Getting these right matters. They affect your monthly payment, your loan qualifying, and even whether a deal closes on time. Let's break them down.
In California, property taxes are based on Proposition 13: a base rate near 1% of your purchase price, plus local items, for an effective rate often around 1.1%-1.25%. After you buy, expect a one-time supplemental tax bill. Homeowners insurance has become harder and costlier in California, especially in wildfire areas, and some owners rely on the state's FAIR Plan as a last-resort option.
Part 1: California Property Taxes
How Prop 13 works
Proposition 13 sets the rules for California property taxes:
- Your base tax is about 1% of your home's assessed value.
- Your assessed value usually starts at your purchase price.
- Yearly increases in assessed value are capped (about 2% per year).
- The home is reassessed when it sells, which resets the value for the new owner.
Example
| Item | Amount |
|---|---|
| Purchase price | $700,000 |
| Effective rate (example) | ~1.2% |
| Estimated yearly tax | ~$8,400 |
This is a rounded example, not a quote. Rates vary by county and community.
The supplemental tax bill
This catches many buyers off guard. Soon after you buy, the county reassesses your home at your purchase price and sends a one-time supplemental bill for the difference from the prior owner's value. It usually is not covered by your impound account, so plan for it. See Escrow & Impounds.
When taxes are due
California property taxes are paid in two installments: the first is due November 1 (late after December 10), and the second is due February 1 (late after April 10).
Prop 19 (for some homeowners)
California's Proposition 19 can let eligible homeowners (such as those 55 or older, or those who lost a home to disaster) transfer their property tax base to a new home under certain rules. This can keep taxes lower when moving. Rules have conditions, so confirm details with the county or a tax professional.
Part 2: California Homeowners Insurance
Why insurance is a big deal right now
As of 2026, California's homeowners insurance market is strained. Several major insurers have pulled back or stopped writing new policies in higher-risk areas, and premiums have risen sharply. After the major Southern California wildfires, this pressure increased. For buyers, this means insurance is no longer a last-minute detail — it can affect your timeline and even your budget.
What this means for buyers
- Start early. In wildfire-prone areas, finding a policy can take weeks.
- Budget carefully. Higher premiums can raise your monthly payment and even affect your loan qualifying, since insurance is part of your housing cost. See Credit & Debt (DTI).
- Get quotes before you commit. Some buyers now request insurance quotes before making an offer.
The California FAIR Plan
The FAIR Plan is California's insurer of last resort. It exists for owners who cannot find coverage on the regular market. Key points:
- It provides basic coverage, focused mainly on fire and certain named perils.
- It is more limited than a standard policy — it often does not include things like theft, water damage, or liability.
- Many owners pair it with a "wraparound" policy (called DIC, or Difference in Conditions) to fill the gaps.
- It is meant to be temporary, not a long-term solution.
Reducing your insurance risk and cost
- Wildfire mitigation — defensible space, fire-resistant roofing, and ember-resistant vents — can qualify you for discounts and make coverage easier to find.
- Shop early and widely, including specialty markets and a knowledgeable local broker.
- Keep records — photos, receipts, roof age, and upgrade dates speed up quotes.
How Taxes & Insurance Fit Your Payment
Both are usually part of your monthly payment through an impound account, which collects taxes and insurance monthly and pays them for you. If costs rise, your payment can rise. See Escrow & Impounds.
Requirements (At a Glance)
| Item | What to know |
|---|---|
| Property tax | ~1.1%-1.25% effective, due in two installments |
| Supplemental bill | One-time, after purchase, often not impounded |
| Homeowners insurance | Required before closing; can take time in risk areas |
| Impounds | Often collect taxes and insurance monthly |
Common mistakes
<em>This page is for education only. It is not a loan offer, tax advice, or insurance advice, and not a promise of costs or terms. Tax rules (like Prop 19) and insurance availability have conditions and change often; confirm current details with the county and licensed professionals. Qualification depends on your individual circumstances.</em> Equal Housing Opportunity · NMLS #362311 · CA DRE #01871814.
