Haircut

Haircut is the difference between collateral value and the amount a lender advances against it.

Why this matters to income investors

A larger required equity cushion reduces how much a mortgage investor can borrow against assets.

How to use haircut in your research

Read the financing or hedge terms and the amount of liquid collateral available. A market move can trigger a cash demand even before the underlying investment is sold.

This material is general education and information, not individualized investment, tax, or legal advice.