TITLE: Crypto-Backed Mortgages Explained: How Bitcoin Could Help You Buy a Home
META: Crypto-backed mortgages let you use bitcoin as collateral for a home loan—no selling required. Here’s how Fannie Mae, Better, Coinbase, and Milo are making it happen.
SLUG: crypto-backed-mortgages-explained
FOCUS KEYWORD: crypto-backed mortgage
TAGS: crypto-backed mortgage, bitcoin, home loan, Fannie Mae, Coinbase, tokenization, USDC, real estate financing
CATEGORY: Cryptocurrency
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A New Path to Homeownership Through Digital Assets
For years, crypto investors faced a frustrating dilemma: their digital wealth grew on paper, but turning it into a home required selling—triggering taxes and forfeiting future gains. That’s beginning to change. A wave of crypto-backed mortgages is moving from the fringes of finance into the mainstream, letting borrowers pledge cryptocurrency as collateral instead of cashing out.
At its core, a crypto-backed mortgage is a home loan that uses your cryptocurrency as security. You keep your holdings while borrowing against their value—a strategy long favored by the ultra-wealthy, now being repackaged for everyday buyers.
Fannie Mae Opens the Door
The biggest signal of this shift came from Fannie Mae, the government-sponsored entity that fuels much of the U.S. housing finance system. It announced plans to accept bitcoin and the stablecoin USD Coin (USDC) as collateral for the conventional mortgage—the most widely used home loan in the country.
The product isn’t live yet, but it’s close. Until recently, using crypto toward a down payment was a niche offering from only a tiny number of lenders. Under Fannie Mae’s pilot, mortgage company Better is teaming up with crypto exchange Coinbase, and a waitlist is already drawing strong demand.
“Every single person on the waitlist is a story of someone… that’s just been sitting on [crypto] for years and now is like, ‘Oh, I can actually use this to do something very useful, which is put a roof over my head,'” said Mark Troianovski, Coinbase’s head of business development.
Better’s founder and CEO, Vishal Garg, said the official launch is targeted for June, with some loans already being processed to smooth out the workflow.
How the Better–Coinbase Mortgage Works
The conventional crypto mortgage from Better and Coinbase functions essentially as a zero-down loan made up of two parts bundled together:
- A standard mortgage covering most of the home’s price
- A down-payment loan secured by your cryptocurrency
Both are merged into one interest rate, one term, and a single monthly payment.
The collateral requirements differ by asset because of volatility:
- Bitcoin pledge: Collateral must equal at least 250% of the down-payment loan. A $250,000 BTC pledge supports a $100,000 down-payment loan.
- USDC pledge: Collateral must be at least 125% of the down-payment loan. A $125,000 USDC pledge supports a $100,000 down-payment loan.
Coinbase One members approved by Better can also earn a lender credit toward closing costs worth 1% of the mortgage amount, capped at $10,000.
The Bigger Vision: Tokenized Assets as Down Payments
Garg sees crypto as just the beginning. “This isn’t just about bitcoin, this is about any tokenized asset,” he said. He noted that 41% of Better’s customers ultimately didn’t buy a home or didn’t qualify because they lacked the down-payment funds.
Eventually, he envisions borrowers pledging tokenized versions of S&P 500 ETFs or individual stocks like Amazon and Tesla—without selling appreciated investments. Better is already working with major U.S. corporations to let employees leverage company stock toward a no-down-payment home purchase.
“There’s $35 trillion in U.S. stocks and bonds held by U.S. households,” Garg said. “The amount that’s kept in bank accounts and checking accounts is $5 trillion. Right now, we only count $5 trillion as eligible to fund a down payment.”
Troianovski compared the approach to how the wealthy already manage money: “This is the same exact mechanism that a Sergey Brin or Jeff Bezos uses, because they don’t want to sell a bunch of Google stock or Amazon stock.” The tactic—known as Buy, Borrow, Die—is a long-standing way the rich minimize taxes by borrowing against assets rather than selling them.
Crypto Mortgages for Borrowers Without Traditional Income
Not everyone with substantial crypto holdings has a conventional paycheck. That’s the gap Josip Rupena set out to fill with Milo.io. Before founding the company, Rupena worked in the ultra-high-net-worth divisions of Wall Street firms, advising wealthy retirees holding concentrated stock positions.
He noticed that some extremely wealthy clients couldn’t qualify for standard mortgages. “They couldn’t really document income because they had no more income, but a very sizable net worth,” he said.
Unlike conventional mortgages, which require proof of steady income, Milo lends to holders of large digital asset portfolios without traditional earnings. The company recently surpassed $100 million in crypto mortgage originations, including a record $12 million loan.
How Milo’s Crypto Mortgage Is Structured
- 100% financing with no traditional income required
- 30-year term: interest-only for the first 10 years, then amortized over 20 years
- Collateral matches the loan—a $1 million loan requires $1 million in bitcoin pledged
- Both the bitcoin and the property serve as collateral
If bitcoin’s value falls 65%—turning a $1 million pledge into $350,000—the borrower must either add collateral or reduce the loan balance. Rupena says this hasn’t been an issue: “Over the three and a half year period that we’ve been originating our crypto mortgages, we’ve never had to ask for someone to post more collateral because of that 65% drawdown.”
Milo also offers a self-custody version, where it verifies the bitcoin but the borrower keeps control of it and pays a cash down payment. Rates run slightly above conventional—roughly half a point higher. “If conventional rates are 6.5%, we’re going to be 7%,” Rupena said. The company’s website includes a five-minute prequalification tool.
Things to Weigh Before Taking a Crypto Mortgage
Bryan Courchesne, founder and CEO of Daim.io, a crypto-focused registered investment advisor in Palm Beach, Florida, says clients are already asking about these products. While the appeal is real, prospective borrowers should think carefully before pledging volatile assets.
- Volatility risk: A sharp crypto downturn can trigger margin calls, forcing you to add collateral or pay down the loan at the worst possible time.
- Cost trade-offs: Crypto-backed loans may carry higher rates than standard mortgages, and you remain exposed to your asset’s price swings while also owing on a home.
FAQ
What is a crypto-backed mortgage?
It’s a home loan that uses your cryptocurrency as collateral, allowing you to borrow against your holdings without selling them first.
Which cryptocurrencies can be used?
In Fannie Mae’s pilot with Better and Coinbase, bitcoin and the stablecoin USDC are accepted. Future products may expand to other tokenized assets like stock ETFs.
How much collateral do I need?
For bitcoin, the collateral must equal at least 250% of the down-payment loan. For USDC, it must be at least 125% because stablecoins are less volatile.
What happens if my crypto loses value?
If the value drops significantly—around 65% in Milo’s model—you’ll need to either add more collateral or reduce your loan balance to maintain the required ratio.
Do I need traditional income to qualify?
Not always. Lenders like Milo offer mortgages based on digital asset holdings without requiring proof of steady income, making them an option for crypto holders without conventional paychecks.
The Bottom Line
Crypto-backed mortgages represent a meaningful step in the broader tokenization of finance—turning paper wealth into purchasing power without forcing a sale. With Fannie Mae’s backing and partnerships between established players like Better, Coinbase, and Milo, the option could open homeownership to millions of digital asset holders. But the same volatility that built those fortunes can also threaten them. Before pledging your crypto, weigh the risks of margin calls, higher rates, and price swings against the benefit of keeping your investments intact.