Coinbase and Fannie Mae-Approved Lender Better Launch Bitcoin-Backed Mortgages

Coinbase is working with Fannie Mae-approved lender Better Home & Finance Holding Co. to introduce a mortgage product that allows homebuyers to use digital assets as down payment collateral.

The loans are structured as conforming mortgages backed by Fannie Mae, meaning they follow the same standards as traditional home loans.

The structure involves two loans at closing: a standard Fannie Mae mortgage on the home and a separate loan secured by the borrower’s pledged digital assets, which is used to fund the down payment. 

Both loans share the same interest rate and amortization schedule, resulting in a single combined monthly payment.

Under this model, borrowers do not need to liquidate assets to meet down payment requirements. 

Instead, Bitcoin or USDC is pledged as collateral for the second loan, while the underlying mortgage functions like a conventional home loan with standard legal protections.

For example, a buyer purchasing a $500,000 home could pledge $250,000 in Bitcoin to secure a $100,000 loan for the down payment, while the primary mortgage covers the remaining balance. 

The pledged assets remain in custody for the duration of the loan and are returned once it is repaid.

Borrowers can pledge Bitcoin or the USDC stablecoin to fund their down payment, allowing them to retain ownership of their assets and avoid triggering taxable events from selling. Coinbase added that USDC holders may continue earning rewards.

Better founder Vishal Garg stated many prospective buyers struggle to meet down payment requirements despite having assets elsewhere.

“Some 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,” Garg said.

He noted that a buyer targeting a $400,000 home may find it difficult to produce a $40,000 down payment and could face tax and legal hurdles when liquidating assets.

Garg explained that Coinbase users can transfer their digital assets into a custody wallet with Better while maintaining ownership rights.

He added that if such a model had been available earlier, “we would have funded maybe 40 billion more of consumer demand over the past few years.”

According to Coinbase, the loans do not include margin calls or additional collateral requirements if asset prices decline, and mortgage terms remain unchanged regardless of Bitcoin price movements. 

Liquidation would occur only in cases of 60-day payment delinquency, similar to conventional mortgages.

Mark Troianovski, Coinbase’s head of consumer and platform business development, said the product is designed to expand access to housing.

“People who are sitting on Bitcoin or USDC can put a roof over their head without needing to sell it, without needing to incur capital gains,” Troianovski said.

“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.”