Coinbase has teamed up with Fannie Mae-approved mortgage firm Better Home & Finance Holding Co. to launch a program allowing cryptocurrency holders to use their digital assets as collateral for home down payments. This initiative marks a significant step in integrating crypto assets into mainstream financial products, specifically the U.S. housing market.
The mortgage is structured as a conforming loan backed by Fannie Mae, meaning it carries the same protections and standards as traditional mortgages. Borrowers can pledge Bitcoin (BTC) or the USDC stablecoin as collateral to fund their down payment. This structure allows them to keep their assets intact and avoid creating a taxable event that would occur from selling them. For USDC holders, they can continue to earn rewards on their collateral.
Better founder Vishal Garg highlighted the pressing need for such a product, stating that "41% of American families fail to buy a home because they don't have enough funds for the down payment, even though they have money elsewhere in savings." He explained that average homebuyers are squeezed by high interest rates while house prices remain elevated, creating a barrier to entry. For example, someone looking to buy a $400,000 property might struggle to find the $40,000 cash down payment and face complex legal and tax hurdles when trying to sell other assets to raise the funds.
The process is streamlined for Coinbase customers. They can simply transfer their digital assets from the exchange to a custody wallet with Better while retaining ownership rights, avoiding what Garg called "crazy stuff" related to filings. Garg estimated that if Better had offered this product earlier, "we would have funded maybe 40 billion more of consumer demand over the past few years."
While there have been other crypto-backed mortgage offerings, often with Coinbase as custodian, they have typically focused on wealth management and high-end purchases. This new program aims to cater to the average consumer. The rates for these crypto-backed mortgages will be higher than a standard 30-year fixed mortgage by between 0.5 and 1.5 percentage points, depending on the borrower's profile.
A key feature of the product is protection from market volatility. The loans are free of margin calls and top-ups. If Bitcoin's value drops, the mortgage terms remain unchanged and no additional collateral is required. Market movements alone never trigger liquidation. Borrowers' collateral is only at risk in the event of a 60-day payment delinquency, similar to conventional mortgages.
Coinbase's head of consumer and platform business development, Mark Troianovski, described the product as "as American as apple pie," emphasizing that it allows people to access housing without selling their crypto assets and incurring capital gains taxes. "We are giving people access to housing in a way that is very similar to how private bankers serve some of the wealthiest customers. They don't sell assets to buy stuff; they actually take loans against assets," Troianovski said.