U.S.-listed crypto exchange Coinbase (COIN) has partnered with Fannie Mae-approved mortgage firm Better Home & Finance Holding Co. (BETR) to allow crypto holders to use their digital assets as collateral for down payments when purchasing a home. The mortgage is structured as a conforming loan backed by Fannie Mae, carrying the same protections and standards as traditional mortgages, according to a press release Thursday.
Borrowers pledge bitcoin (BTC) or stablecoin USDC as collateral to fund their down payment, keeping their assets intact and avoiding a taxable event. In the case of USDC, they can continue earning rewards. Some 41% of American families fail to buy a home due to insufficient down payment funds, even when they have savings elsewhere, said Better founder Vishal Garg. Average homebuyers are squeezed by rising interest rates and steady home prices. For example, someone targeting a $400,000 property might struggle to find $40,000 cash while facing legal and tax hurdles from selling assets, he said.
Provided the consumer is a Coinbase crypto holder, they can avoid filing “crazy stuff” and simply transfer digital assets from the exchange to a custody wallet with Better while retaining ownership rights. “If Better had previously been accepting crypto as down payment collateral, we would have funded maybe $40 billion more of consumer demand over the past few years,” Garg added.
Key design features
Earlier crypto-backed mortgage products also used Coinbase as custodian, but they typically targeted wealth management and high-end purchases rather than average buyers. In February 2023, Better allowed Amazon employees to pledge stock as collateral for a home loan at a slightly higher rate. For the new crypto product, rates will be 0.5 to 1.5 percentage points above a standard 30-year fixed mortgage, depending on the borrower’s profile, a Coinbase spokesperson said.
The loan is free of margin calls and top-ups, according to the press release. If BTC drops in value, loan terms remain unchanged and no additional collateral is required. Market movements alone never trigger liquidation. Liquidation risk only arises after a 60-day payment delinquency, similar to conventional mortgages. “People who are sitting on Bitcoin or USDC can put a roof over their head without needing to sell it, without needing to incur capital gains,” said Mark Troianovski, Coinbase’s head of consumer and platform business development. “We are giving people access to housing in a way that is very similar to how private bankers serve some of the wealthiest customers.” The product is “as American as apple pie,” he added.