Coinbase and Better Mortgage have expanded their crypto-backed mortgage product to U.S. homebuyers, allowing eligible borrowers to pledge Bitcoin as collateral for a home down payment without first selling their holdings. The product became generally available to Coinbase One members on August 12 following an initial rollout and waitlist, the companies said Wednesday. It combines a conventional Fannie Mae-conforming mortgage with a separate loan that provides the cash required for the down payment.
Rather than liquidating Bitcoin, borrowers transfer the pledged BTC into a custodial account controlled by Better through Coinbase Prime. The Bitcoin remains there until the underlying down-payment loan is repaid or refinanced, after which the pledged assets are returned subject to the loan terms. Coinbase provides the crypto infrastructure and custody technology but does not originate or service the mortgages. Better performs the underwriting and remains the lender and mortgage servicer.
$250,000 of Bitcoin Can Support a $100,000 Down Payment Loan
The structure effectively creates two loans at closing. The first is a standard Fannie Mae-backed home mortgage. The second is secured by the borrower’s Bitcoin and supplies the cash used for the down payment. Both loans have the same interest rate and amortization term and are combined into a single monthly payment. Bitcoin must initially be worth at least 250% of the down-payment loan. That means a borrower seeking $100,000 toward the down payment on a $500,000 home would need to pledge approximately $250,000 of BTC. Better describes this another way: borrowers can receive down-payment credit equal to approximately 40% of their pledged Bitcoin’s value.
Importantly, falling Bitcoin prices do not automatically create a margin call. Better says borrowers are not required to add collateral if BTC declines and market movements alone will not trigger liquidation. Pledged cryptocurrency becomes subject to liquidation following a 60-day payment delinquency. The arrangement allows long-term holders to preserve their Bitcoin exposure while avoiding a sale that could generate capital-gains tax. However, it adds leverage because borrowers are taking a second loan instead of contributing an ordinary cash down payment. Reuters noted that the structure therefore increases financial complexity around an already leveraged home purchase.
Coinbase and Better Target Crypto-Rich, Cash-Poor Buyers
The companies see a significant potential market among Americans whose net worth increasingly sits in digital assets. Better said 41% of its pre-approved customers satisfy its income and credit requirements but lack enough cash for a traditional down payment. A waitlist established in June represented more than $260 million in projected mortgage volume, while 76% of respondents were already Coinbase One members and 60% expected to purchase a home within six months. Coinbase One members approved for eligible Better financing can also receive a lender credit equal to 1% of their mortgage value, capped at $10,000. The credit is applied toward closing costs.
The partnership was initially announced in March and subsequently funded its first Bitcoin-backed conforming mortgage before expanding availability this month. The product represents a different approach from simply allowing crypto to count toward mortgage qualification. Newrez, for example, recognizes Bitcoin, Ether, approved spot crypto ETFs and dollar-backed stablecoins when evaluating certain borrowers but still requires closing funds to be provided in U.S. dollars. Coinbase and Better instead turn Bitcoin directly into collateral for the separate down-payment loan.
The trade-off is straightforward: borrowers retain potential Bitcoin upside and avoid an immediate sale, but finance a larger portion of their home purchase and surrender access to the pledged BTC while the loan remains outstanding. For Coinbase, the product extends cryptocurrency beyond trading and investment into conventional consumer finance. For the mortgage industry, it provides an early test of whether digital wealth can be incorporated into mainstream housing finance without requiring crypto holders to convert their assets into cash first.