Vacancy Rate
Direct definition
The percentage of time a rental property is unoccupied during the year.
Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content
Plain-English explanation
Underwriters commonly apply a 5–10% vacancy factor when calculating rental income. Investors should model realistic vacancy for their market.
Why it matters
Assuming 100% occupancy overstates cash flow and DSCR.
Where you may see it
- Rent roll
- Operating statement
- DSCR loan underwriting
A real-world example
A property renting at $2,500/month with 5% vacancy generates $28,500/year (versus $30,000 at 0% vacancy).
Educational and illustrative only
A common misunderstanding
Vacancy rate isn't the same as turnover — a property can have low turnover but still register vacancy days between tenants.
Ask Vabasso AI
This glossary provides general educational information. Mortgage terminology, qualification methods, forms, timelines, fees, program rules, and legal meanings may vary by lender, investor, loan program, property, occupancy, state, and transaction. Definitions do not represent loan approval, legal advice, tax advice, or a commitment to lend.
- Author
- Vabasso Mortgage Editorial Team
- Reviewed by
- Vabasso Mortgage Licensed Advisory Team
- Last reviewed
- July 30, 2026