In a groundbreaking development for the housing market, Coinbase has officially partnered with Better Home & Finance to launch a new line of crypto-backed mortgages backed by Fannie Mae. This initiative aims to weave digital assets into the fabric of traditional housing finance, presenting a unique opportunity for borrowers who wish to maintain their cryptocurrency investments.
The new mortgage offering enables qualified borrowers to use Bitcoin or USDC as collateral for their down payments without having to liquidate these digital assets. This capability is especially appealing as it allows borrowers to sidestep potential capital gains taxes and keep their investments intact. By structuring these loans as conforming loans, they benefit from the same protections and standards as traditional Fannie Mae-backed loans, ensuring a level of safety and familiarity for borrowers.
According to data from Better, approximately 41% of American families are unable to purchase homes due to inadequate liquid cash, even when they possess other types of wealth. Better CEO Vishal Garg emphasized the importance of this partnership, stating, “For decades, the path to homeownership has required Americans to sell assets, liquidate investments, or withdraw retirement savings. This partnership introduces a new pathway for millions of Americans who hold digital assets.”
The potential reach of this offering is significant, with estimates suggesting that around 52 million Americans—equivalent to 20% of adults—have owned digital assets. By enabling borrowers to use cryptocurrency instead of cash for down payments, this product aims to bridge a critical gap in the housing market.
In a departure from traditional crypto-backed lending, the new mortgages are designed to mitigate volatility risks for borrowers. The loans do not come with margin calls or collateral top-ups; if the value of Bitcoin declines, borrowers are not required to provide additional collateral, protecting them from abrupt liquidations. Collateral only becomes vulnerable if the borrower is more than 60 days delinquent on mortgage payments, which aligns with typical foreclosure timelines in traditional housing finance.
Interest rates for these crypto-backed mortgages are anticipated to be higher than those of standard 30-year mortgages, by an estimated 0.5 to 1.5 percentage points based on individual borrower profiles. Nevertheless, Coinbase representatives assert that the benefits—specifically the ability to avoid liquidating assets—may outweigh the higher costs for many borrowers. Max Branzburg, head of consumer and business products at Coinbase, proclaimed, “The ability to transform digital wealth into housing access is a milestone.”
This innovative product is a response to evolving wealth trends among younger Americans, with Coinbase data showing that 45% of younger investors own cryptocurrency, compared to only 18% of older generations. At the same time, the increasing unaffordability of housing has led many would-be buyers to find themselves asset-rich but cash-poor. The introduction of token-backed mortgages seeks to convert cryptocurrency holdings into usable collateral rather than regarding them solely as speculative investments.
Better has piloted alternative collateral models in the past, allowing Amazon employees to use stock as down payments for loans. Executives believe that the addition of Bitcoin and other cryptocurrencies could significantly boost lending demand—Garg estimates that the firm may have overlooked up to $40 billion in originations by not offering these products sooner.
The structure also presents unique attributes associated with digital assets. Borrowers using USDC as collateral may continue to earn yields on their holdings, potentially offsetting some mortgage costs. Furthermore, Coinbase’s custody model permits users to pledge specific portions of their crypto portfolio instead of having to lock all assets, offering greater flexibility.
The partnership signifies a notable shift in the landscape of mortgage lending, as the involvement of Fannie Mae lays the groundwork for broader adoption of crypto-backed mortgages. By aligning digital asset collateral with conforming loan frameworks, this collaboration integrates cryptocurrencies into mainstream financial infrastructure rather than treating them as a separate entity.
Coinbase has characterized the new mortgage product as “as American as apple pie,” framing it as a natural evolution in home financing rather than a deviation from traditional practices.
