Twelve years ago, Better Home & Finance CEO Vishal Garg ran into a problem that stuck with him. To buy a home, he had to sell assets, pay capital gains tax and convert everything into cash before he could close. In an interview, Garg said the experience led him to a basic question: why should buyers have to liquidate assets at all, instead of pledging them directly?
He said the process was even harder because of timing. Buyers often need to show cash to make an offer credible, yet they do not know whether the offer will be accepted until later. That leaves them selling assets and paying taxes before they know if the purchase will actually happen.
Better and Coinbase put crypto into a mortgage down-payment structure
In March, Better and Coinbase rolled out a structure designed to address that gap. Borrowers can pledge Bitcoin or USDC and receive two loans: a first-lien mortgage that conforms to Fannie Mae standards, and a separate private loan for the down payment that is secured by the crypto collateral and backed by a second lien on the property.
The Wall Street Journal reported the same day that Fannie Mae had, for the first time, accepted a mortgage supported by crypto assets. In early June, a couple in their 30s in Ann Arbor, Michigan completed the first loan under the model.
Better said that before the product’s summer launch, its waitlist represented roughly $250 million in potential loan volume. It also said 41% of applicants did not have enough cash to cover a down payment.
Asked who would take these loans as assets, Garg said they fit bank investment standards and that multiple banks, including major U.S. institutions, were already lining up to buy and hold them. He framed that as a path for digital assets to enter the banking system in a formal way.
Collateral ratios, liquidation triggers and what the structure really costs
The product’s reach depends heavily on collateral rules.
For Bitcoin, Better requires a 250% collateral ratio. A borrower seeking a $100,000 down-payment loan would need to pledge $250,000 worth of BTC. For USDC, which has a more stable price, the required collateral ratio is 125%.
There is no margin-call mechanism in the product. A drop in Bitcoin’s price does not change the mortgage terms. Liquidation is triggered only if a borrower is delinquent for 60 straight days, using the same standard Better says applies to ordinary compliant mortgage loans.
The design is aimed at buyers who have assets but not much liquid cash. According to Redfin, 12.7% of younger homebuyers recently used crypto assets to help fund a down payment. Data from the National Association of Realtors shows the median age of first-time homebuyers is expected to reach a record 40 by the end of 2025, while the share of first-time buyers is expected to fall to a record low of 21%, though the Mortgage Bankers Association has disputed that figure using federal loan data. Census data shows the homeownership rate for people under 35 was just 35.2% in the second quarter of this year.
Using assets that borrowers already hold as support for lending is not entirely new. On the podcast On The Margin, PayJoy co-founder and CEO Doug Ricketts said smartphones can serve a role similar to collateral in housing finance. He said the company’s original innovation was to make the phone itself the pledged asset, so in that sense a smartphone functions much like a house does in a mortgage structure.
PayJoy lends to people with thin credit files in Latin America, Africa and South Asia. If a borrower defaults, the device can be locked, a familiar form of digital collateral. Ricketts said the company has a clear line on pricing risk: one model for lending to low-income populations is to charge very high interest rates, allow many users to default, and extract outsized returns from the few who keep paying. He said that is not PayJoy’s approach. PayJoy charges a one-time fixed fee and does not impose compounding interest, something he described as unusual in technology consumer lending.
Seven senators ask FHFA to shut the model down
On April 30, seven U.S. senators sent a letter to Federal Housing Finance Agency Director William Pulte, naming Better and Coinbase and asking the regulator to revoke the approval and bar government-sponsored enterprises from taking on crypto-related risk.
The letter was led by Dick Durbin and Elizabeth Warren, with Jeff Merkley, Chris Van Hollen, Richard Blumenthal, Bernie Sanders and Mazie Hirono also signing.
The lawmakers centered their criticism on the same 250% collateral rule Better has highlighted as a risk-control feature. In the letter, they argued that requiring buyers to post crypto worth as much as 2.5 times the down payment is itself an acknowledgment that crypto is a high-risk asset. They also said borrowers would be paying interest on two loans at once.
