What a Prop 37 loan could cost

Monthly cost calculator

The calculator splits a home price into your cash, the Prop 37 loan and the first mortgage, then shows a monthly payment for each loan. Put in more than 3 percent down and the Prop 37 loan shrinks, so the two always add up to 20 percent. Change any box. The rates and term for the Prop 37 loan are assumptions, since none have been set. This runs in your browser, and nothing is sent or saved.

Example payments

These use a 3 percent down payment, a 6.5 percent 30-year first mortgage and a 7 percent 30-year Prop 37 loan. The 6.5 percent reflects the rough conventional rate cited by the Budget Center. The 7 percent is the example rate CalMatters used. Neither is an offer.

Why the rate matters so much

The whole value of this loan depends on a number no one has published. Here's the same $119,000 loan from the example above, over 30 years, at different rates.

Each two-point step changes this payment by roughly $140 to $165 a month, or about $2,000 a year. Over 30 years, that adds up to more than the price of a car. Experts disagree about where the rate lands. CalMatters quotes Bob Hertzberg, the measure's main advocate, hoping philanthropic groups will buy bonds at rates as low as 3 percent. It also quotes Edward Pinto of the American Enterprise Institute, who expects investors to demand high rates for a riskier, untested loan. The Budget Center says the rate could exceed a regular first mortgage. The measure requires CalHFA to keep interest costs as low as possible, but the bonds still have to be paid.

Less cash now, more debt every month

A buyer who puts 20 percent down on a $700,000 home needs $140,000 and has one loan of $560,000. A Prop 37 buyer needs $21,000 but owes $679,000 across two loans. The upside is that you can buy sooner, start building equity and skip private mortgage insurance. The downside is a higher monthly payment, and less cushion if prices fall.

For comparison, a buyer with a low-down-payment loan pays mortgage insurance instead. Our program comparison lays out the alternatives. A HUD-approved housing counselor can help you compare your real numbers.

Other monthly costs to add

• Property tax. Usually around 1 percent of the price or more, and more with Mello-Roos taxes in some new communities.
• Home insurance. It varies by location, and wildfire risk can push it up.
• HOA dues. The Budget Center puts California's average at $280 a month.
• Closing costs. The measure says the agency may allow the loan to cover these, but it hasn't said yes.
• Upkeep. New homes need less at first, but still plan for it.

Cost questions