Mortgage Glossary
Income Approach
Defined by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
The income approach is an appraisal method that values a property based on the rental income it generates.
What Income Approach means
Used mainly for investment and commercial properties, it converts expected net income into value using a capitalization rate. It is central to how DSCR lenders and investors assess deals. Comparable rents support the estimate.
Florida example
An appraiser valued a Florida fourplex with the income approach, dividing its net operating income by a market cap rate to arrive at value.
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