By Isabelle Lee | Bloomberg
Crypto is moving deeper into the US financial system — this time through the mortgage market.
Better Home & Finance Holding Co., a mortgage company, and Coinbase Global Inc. are launching a product that links digital assets to down payments on Fannie Mae-eligible home loans. The structure allows borrowers to pledge Bitcoin and Circle Internet Group Inc.’s USDC stablecoin as collateral for a separate loan used to fund the down payment, rather than selling those assets to raise cash.
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The offering arrives as digital assets push further into the financial mainstream, following the blockbuster rollout of spot-crypto exchange-traded funds in 2024 that have helped mint wealth for investors. For years, many crypto holders have balked at selling — even for major purchases like a home — because doing so would mean giving up potential upside while also incurring capital gains taxes.
While crypto-backed mortgages aren’t entirely new, Fannie Mae’s involvement is significant. The government-backed entity, overseen by the Federal Housing Finance Agency, plays a central role in the US housing market. Its move aligns with a broader policy shift: In June, Federal Housing Finance Agency Director Bill Pulte signaled support for factoring crypto held on regulated exchanges into mortgage risk assessments — the process lenders use to determine whether a borrower has the financial clout to make good on their debt.
“Crypto democratizes the ability of regular Americans to access financial instruments that’s only for the traditionally wealthy,” Vishal Garg, chief executive officer and founder of Better Home, said in an interview.
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The primary mortgage remains a conventional conforming loan, originated and serviced by Better Homes in accordance with Fannie Mae guidelines. Conforming loan status typically means borrowers get access to lower interest rates and standardized terms backed by the government-sponsored mortgage market. A Fannie Mae spokesperson didn’t immediately reply to a request for comment.
At closing, borrowers take out two loans: the main mortgage on the home and a second loan secured by cryptocurrency that funds the down payment. Both loans carry the same interest rate and amortization term, resulting in a single combined monthly payment.
According to the companies, the loan terms are not affected by changes in cryptocurrency prices. The pledged assets are only at risk of liquidation if a borrower becomes delinquent on payments. Borrowers pay interest on both the primary mortgage and the down-payment loan rather than making a cash down payment.
“You don’t sell your equities to qualify for mortgage. You borrow against them,” said Mark Troianovski, head of consumer and platform business development at Coinbase, the largest US crypto exchange. In the same way, this “is about getting utility from your crypto for real world use cases.”
