Ace the Arizona Real Estate Exam 2026 – Unlock Your Property Dreams!

The 10% down payment made by a borrower is referred to as equity because it represents the borrower’s ownership stake in the property. Equity is the difference between the fair market value of the property and the amount still owed on the mortgage. In this case, when a borrower puts down 10% of the property’s value, that amount is considered their initial equity investment. As the mortgage is paid down or if the property appreciates in value, this equity can increase over time.

The other terms listed have different meanings in the context of real estate. For example, "boot" typically refers to cash or other property given to balance an exchange in a 1031 exchange transaction. A "tax shelter" involves strategies that reduce taxable income, often related to real estate investments but not a direct reference to a down payment. "Leverage" refers to the use of borrowed capital to increase the potential return on investment, which encompasses the broader use of financing but isn’t specifically about the down payment itself.