California usury law: the limits, the exemptions, and the 2025 change.
California usury law caps the interest a lender may charge — 7 percent by default, 10 percent for most written consumer contracts — but the California Constitution and the Civil Code exempt whole classes of lenders, and exempt loans secured by real property when a licensed broker makes or arranges them.
NexWin Capital Corp. is a licensed California mortgage broker (NMLS 2743839, DFPI 60DBO-211586) rather than a lender. This page quotes the official texts and links them; it is information, not legal advice, and none of the Constitution’s figures are rates anyone here offers.
What the California Constitution caps.
Article XV, Section 1 sets the defaults. Every figure below is the Constitution’s own, quoted from the official text.
| No written contract | “The rate of interest upon the loan or forbearance of any money, goods, or things in action, or on accounts after demand, shall be 7 percent per annum”. |
|---|---|
| Personal, family or household purposes | By written contract, “at a rate not exceeding 10 percent per annum” — and the same clause says a loan “the proceeds of which are used primarily for the purchase, construction or improvement of real property shall not be deemed to be a use primarily for personal, family or household purposes”. |
| Any other purpose | By written contract, “at a rate not exceeding the higher of (a) 10 percent per annum or (b) 5 percent per annum plus the rate prevailing on the 25th day of the month preceding” the loan, as “established by the Federal Reserve Bank of San Francisco on advances to member banks”. |
Those are constitutional ceilings on lenders the law does not exempt — not prices, and not anything NexWin Capital Corp. quotes. The exemptions below are why most professional real estate lending in California is priced by the market instead.
The broker exemption: Civil Code section 1916.1.
California’s usury limits do not apply to a loan secured by real property that is made or arranged by a California-licensed real estate broker. The statute’s own words:
“The restrictions upon rates of interest contained in Section 1 of Article XV of the California Constitution shall not apply to any loan, or any forbearance, extension, or modification of a loan, made or arranged by any person licensed as a real estate broker by the State of California, and secured, directly or collaterally, in whole or in part by liens on real property.”
What “made or arranged” by a broker means
The section defines it in three prongs. A loan is “arranged” by a licensed broker when a broker:
- “acts for compensation or in expectation of compensation for soliciting, negotiating, or arranging the loan, or forbearance, extension, or modification of the loan, for another”;
- acts for compensation in a sale, purchase, lease or exchange of real property or a business and “arranges a loan to pay all or any portion of the purchase price of, or of an improvement to, that property or business” — or arranges a forbearance, extension, modification or refinancing in connection with that transaction; or
- “arranges or negotiates for another a forbearance, extension, modification, or refinancing of any loan secured by real property in connection with a past transaction” in which a broker had acted for compensation.
And the statute closes the loop on both roles: “The term ‘made or arranged’ includes any loan, or any forbearance, extension, or modification of a loan, made by a person licensed as a real estate broker as a principal or as an agent for others, and whether or not the person is acting within the course and scope of such license.”
The other exempt classes.
The broker exemption sits inside a longer constitutional list. Article XV exempts — among others — building and loan associations, industrial loan companies, credit unions, licensed pawnbrokers and personal property brokers, banks state and national, agricultural cooperatives, “any loans made or arranged by any person licensed as a real estate broker by the State of California and secured in whole or in part by liens on real property”, and “any other class of persons authorized by statute”.
That last clause is where the California Financing Law comes in. Financial Code section 22002 says the division “creates a class of exempt persons pursuant to Section 1 of Article XV of the California Constitution” — which is why licensed finance lenders price by their programs rather than the constitutional caps. The DFPI, which administers that law, puts it plainly on its own site: “A finance lenders license provides the licensee with an exemption from the usury provision of the California Constitution.”
NexWin Capital Corp. holds a CFL license (60DBO-211586) and an NMLS registration (2743839) as a broker. It arranges business-purpose loans through licensed lending partners; it does not lend, and nothing here changes that.
What happens when a loan is usurious.
The consequences are severe, which is why the exemptions matter so much in practice. In Hardwick v. Wilcox (Cal. Ct. App. 2017, No. A147944), the court collected the rules. Quoting Gibbo v. Berger: “When a loan is usurious, the creditor is entitled to repayment of the principal sum only. He is entitled to no interest whatsoever.” Quoting Epstein v. Frank: the attempt to exact usurious interest “renders the interest provisions of a note void”. And in the court’s own words, usurious interest payments “should be credited against the principal balance in any action to collect on the note”.
