Mortgage Glossary
Effective Gross Income
Defined by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
Effective gross income is a rental property's total potential income minus an allowance for vacancy and credit losses.
What Effective Gross Income means
Investors and DSCR lenders use it as a realistic income figure rather than assuming full occupancy. It feeds cash-flow and debt-coverage calculations. The vacancy factor reflects local market conditions.
Florida example
A Florida fourplex with $80,000 in potential rent and a 5% vacancy allowance had an effective gross income of $76,000, the figure the DSCR lender used to size the loan.
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