Gov. Gavin Newsom on Friday, Sept. 6 vetoed a controversial housing bill that would have ensured California residents are not excluded from assistance programs due to their immigration status.

AB 1840 would have ensured that an applicant’s immigration status was not the sole reason they were denied from any of California’s Housing Finance Authority’s home purchase assistance programs, including the Dream for All Program, which provides a loan for first-time homebuyers.

“Given the finite funding available for CalHFA programs, expanding program eligibility must be carefully considered within the broader context of the annual state budget to ensure we manage our resources effectively,” Newsom wrote in his veto.

The idea, according to bill author Assemblymember Joaquin Arambula, D-Fresno, was that the “social and economic benefits of homeownership should be available to everyone,” including undocumented individuals, and doing so will bolster personal economic stability as well as the local economy.

Arambula previously made clear that undocumented first-time homebuyers already can apply for the Dream program, which offers 20% downpayment assistance up to $150,000. The Dream for All Program ran out of its $300 million in funding 11 days after launching in 2023.

Sen. Josh Newman, who voted in favor of the bill, said previously that AB 1840 was more of a “clarification.”

“The bill does not create a new program or substantially expand an existing program,” Newman said. “What it does is it attempts to address ambiguity in the existing regulation, and many borrowers have received conflicting information.”

The bill received significant pushback and national media attention, particularly as opponents questioned its cost in a year when California is already grappling with a major budget deficit.

A fiscal analysis determined the bill would result in “unknown significant cost pressures, potentially in the millions annually,” to cover the expanded eligibility for the California Dream for All Program.

Local lawmakers were mostly opposed to the bill.

“Very simply, we cannot afford it,” Sen. Kelly Seyarto, a Republican whose district includes Yorba Linda, said in late August. “We’re already battling with deficits every year, year after year.”

Others who opposed it included Sen. Janet Nguyen, R-Huntington Beach, and Democratic Sens. Catherine Blakespear, Dave Min and Tom Umberg.

“While I support down payment assistance programs for those who need it, the California Dream for All Program provides down payments on home purchases up to nearly $1 million,” Min said in August. “I believe this program exacerbates the main problem with housing in our state, by helping to inflate home prices, while failing to create more new housing stock.”

Local assemblymembers who voted against AB 1840 included Phillip Chen, R-Yorba Linda; Laurie Davies, R-Laguna Niguel; Diane Dixon, R-Newport Beach; Cottie Petrie-Norris, D-Irvine; Kate Sanchez, R-Rancho Santa Margarita; and Tri Ta, R-Westminster.

In addition to Newman, Sharon Quirk-Silva, D-Fullerton; Avalenio Valencia, D-Anaheim, and Sen. Bob Archuleta, a Democrat whose district includes Buena Park, all voted in favor of the bill.

Seyarto, in floor comments in late August, also cautioned that the bill could end up incentivizing mortgage brokers to give loans to people who cannot afford them.

“This is a recipe for financial disaster for individuals, especially (for) people that can’t really afford it,” said Seyarto.

CalMatters contributed to this report.