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Coinbase and Better Home & Finance are launching a new mortgage product that allows homebuyers to use crypto holdings as collateral for a down payment.
Because the primary loan is a conforming mortgage eligible for purchase by Fannie Mae, the product is placed within the same framework as traditional home loans. While crypto-backed mortgages have existed before, this is the first time such a structure has been accepted within this channel.
Under the model, borrowers take out a standard mortgage through Better alongside a second loan backed by bitcoin or USDC held in a Coinbase account. That second loan is used to fund the down payment, allowing borrowers to retain ownership of their crypto rather than selling it to raise cash.
The approach is designed to address a common constraint in home buying: many prospective buyers hold assets but lack the liquid cash required for a down payment. By allowing digital assets to serve as collateral, the product effectively converts crypto holdings into usable purchasing power without triggering a taxable sale.
Once the loan is in place, the mortgage behaves similarly to a traditional one. The pledged crypto is held in custody and cannot be traded while securing the loan. Price volatility alone does not trigger liquidation or margin calls, and loan terms remain fixed as long as the borrower stays current on payments. Collateral is only at risk in cases of extended delinquency, aligning enforcement more closely with standard mortgage practices.
At the same time, the structure introduces additional complexity. Borrowers are taking on two loans instead of one, increasing overall borrowing costs. The crypto-backed portion of the loan is expected to carry a higher rate than a standard mortgage, reflecting the added risk and structure.
Even so, the launch represents a broader shift in how crypto is being positioned within financial markets. Rather than functioning solely as a speculative asset, digital holdings are increasingly being used as collateral within traditional financial systems.
The same framework could eventually expand beyond crypto to include other tokenized or digitally custodied assets, such as equities or funds, creating a more flexible approach to collateralizing large purchases.
