rate second mortgage loans covering up to 17 percent of the price of a newly built home, repaid by the homeowners who borrow. A YES vote means the state would create this new homebuying assistance program; a NO vote means the state would not be required to create it. For North County, the key fact is that only new homes priced under a county cap qualify. In San Diego County that cap works out to $1,380,000 using the 2026 federal loan limit, well below average sale prices in Del Mar and Solana Beach, so the program would mostly fit new homes priced closer to countywide levels.

I'm Zach Arrington, Broker Associate with Real. I work with buyers and sellers in coastal North County, from Carmel Valley and Del Mar to Solana Beach, Encinitas, Cardiff by the Sea and Rancho Santa Fe. This post explains what Prop 37 says, using official sources. It does not tell you how to vote.

What would Prop 37 do?

Prop 37 would create a statewide down payment loan program for buyers of newly built homes, funded by bonds that borrowers repay. According to the Legislative Analyst's Office (LAO), CalHFA would decide how much of the $25 billion to issue and over what period, and it would have to keep interest costs for homebuyers as low as possible. It is an initiative statute that requires CalHFA to launch the program no later than one year after the measure takes effect.

Feature	What the measure says
Maximum bonds	$25 billion in CalHFA revenue bonds
Loan size	Up to 17 percent of the purchase price
Buyer's own down payment	At least 3 percent of the price
Loan type	Fixed rate, secured by a second mortgage that sits behind the main mortgage; no prepayment penalty
Income limit	Household income no more than 200 percent of area median income for the same family size, in the county or metro area where the home is
Residency and occupancy	California resident for at least one year before applying; move in as a primary residence within 60 days of closing
Eligible homes	Newly built homes, townhomes, row houses, condos or manufactured homes, or units in converted nonresidential buildings, where the borrower is the first purchaser
Price cap	125 percent of the federal conforming loan limit for a one unit home in that county
Who repays the bonds	Homeowners' loan payments, not the state

CalHFA would set the interest rate and repayment terms, and borrowers could request a temporary hardship deferral of monthly interest payments. The measure also offers builders an optional "qualified builder option": builders who choose it would meet higher labor standards and, in exchange, follow different construction defect rules that the LAO says generally aim to give developers more flexibility.

What does a YES vote or a NO vote mean?

A YES vote means the state would create a new homebuying assistance program, funded by up to $25 billion in revenue bonds repaid through homeowners' loan payments. A NO vote means the state would not be required to create that new program.

What would Prop 37 mean for North County homeowners, buyers and sellers?

In Del Mar and Solana Beach, average sale prices are well above the program's cap, so Prop 37 would rarely apply there. My method: I took San Diego County's 2026 one unit conforming loan limit from the Federal Housing Finance Agency ($1,104,000), multiplied it by 125 percent as the measure directs, and compared the result with 12 month average sale prices from the San Diego MLS for October 2025 through September 2026 and the September 2026 county medians. MLS figures include resales and only new homes qualify, so this compares price levels, not eligible homes.

Area and home type	Price	Compared with the $1,380,000 cap
Del Mar (92014) single family, 12 month average	$4,880,613	About 3.5 times the cap
Solana Beach (92075) single family, 12 month average	$3,683,978	About 2.7 times the cap
Solana Beach (92075) condo, 12 month average	$1,807,273	$427,273 above
Del Mar (92014) condo, 12 month average	$1,635,928	$255,928 above
San Diego County single family, 12 month average	$1,433,863	$53,863 above
San Diego County single family, September 2026 median	$1,075,000	$305,000 below
San Diego County condo/townhome, 12 month average	$788,023	$591,977 below
San Diego County condo/townhome, September 2026 median	$650,000	$730,000 below

Average prices in Del Mar and Solana Beach, for houses and condos alike, sit above the cap, while countywide medians sit below it. New homes, especially new condos and townhomes, priced near countywide levels are where the program could fit.

Here is a worked example at the county's September 2026 single family median of $1,075,000. The Prop 37 loan could cover up to $182,750 (17 percent), the buyer would put down at least $32,250 (3 percent), and together that is 20 percent of the price. At the cap itself, $1,380,000, the maximum Prop 37 loan would be $234,600 with at least $41,400 down. These are maximums, not a quote for any buyer.

On income, the state's 2026 area median income for San Diego County is $130,900 for a four person household, according to the California Department of Housing and Community Development. Twice that is $261,800. The measure has CalHFA adjust for family size and does not name which income table it would use, so the final figure could differ.

Both limits move. The federal loan limit resets yearly, and the program could start up to a year after the measure takes effect, so a later year's cap would likely apply.

Where does Prop 37 apply, and where doesn't it?

Prop 37 applies only to newly built homes, or units in converted nonresidential buildings, bought by their first purchaser as a primary residence anywhere in California under the county price cap. It does not cover resale homes, and because the borrower must live in the home as a primary residence, it would not fund investment properties or second homes. The measure text does not require borrowers to be first time homebuyers; it requires that the borrower be the first purchaser of that particular home. CalHFA may add other eligibility rules.