California’s uncodified Usury Law also provides further remedies, including treble recovery in some circumstances — the details sit outside the codes quoted here, which is exactly the kind of question to put to counsel rather than a web page.
What changed in 2025: Moon and SB 1146.
Until a 2022 bankruptcy decision, the settled understanding was that the broker exemption covered what happens after a loan closes — the forbearance, the extension, the modification. Bankruptcy courts then read the old statute narrowly. The bill’s co-sponsors, quoted in the Assembly Judiciary Committee’s analysis of SB 1146, describe it directly: “Known as the Moon decision, the 9th Circuit’s action to affirm the BAP decision has raised technical issues with Civil Code Section 1916.1 due to the bankruptcy courts’ interpretation.” And their resolution: “SB 1146 clarifies these two issues by making technical and clarifying language to help address the issues raised by the Moon decisions.”
The amended section 1916.1 — effective January 1, 2025 — now says so in its first sentence, quoted in full above: the exemption covers “any loan, or any forbearance, extension, or modification of a loan” made or arranged by a licensed broker and secured by real property. For an investor whose bridge term needs an extension, that wording is the difference between a routine term-sheet conversation and a usury question — and it is why the extension belongs in the term-sheet conversation, structured with the lender before you need it.
Related reading here: what a bridge loan is, hard money lenders in California and DSCR loans in California.
Check our claims against the primary source.
Broker-arranged financing here is business-purpose credit. The rules that govern it, and the government-backed programs worth comparing before you commit, are published. These links go to the official pages, not summaries of them.
Our notes are plain-language explanations, not legal or tax advice. For your situation, talk to your own counsel or tax professional.
- California Legislative InformationCalifornia Constitution, Article XV (usury) (opens in a new tab)
Sets the constitutional interest limits — 7 percent by default, 10 percent for written consumer-purpose contracts, the higher of 10 percent or the FRBSF rate plus 5 for other purposes — and lists the exempt classes, including loans made or arranged by a California-licensed real estate broker secured by real property.
Reviewed Aug 2026 - California Legislative InformationCivil Code § 1916.1 — the licensed-broker exemption (opens in a new tab)
The usury restrictions do not apply to any loan, or any forbearance, extension, or modification of a loan, made or arranged by a person licensed as a real estate broker and secured by liens on real property — amended by SB 1146, effective January 1, 2025.
Reviewed Aug 2026 - California Legislative InformationFinancial Code § 22002 — CFL licensees as an exempt class (opens in a new tab)
The California Financing Law creates a class of exempt persons pursuant to Section 1 of Article XV of the California Constitution — the statutory basis for licensed finance lenders pricing outside the constitutional caps.
Reviewed Aug 2026 - California CourtsHardwick v. Wilcox (Cal. Ct. App. 2017, No. A147944) (opens in a new tab)
Collects the consequences of usury: a usurious creditor is entitled to repayment of principal only, the interest provisions of the note are void, and usurious interest paid is credited against principal.
Reviewed Aug 2026 - California Legislative InformationSB 1146 (2024) — bill text and committee analyses (opens in a new tab)
Amended Civil Code § 1916.1 effective January 1, 2025 so the broker exemption expressly covers forbearances, extensions and modifications, addressing the bankruptcy courts' narrow reading described in the Moon decisions.
Reviewed Aug 2026 - California Department of Financial Protection and InnovationCalifornia Financing Law (finance lenders & brokers) (opens in a new tab)
Finance lenders and brokers operating in California are licensed under the California Financing Law, administered by the DFPI, the regime NexWin Capital Corp.'s CFL license (60DBO-211586) is issued under.
Reviewed Aug 2026 - Nationwide Multistate Licensing SystemNMLS Consumer Access. NexWin Capital Corp. (ID 2743839) (opens in a new tab)
Look us up yourself: NMLS Consumer Access is the public registry where you can verify NexWin Capital Corp.'s record under NMLS ID 2743839.
Reviewed Jul 2026