New Home Deposit Reform

AB 1406 will give more Californians a pathway to affordable homeownership by raising current limits on homebuyer deposits in new housing developments. The bill helps builders lower their construction and financing costs by reducing risk to lenders and investors, ultimately leading to lower-cost homes for Californians.

The bill helps builders lower their construction and financing costs by reducing risk to lenders and investors, ultimately leading to lower-cost homes for Californians. 

The bill increases outdated limits on homebuyer deposits from 3 percent to 6 percent of the expected final purchase price. Higher deposit limits reduce project financial risk, giving builders access to construction funding at a lower cost of capital. These savings can be passed on to homebuyers at the time of purchase.

Updates

  • AB 1406 was amended in the Assembly on January 5, 2026. It passed the Assembly Judiciary Committee on January 13, 2026. It passed the Assembly on January 29, 2026 by a 41-14 vote. AB 1406 now heads to the State Senate for further action.

Authors

  • Chris Ward (AD 78)

Sponsors

  • California YIMBY
  • SPUR

Resources