Borrowers can pledge Bitcoin or USDC as down payment collateral without triggering a taxable event.
Coinbase and Better Home & Finance announced a partnership on Thursday to offer token-backed mortgages. The product aims to expand access to homeownership while carrying the same Fannie Mae backing as other conforming mortgages.
Qualifying Americans can now pledge Bitcoin or USDC as collateral to fund their cash down payment, securing a standard conforming mortgage without liquidating their digital assets or potentially triggering a taxable event.
How It Works
Instead of needing to come up with cash for the down payment, borrowers pledge their crypto holdings as collateral for a separate loan that covers the down payment. The result is two loans at closing: a standard Fannie Mae mortgage on the home, and a second loan secured by the pledged crypto. Both loans share the same interest rate and amortization term, so the borrower manages a single combined monthly payment — a structure the companies describe as a market first.
The mortgages are designed in accordance with Fannie Mae guidelines and structured as standard conforming loans, which the companies say will enable significantly lower interest rates than those traditionally associated with token-backed loans.
No Margin Calls
If Bitcoin’s value drops, the mortgage terms remain unchanged, and no additional collateral is required. Market movements alone never trigger liquidation. Collateral is only at risk of liquidation in the event of a 60-day payment delinquency, similar to conforming mortgages.
For borrowers who pledge USDC, the collateral earns rewards that can help offset mortgage payments, enabling borrowers to reduce their net effective interest rate.
Coinbase One members who close a crypto-backed or regular mortgage through Better are eligible for a rebate worth 1% of the mortgage value, capped at $10,000, to cover closing costs and fees.
Why It Matters
For decades, the path to homeownership has required Americans to sell assets, liquidate investments, or withdraw retirement savings to cover a cash down payment — often triggering capital gains taxes or early withdrawal penalties. Market reports suggest 52 million American adults, or roughly 20% of the adult population, have owned digital assets.
Until now, borrowers have not been able to get credit for those assets in the traditional mortgage underwriting process without first liquidating them. Crypto-backed mortgages change this by allowing onchain wealth to translate into real-world access, expanding the pathways to homeownership while preserving long-term investment positions.
Better CEO Vishal Garg said the partnership “introduces a new pathway to realizing the American Dream for the 52 million Americans who own digital assets.”
The companies plan to expand eligible collateral types over time to include tokenized equities, fixed income, and other tokenized real estate assets, pending market and regulatory conditions.
This article was written with the assistance of AI workflows. All our stories are curated, edited and fact-checked by a human.