What are the fiscal effects?

The LAO estimates no direct state or local costs because homebuyers' payments, not the state, would repay bond investors. The measure says the bonds would not be a debt or a pledge of the state's credit and would be payable solely from the program's funds. The LAO lists three unknowns that could shape the program: how much investors want to buy the bonds, how the loans' cost compares with other down payment help, and whether the program leads to more home construction and buying.

What do supporters say?

Supporters argue that the down payment is one of the biggest barriers to buying a home and that Prop 37 would offer low interest down payment loans for newly built homes at no cost to taxpayers, since private bond investors fund the loans and borrowers repay them. They say buyers must still qualify for a mortgage, meet income rules and put at least 3 percent down, that the program would speed up construction and jobs, and that annual audits would provide accountability. The argument is signed by Danny Curtin, Director of the California Conference of Carpenters; Fiona Ma, a CalHFA board member; and David West, Chair of the California State Commanders Veterans Council.

What do opponents say?

No argument against Prop 37 was submitted for the official voter guide, so there is no official opposing argument or rebuttal to summarize.

What this means if you are buying or selling

If you are buying in coastal North County, Prop 37 is unlikely to change your options for existing homes, because resales never qualify and average prices in Del Mar and Solana Beach exceed the cap. If you are shopping new construction priced near countywide levels and your income is under the limit, it could become one more financing option. If you are selling a home you already own, Prop 37 would not apply to your buyer, since only a home's first purchaser qualifies; builders of new homes under the cap are the sellers it touches most.

Frequently asked questions

What is Prop 37 on the California 2026 ballot?

Prop 37 is an initiative statute that would let CalHFA sell up to $25 billion in revenue bonds to fund fixed rate down payment loans of up to 17 percent of the price of a qualified new home. Borrowers' loan payments would repay the bonds. The LAO estimates no direct state or local costs.

What does a yes vote on Prop 37 mean?

A YES vote means the state would create a new homebuying assistance program, funded by up to $25 billion in CalHFA revenue bonds repaid through homeowners' loan payments. CalHFA would have to launch the program no later than one year after the measure takes effect.

What does a no vote on Prop 37 mean?

A NO vote means the state would not be required to create the new down payment loan program for buyers of newly built homes, and the $25 billion in revenue bonds the measure authorizes would not be issued for it.

Who qualifies for a Prop 37 loan?

A borrower must have lived in California for at least one year, earn no more than 200 percent of area median income for the same family size, move in as a primary residence within 60 days of closing, and put at least 3 percent down. In San Diego County, twice the 2026 four person area median income of $130,900 is $261,800. CalHFA could add other requirements.

Do you have to be a first time homebuyer to use Prop 37?

The measure text does not require it. It requires that the borrower be the first purchaser of the newly built home and live in it as a primary residence. CalHFA may set additional eligibility rules if the program is created.

Can Prop 37 be used to buy an existing home?

No. Eligible homes are newly built homes, townhomes, row houses, condos or manufactured homes, or units in converted nonresidential buildings, where the borrower is the first purchaser. A resale home would not qualify.

What is the maximum home price under Prop 37 in San Diego County?

The cap is 125 percent of the county's one unit conforming loan limit set by the Federal Housing Finance Agency. Using the 2026 San Diego County limit of $1,104,000, that is $1,380,000. The limit is updated each year, so the cap in use when the program starts could be different.

How is the Prop 37 loan repaid?

It is a fixed rate loan secured by a second mortgage behind the main mortgage, with monthly payments designed to repay the bonds and cover program costs. CalHFA would set the interest rate, amortization and other terms, and there is no prepayment penalty. Borrowers could request a temporary hardship deferral of monthly interest payments.

Does Prop 37 cost taxpayers anything?

The LAO estimates no direct state or local costs because homebuyers' payments would repay bond investors. The measure states the bonds would not be a debt or a pledge of the state's credit.

When would Prop 37 take effect?

If voters approve it on November 3, 2026, the measure requires CalHFA to start the program no later than one year after it takes effect. Election results will be certified later, and I will update this post after the election.

This is one of five explainers on the November 2026 propositions that affect California homeowners: What Is Prop 1, the 2026 Housing Bond, and What Would It Mean for North County?, What Does Prop 42 Do, and Would It Change Taxes on Your Home?, What Is Prop 43, and What Would It Change for North County Homeowners? and What Would Prop 45 Change About New Housing Near You in North County?

Questions about how a ballot measure could affect buying or selling your home? Call or text Zach Arrington at (619) 374-5339 or email zach@zarealtygroup.com.

This article is general information and does not recommend how to vote. It is not legal, tax or financial advice. Read the official voter guide and the full measure text before you vote.

Zach Arrington, DRE 02135675, Real Broker, LLC