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Program 03

Rental / DSCR in Merced

Merced DSCR loans built on rent-to-value, not appreciation.

Hold your rentals with financing that underwrites the asset, not just you. We offer DSCR from 0.75, rates from 5.5% interest-only, and 30-year fixed options. Merced County is a yield market, so coverage comes from rent against price rather than from appreciation. Business-purpose only, subject to underwriting.

Rental / DSCR in Merced, CA from USA Mortgage
0.75
min DSCR
5.5%
rates from
30-yr
fixed avail.
80%
max LTV

Typical figures, subject to underwriting and market conditions. Not a commitment to lend.

How it works

No tax returns or personal income docs in most cases. We qualify on the property's cash flow, so you can scale your portfolio without the paperwork drag of conventional lending.

Who it's for
Buy-and-hold investors
Single rentals and portfolios
Short-term rentals considered
Rate/term and cash-out refi
Typical terms
Loan amount$100K to $3M
Max leverageUp to 80% LTV
DSCRFrom 0.75
CreditFrom 640
Term30-yr fixed / 5-7-10 ARM
RateFrom 5.50% IO*
PrepayFlexible structures
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*Typical terms, subject to underwriting and market conditions.

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Local FAQ

Rental / DSCR in Merced, answered.

What rent-to-value ratio should I expect on a Merced County rental?
About 6.6% gross as of September 2026, before taxes, insurance and vacancy. Zillow's metro single-family rent index was $2,284 against a $414,423 mid-tier value, which is $27,408 a year ($2,284 x 12) divided by $414,423. The same inputs give 7.02% for Fresno, 6.49% for Stockton and 5.24% for Los Angeles, so Merced sits among the Central Valley yield markets rather than beating them. Metro rent rose 1.2% year over year while value slipped 0.3%. These are county-wide figures from Zillow's indexes, so check the rent comps on your own address.

Sources: files.zillowstatic.com

Is there enough renter demand in Merced County to hold a rental?
Yes, and the City of Merced leans toward renting. The 2024 American Community Survey counted 12,743 renter households of 27,059 occupied units in the City of Merced, 47.1%, and 39,152 of 87,632 across the county, 44.7%, with a margin of error near 1,400 units on the renter counts. Population growth is uneven: the City of Merced grew 11.0% from April 2020 to July 2025 to 99,724 people and Los Banos 8.8%, while Atwater grew 0.6% and Gustine and Dos Palos shrank slightly. Do not underwrite every Merced County town as a growth town.

Sources: www2.census.gov

What tax number should I put in the DSCR calculation?
Use the parcel's own tax rate area, not 1%. The county's 2026-27 rate book shows stacks from about 1.04% in the Livingston school district to about 1.16% in Delhi, with 1.1105% in Merced City School District territory. Newer City of Merced tracts also carry a services special tax from Community Facilities District 2003-2 that is not in the rate book, and we found no per-parcel amount. A purchase triggers a supplemental assessment that the owner receives and the mortgage servicer does not, so budget it outside the escrow. Talk to your CPA.

Sources: countyofmerced.com, cityofmerced.gov

How do Merced's housing code rules affect rental cash flow?
Deferred maintenance is a real cost line. Under Chapter 8.53, an owner with three housing code violations within 12 months is designated a repeat violator and listed on the city's website, and the council amended the chapter in June 2026. Read the current fine and relocation terms with your attorney before you buy a property with open violations. Enforcement is complaint-driven according to local reporting, and we did not locate a City of Merced rental registration or proactive inspection program, which is not the same as confirming none exists.

Sources: cityofmerced.gov, kvpr.org

Can I run a short-term rental in the City of Merced?
The city has no short-term rental chapter, and nightly stays are taxed as hotel occupancy. A search of the municipal code finds no short-term or vacation rental rules. Chapter 3.08 sets a transient occupancy tax of 10% of the rent charged, with the operator registering with the Tax Administrator and filing quarterly returns. We did not find short-term rental rules for Atwater, Los Banos, the other cities or unincorporated Merced County, so check the jurisdiction before you count that income. Our DSCR program considers short-term rentals.

Sources: library.municode.com, cityofmerced.gov

Can I raise rent freely on a Merced rental?
The City of Merced has no rent control chapter, so the statewide AB 1482 cap governs covered units. The California Apartment Association summarizes that cap as 5% plus the percentage change in the cost of living, or 10%, whichever is lower. We could not confirm the allowable percentage for Merced County for the year starting August 1, 2026, so check it before you write a rent increase into your coverage ratio. The exception is a unit damaged in the January 2023 flood, where Chapter 9.75 bars a rent increase for six months after a displaced tenant returns. Talk to your attorney about any covered unit.

Sources: caanet.org, library.municode.com

More Rental / DSCR questions, answered on the program page

Resources

Guides for Rental / DSCR

Rental / DSCR · 5 min read
What Is a DSCR Loan? How Investors Qualify on Rental Income
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Strategy · 6 min read
Financing the BRRRR Method: Buy, Rehab, Rent, Refinance, Repeat
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Rental / DSCR · 5 min read
DSCR vs Conventional Loan: Which Is Better for Investment Property?
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Rates & Costs · 5 min read
Hard Money Loan Rates and Costs, Explained
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About the local figures on this page

Local rules move. Every tax rate, fee, ordinance and market figure here comes from a primary source and carries the date we read it, and we correct them as the rules change. Where a number is mid-change or we could not verify it, we say so rather than guess. Before you commit a budget, confirm anything that drives it with the city or county, and talk to your attorney or CPA on questions of law or tax.

Published by USA Mortgage Funding, LLC, NMLS #152588. Researched from primary sources by our team, drafted with AI assistance, and every figure checked against its source before publishing. Where an answer rests on a public record, that record is linked under it. Figures read on 2026-10-16.

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