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Program 04

Ground-Up Construction in Merced

Merced ground up construction loans for the university growth corridor.

Our construction program funds new builds up to 70% LTV and 85% of cost, with draws that follow the build. In the City of Merced, impact fees come due at certificate of occupancy, not at permit. Business-purpose only, and every structure is set in underwriting.

Ground-Up Construction in Merced, CA from USA Mortgage
70%
max LTV
85%
of cost
Most states
funding
$5M
max loan

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

How it works

We finance both the land and the vertical construction, with a draw schedule built around your timeline. Experienced builders can access higher leverage on cost.

Who it's for
Spec home builders
Developers and operators
Lot purchase or teardown
Build-to-rent strategies
Typical terms
Loan amountUp to $5M
LeverageUp to 70% LTV / 85% LTC
Term12 to 24 months
DrawsPer build schedule
RateFrom 10.00%*
UseSpec or build-to-rent
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*Typical terms, subject to underwriting and market conditions.

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Local FAQ

Ground-Up Construction in Merced, answered.

Why is Merced a ground-up market now?
Because land around UC Merced moved inside city limits in 2024. The campus, about 1,040 acres, and a two-mile stretch of Bellevue Road were approved for annexation into the City of Merced on July 18, 2024, and the 650-acre Virginia Smith Trust land just south of the campus was annexed after it. The city says its focus now shifts to processing the necessary entitlement applications, which is the step a builder underwrites. Census permit counts show the base: 780 units permitted in the metro in 2025, 697 of them single-family. We did not find lot inventory, so we publish none.

Sources: cityofmerced.gov, www2.census.gov

What do City of Merced impact fees cost on a new house, and when are they paid?
$13,574 per single-family dwelling in 2026, paid at certificate of occupancy. The city's Public Facilities Impact Fees took effect January 1, 2026, after a 3.6% index adjustment, with the next update scheduled for January 1, 2027. Multi-family is $9,908 per dwelling. Single-family pays in full at occupancy rather than at permit, so the fee falls at the end of the build, near your exit, instead of in the draw schedule; model it in your sources and uses either way. Confirm the current schedule with the city before you close on the lot.

Sources: cityofmerced.gov

What other City of Merced fees land on a new house?
A residential construction tax of $0.91 per square foot, paid at building permit. It comes from Merced Municipal Code section 5.50.020, with a credit for a CRIS fee paid under a development agreement. On a 1,920 square foot house, the city's average size, that is about $1,747 ($0.91 x 1,920). With the impact fee, the city-side load is about $15,321 ($13,574 + $1,747), before building permit and plan check fees, school developer fees, and water and sewer connections. We could not find the school developer fees or a plan-review turnaround, and we could not confirm whether the $0.91 rate has been indexed since it was set.

Sources: library.municode.com, cityofmerced.gov

Which discounts and deferrals change the math on an infill build?
There are three, and they favor small and central projects. The city charges no impact fee on an accessory dwelling unit under 750 square feet. It discounts the fee 50% in the central area and in Opportunity Zones. Single-family homes at least 20% below the city's 1,920 square foot average pay proportionally less. Separately, non-residential and multi-family projects with more than $50,000 in fees may defer 75% over five years, while single-family pays in full. Confirm that your parcel qualifies with the city before you underwrite the discount.

Sources: cityofmerced.gov

What will my buyers see on the tax bill of a new Merced subdivision?
The base stack plus a services special tax. City of Merced Community Facilities District 2003-2 funds police and fire, landscaping and park maintenance, and flood control, and the city's report says new development areas annex into it as they apply for approval. It had 42 improvement areas at the fiscal 2021-22 report. Those special taxes are not in the county's ad valorem rate book, and we could not find a per-parcel rate or any facilities districts elsewhere in the county. Ask the city for the district and amount on your subdivision before you set sale prices.

Sources: cityofmerced.gov

What should a builder check about flood exposure before buying a lot?
Ask for the parcel's flood determination before you close. Bear Creek reached a flood of record on January 10, 2023, and the town of Planada was ordered to evacuate after a levee breach; Merced County received a major disaster declaration four days later. A lender may require flood coverage near Bear Creek and the other creeks. We found no county flood-zone parcel share and no premium averages, so publish no number in your pro forma until you have a quote.

Sources: weather.gov

More Ground-Up Construction questions, answered on the program page

Resources

Guides for Ground-Up Construction

Fix and Flip · 6 min read
Fix and Flip Loan Requirements: What You Need to Get Funded
Read the guide
Fix and Flip · 5 min read
What Is ARV (After-Repair Value) and How Do You Calculate It?
Read the guide
Construction · 5 min read
How Ground-Up Construction Loans Work
Read the guide
Getting Funded · 4 min read
LTV vs LTC: What's the Difference?
Read the guide
Browse all guides
More in Merced

Other programs in Merced

Second MortgageKeep your first mortgageFix and FlipUp to 90% / 100% rehabRental / DSCR30-yr fixed, DSCR from 0.75CRE BridgeUp to $10M, 24-36 moTransactional FundingSame-day double-close capitalBank Statement / No-DocNo tax returns requiredConventional InvestmentNon-owner-occupied investmentPortfolio LoansMultiple properties, one loanCRE PermanentLong-term agency & permSBA Financing7(a) & 504 placement

Ground-Up Construction elsewhere in California

All Merced loan programs
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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