Mortgage Calculator California

Why the California tax line starts at 1%, not at the median

Proposition 13, passed in 1978, did three things that still set every California property tax bill. It rolled assessments back, limited the ad valorem rate to 1% plus whatever is needed to fund voter-approved local bonds, and capped how fast an assessed value can grow — by the change in the California Consumer Price Index, no more than 2% a year.

The consequence is a state with two different numbers, and they are not in conflict:

• What you pay in year one. When a home sells, the assessed value resets to the purchase price. A new buyer therefore starts near the 1% base, plus local bonds on top — which is why many first bills land between 1.1% and 1.3%.
• What the typical owner pays. Owners who have held for years sit on assessments set years ago and grown by 2% a year, so their tax as a share of today's market value drifts down. That is what pulls the statewide median effective rate to 0.70%.

This calculator prefills 1.00%, not the median. For someone buying today, the median would understate the bill, and an understated escrow is the one error that hurts at closing. Edit the field to match the levy on the home you are actually buying — your county's tax bill, or the preliminary title report, has it.

California also gives a $7,000 homeowners' exemption off assessed value once you file with the county assessor. It is small — about $70 a year at 1% — but it is free money for a one-time form.

The same home at four tax rates

Same $800,000 price, 20% down, 6.5% and 30 years on every line — only the levy moves. The spread between the lowest and highest line is $396.50 a month, and the levy is the one number on this page that your lender does not control.

What insurance adds here

The California Department of Insurance puts the statewide average homeowner premium at $1,571 a year against $1,512 nationally — California is close to the national figure in the average, because the average blends inland markets with coastal ones. The distribution is what matters: homes in wildfire-exposed areas can be declined by standard carriers entirely and end up on the FAIR Plan, a bare-bones fire policy that is usually paired with a separate difference-in-conditions policy to replace what it does not cover. If your quote is far above the average, ask which of those two worlds you are in before you treat the number as final.

What else moves the number

• Your county's conforming limit. Most of California is a high-cost county, so the conforming loan limit runs above the $832,750 baseline — up to $1,249,125. Crossing it is what makes a loan jumbo, and the jumbo mortgage calculator prices that slice separately.
• Mello-Roos and special assessments. Many newer California neighborhoods carry bond assessments that sit on the tax bill but are not part of the 1% rate. Add them to the tax field if they apply.
• Whether you file for the exemption. The $7,000 reduction is not automatic on a change of ownership; a new owner has to file.
• HOA dues. Common in California attached housing and rarely trivial — the field is there because lenders count it in your housing ratio.

How to use this calculator

1. Enter the purchase price and your down payment.
2. Enter the rate and term you were quoted.
3. Check the property tax rate against the home's current bill or title report — raise it if the home carries local bonds or special assessments.
4. Replace the insurance figure with your own quote if you have one; the default is the state average.
5. Read the monthly payment, then the tax table, to see how much of the payment is the levy rather than the loan.

Frequently asked questions

Why is California's median property tax rate so low?

Because Proposition 13 caps assessed-value growth at 2% a year while market values rise faster. Long-held homes are taxed on assessments set years ago, so their effective rate — tax divided by today's value — falls well below the 1% base a new buyer pays.

Do I pay 1% of the purchase price?

In the first year, close to it: the assessed value resets to the purchase price at sale, and the base rate is capped at 1%. Voter-approved local bonds and special assessments are added on top, which is why the total is often above 1%.

What is the California homeowners' exemption?

A $7,000 reduction in taxable value for an owner-occupied home, claimed once with the county assessor. New owners must file even if the previous owner had it.

Does homestead exemption work differently here than in Florida or Texas?

Yes. California's is a flat $7,000 off assessed value; Florida's is $50,000 off taxable value; and Texas's $140,000 applies only to school-district taxes. Three states, three different mechanics — see the Florida and Texas versions.

Is insurance really near the national average in California?

On average, yes — $1,571 against $1,512 nationally — but the average hides the split between inland markets and wildfire-exposed ones, where standard carriers may decline the home outright.

Data sources: The 1% ad valorem cap, the CPI-limited 2% assessment growth and the $7,000 homeowners' exemption come from the California State Board of Equalization (boe.ca.gov, checked 2026-10-23). The statewide median effective rate of 0.70% is Tax Foundation's Property Taxes by State and County, 2026, calculated from US Census Bureau ACS 2024 data (B25082/B25090). The $1,571 average homeowner premium, against $1,512 nationally, is the California Department of Insurance market snapshot (insurance.ca.gov). The conforming limit baseline of $832,750 and the $1,249,125 high-cost ceiling come from FHFA's 2026 announcement. Payments use the standard amortizing loan formula at the rate you enter; property tax is the rate applied to taxable value after the exemption, and insurance and HOA are added as monthly amounts. Not modeled: Mello-Roos and special assessments unless you enter them, closing costs, lender fees, mortgage insurance, and any local bond levy beyond the rate you enter — every figure here is an estimate rather than an offer or financial advice, so compare written Loan Estimates before you commit. All calculations run in your browser. For the escrow breakdown on any state's numbers see the taxes and insurance calculator.