The influence of in situ etching of Si-face n-4H-SiC wafers in H2 and propane on the surface morphology of the grown epi-layers were examined using differential interference contrast (DIC) optical microscopy and atomic force microscope (AFM). Two defect-selective etching techniques were applied in order to reveal the type and spatial distribution of defects in the substrates and epi-layers. It was found that for the flow applied in this experiment propane plays a significant role for the etching process. Depending on temperature and etching time we obtained completely different picture of substrate surface morphology. The propane etching was verified as a tool for substrate surface improvement.