Sacramento – Gov. Gavin Newsom will propose $100 million in new funds to help wildfire victims afford loans to rebuild their homes under a revised budget plan to be released Thursday.
The Newsom administration estimates that thousands of victims of the Los Angeles wildfires cannot afford to rebuild, attributing this to a lack of access to affordable credit and the gap between insurance payouts and the cost of rebuilding.
“We have been on the ground in L.A. since day one leading the recovery from these fires, and we’re not backing down now,” Newsom said in a statement. “This community deserves continued support to help them get back on their feet and rebuild their homes and their lives.”
The new fund will be designed to cover lenders with a loan-loss guarantee, in which the state would commit to returning a percentage of the loan amount if a borrower defaults, in order to reduce risk for lenders and encourage them to make construction loans to borrowers who may not otherwise qualify or may only be eligible for loans at higher interest rates. The money will also be available to homeowners to lower their interest rates during the construction period, according to Newsom’s office.
The Eaton and Palisades fire in January 2025 killed 31 people and destroyed more than 16,000 structures.
A recent survey of wildfire victims found that homeowners estimated they needed an average of more than $600,000 from their insurance payments to rebuild their homes, according to a report from the nonprofit Wildfire Relief Organization. department of angels. The difference in Altadena was about $550,000, and in Pacific Palisades and Malibu between $1.19 million and $1.73 million.
Under Newsom, California has also provided mortgage relief to more than a thousand wildfire survivors CalAssistA program that offers grants to eligible homeowners to cover mortgage payments up to $100,000 for 12 months.
The governor’s new proposal will be included in his funding plan for the upcoming 2026-27 budget year, which begins July 1.
The state’s revenue from income tax collections is higher than initial forecasts, a boon that is expected to eliminate the projected deficit in the coming year. Analysts attribute the revenue growth to the artificial intelligence boom in the stock market.
Although likely to be temporary, the additional funding is expected to provide Newsom with enough help to balance the state budget without major cuts and reduce the projected shortfall in 2027–28.
The proposal to create a reconstruction fund needs the support of both houses of the California Legislature and would move forward as a trailer bill with the state budget. Funding will be available to disaster survivors, although details on eligibility will be determined during the legislative process.
