(FORTUNE Small Business) – The saying that you're not really an entrepreneur unless you've lost your house at least once now rings truer than ever. Faith in ever-increasing property values has led a growing number of entrepreneurs to risk their homes to start or buy businesses. Consider Brad Phillips, 32, who in January opened a $126,000 home-equity line of credit, at 4.5% interest, to fund Phillips Media Relations, a D.C.-based public relations firm. His theory: Even if the business fails, the value of his house will rise to cover the loan and he'll still come out even. He isn't alone: Bill Abrams, a partner in Abrams Garfinkel Margolis Bergson, a law firm that puts together business financing, has seen a tenfold increase in home-equity deals since 2001.

Don Bradley of the University of Central Arkansas worries that if the housing market softens, entrepreneurs will be left with huge debts and little equity. Combine that with a struggling business, and overeager borrowers face losing everything, he says. --I.M.