Equity
The difference between a property's market value and outstanding mortgage balance. Built through principal pay-down, appreciation, or value-add rehab. Pulled out via cash-out refinance or HELOC.
Why it matters on a DSCR loan
Equity is the raw material for portfolio growth: once a rental has appreciated or been paid down enough, a DSCR cash-out refinance can convert that trapped value into the down payment on the next property without touching your tax returns. A common mistake is assuming all equity is accessible — lenders cap how much you can pull based on LTV limits, and the new payment still has to pass the DSCR test. Underwriters look at equity through the appraised value, so a conservative appraisal can shrink your usable equity even when your own estimate is higher.
Related terms
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DSCR Calculator Get a QuoteReviewed by Arin Baghermian, Broker Owner — NMLS #1220456 · Last reviewed July 2, 2026 · DSCR Capital Partners is a brand of UTM Financial, LLC (NMLS #2591548).