- Coinbase and Better Home & Finance launched a structure allowing qualified borrowers to pledge crypto assets like Bitcoin as collateral for a loan covering a mortgage down payment.
- The primary mortgage remains a standard conforming loan backed by Fannie Mae, while Better originates and services it.
- This model introduces new risks, as borrowers cannot trade the pledged crypto collateral while it is locked, though market volatility alone does not trigger margin calls.
- The development follows a broader push to integrate crypto into housing finance, with other lenders like Newrez and Rate recently recognizing digital assets in underwriting.
Cryptocurrency exchange Coinbase Global has partnered with mortgage lender Better Home & Finance to launch a novel financing structure that enables qualified borrowers to use their digital assets for home purchases. According to Coinbase, this model lets borrowers pledge Bitcoin or USDC held in their accounts as collateral for a separate loan to fund a down payment, while the primary mortgage remains a standard Fannie Mae–backed loan.
This development marks a significant shift in U.S. housing finance by making crypto a direct component of mortgage financing. Consequently, it builds on recent regulatory signals, including a June directive from the US Federal Housing Finance Agency for Fannie Mae and Freddie Mac to prepare proposals for recognizing crypto in risk assessments.
However, pledging crypto for down payments introduces specific constraints and risks. Borrowers cannot trade the collateral while it is locked, and although price swings don’t directly alter mortgage terms, they influence borrower risk exposure.
Meanwhile, other lenders are also integrating digital assets into their processes. Loan servicer Newrez now allows Bitcoin, Ether, and crypto ETFs to count as qualifying assets in underwriting without liquidation.
Former Congressman Tim Ryan, a member of Coinbase‘s advisory council, framed this as a practical use case. “Digital assets have a place for working-class people… all the way down to getting a home,” Ryan said, highlighting the potential to address the major barrier of the down payment.
Affordability remains a steep challenge, with the average U.S. home price exceeding $405,000 in Q4 2023, data shows. A 20% down payment on such a home would cost over $80,000, a hurdle that crypto-backed loans aim to lessen for investors.
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