What to know:
- Borrowers pledge bitcoin or USDC as collateral to fund their down payment, allowing them to keep their assets intact and avoid a taxable event by spending them.
- The Coinbase/Better mortgage is structured as a conforming loan backed by Fannie Mae, meaning it carries the same protections and standards as traditional mortgages.
- Coinbase said the crypto-backed mortgages, aimed at regular homebuyers, are “as American as apple pie.”
Coinbase, a cryptocurrency exchange traded on U.S. stock markets, is partnering with Better Home & Finance, a mortgage company approved by Fannie Mae. This collaboration will allow people who own cryptocurrency to use it as part of the down payment when purchasing a home.
The loan follows standard mortgage guidelines and is backed by Fannie Mae, offering the same security and quality as most traditional mortgages, the company announced on Thursday.
People can now use bitcoin or the USDC stablecoin as a kind of guarantee when buying a home, covering their down payment without actually selling their cryptocurrency. This lets them hold onto their digital assets and avoid paying taxes on a sale. With USDC, they can even continue earning rewards on their collateral, according to Coinbase.
According to Better founder Vishal Garg, a significant portion of American families – 41% – are unable to purchase a home, not because they lack savings overall, but specifically because they haven’t saved enough for a down payment.
Rising interest rates are making it harder for people to buy homes, especially with prices remaining high, explained Garg. For example, someone hoping to purchase a $400,000 home might have trouble saving the $40,000 needed for a down payment, and could face complicated legal and tax issues if they try to sell assets to raise the funds.
As a researcher following this development, I’ve learned that if a Coinbase user already owns cryptocurrency, they can significantly simplify their tax reporting. Instead of dealing with complicated filings, they can move their crypto from Coinbase to Better’s custody wallet while still maintaining full ownership.
According to Garg, if Better had allowed cryptocurrency as collateral for down payments in the past, they could have potentially funded an additional $40 billion in consumer loans over the last few years.
We’ve seen some progress with mortgages backed by cryptocurrency, even some using Coinbase to hold the funds. But so far, these solutions have largely focused on managing wealth for luxury purchases, and haven’t been widely available to everyday homebuyers.
Starting in February 2023, Better began letting Amazon employees use their company stock as security for a home down payment loan, though the interest rate was a bit higher than usual.
According to a Coinbase representative, the interest rates on these cryptocurrency-backed mortgages will be between 0.5% and 1.5% higher than those for a typical 30-year mortgage, with the exact rate depending on the borrower’s financial situation.
These new mortgages, secured by tokens, won’t require borrowers to add more funds even if the value of Bitcoin falls. According to Coinbase, the loan terms stay the same, and you won’t be asked for extra collateral or face forced liquidation simply due to market fluctuations.
The company stated that borrowers’ collateral will only be seized if payments are 60 days overdue, much like with traditional mortgages.
Coinbase’s Mark Troianovski described the product as quintessentially American, like apple pie, in a recent CoinDesk interview.
According to Troianovski, people holding Bitcoin or USDC can now secure housing without selling their cryptocurrency and triggering capital gains taxes. This new approach is similar to how private banks serve high-net-worth individuals – offering loans secured by assets instead of requiring them to sell those assets to make purchases.
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2026-03-26 14:47