The senators’ team estimated that the combined financing cost could run as much as 1.5 percentage points above a standard Fannie Mae mortgage rate. They warned that the heavier payment burden could push borrowers to stop paying altogether, with losses ultimately landing on U.S. taxpayers.
The lawmakers asked for a response by May 30. FHFA has not publicly responded.
In June, Alys Cohen of the National Consumer Law Center and Corey Frayer of Consumer Federation of America published a joint commentary that went even further. They wrote that the federal government could be repeating the mistakes that led to the 2008 foreclosure crisis. Their conclusion was blunt: this was not consumer financial innovation, but the spark for a disaster.
Market pricing has added another layer of pressure. Bitcoin hit about $123,000 in October last year, fell to roughly $62,800 in February, and traded around the $60,000 range through July, leaving it at about half of its peak.
Garg’s ambitions extend well beyond Bitcoin and USDC
Garg said Bitcoin is only the starting point. Better currently supports Bitcoin and USDC, and he said the company plans to add mainstream tokenized assets tied to equity in SpaceX, Tesla, Coinbase, Better, Apple and Amazon.
He said the platform will not support meme coins. The focus will stay on liquid assets that draw institutional attention. Ethereum and Solana are next on the list.
He also laid out a broader vision: parents could pledge retirement-account assets to help children buy homes, an idea he linked to the wider push around crypto retirement products. Later, he said, buyers might simply photograph a listing and let software handle the rest. In his description, an AI agent on Better’s platform would submit the application and calculate the maximum bid automatically.
Over the longer term, Garg said ordinary people could hold fractions of homes and move between properties more flexibly. What keeps that from happening now, in his view, is transaction friction.
That thinking rests on a view of how younger people are allocating wealth. Garg said younger generations lack assets that can both hedge inflation and let them participate in rising home prices.
Tokenized equity still carries unresolved legal questions
One major problem remains unsettled for tokenized equity: what legal rights a token holder actually has. That issue runs through the broader tokenization market.
On On The Margin, Tessera founder and CEO Chan Ahn said the company launched a tokenized SpaceX product in February. He openly described one feature of the model: the platform intentionally does not use a KYC process, and he said that was not an oversight. The goal, he said, was to lower access barriers in private markets that have long relied on complicated paperwork, high minimums and geographic limits that shut out 99.9% of ordinary investors.
Chris Turner, co-founder of Kula, drew a distinction on the same podcast. Most tokenized assets, he said, give holders contractual rights to economic benefits rather than direct ownership of the underlying asset. Another model makes the token itself the asset, so holding the token is equivalent to holding the underlying exposure. The difference is fundamental. For mortgage underwriters, that means collateral valuation depends on which type of right the borrower is actually pledging.
Better is also trying to lower its own funding costs
At the same time, Better is reworking its funding channels. In February, the company reached a partnership with Framework Ventures and said it planned to deploy as much as $500 million through the stablecoin ecosystem Sky. Framework Ventures also invested $45 million for roughly a 10% stake.
Better said the shift could lower its cost of capital by more than 100 basis points. The company added that if tokenized funding is implemented, customer loan rates could fall below 5%, versus an industry level that it said is above 6%.
That funding pressure is real. In the first quarter, Better originated $1.64 billion of loans, up 89% year over year. Revenue reached $47.5 million, but the company still posted a loss of about $70 million. Since 2016, Better said it has originated more than $110 billion in loans. In December 2021, the company cut 900 employees in a single online meeting, a move that has continued to shadow Garg.
Even with regulatory scrutiny, market volatility and funding pressure building at the same time, Garg said he is not backing away from the bet. The worst outcome, he said, would be launching the product and seeing no demand, but he added that this is not what he is seeing. On the industry’s direction, he put it this way: rather than only imagining the future, it is more important to build it yourself.