Crypto exchange Coinbase Global has launched a mortgage structure with Better Homes & Finance that lets qualified borrowers pledge digital assets held in Coinbase accounts for repayment on a standard conforming mortgage designed in accordance with Fannie Mae guidelines.
According to Coinbase, the structure enables borrowers to pledge digital assets such as Bitcoin (BTC) or USDC (USDC) as collateral for a separate loan to be used for a down payment, while the primary mortgage remains a standard, Fannie Mae-backed loan. It would be better to originate and service the hostages.
When rolled out, the new development could mark a shift in the way crypto assets are used in US housing finance, increasing their role from eligible assets in underwriting to a more direct component of mortgage financing.
This news follows earlier regulatory signals to integrate crypto into mortgage frameworks. In June, the US Federal Housing Finance Agency instructed Fannie Mae and Freddie Mac to prepare a proposal to recognize cryptocurrencies as an asset in mortgage risk assessment without requiring conversion into US dollars.
It also builds on a series of developments integrating crypto into home lending, with lenders like NewRez and Rate having recently recognized crypto holdings in underwriting, indicating a broader push to embed crypto into the mortgage stack.
Cointelegraph contacted Fannie Mae for more information but did not receive a response prior to publication.
Pleading crypto for down payment comes with additional risks
According to Coinbase, borrowers will take out a standard conforming mortgage while using a separate loan secured by crypto holdings to cover the down payment.
The setup allows buyers to retain investments in digital assets, but replace the upfront cash with additional debt.
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Coinbase said the model introduces constraints associated with mortgaged assets, with borrowers unable to trade the collateral while it is locked.
The company said that as long as borrowers continue to make payments, market volatility alone does not trigger a margin call, and mortgage terms remain unchanged after the loan is activated.
This model also introduces new risks associated with mortgaged assets. Although price fluctuations do not directly affect mortgages, they can affect a borrower’s risk exposure and financial decisions over time.
Lenders are slowly integrating crypto into mortgage underwriting
The new development follows several US lenders that have recently incorporated crypto assets into mortgage processes.
On January 17, loan service provider NuRez said it would allow borrowers to use BTC, Ether (ETH), crypto ETFs and stablecoins as eligible assets in underwriting without the need for liquidation.
On February 23, mortgage lender Rate launched its RateFi program, which allows verified crypto holdings to count towards reserves and, in some cases, income. However, borrowers still need to convert their crypto into cash for down payment and closing costs.
Ex-Congressman Ryan Presents Crypto as a Housing Tool
Ahead of the rollout, Cointelegraph’s Turner Wright spoke with former Ohio Rep. Tim Ryan, who is a member of Coinbase’s advisory council focused on middle-class affordability, including housing.
Ryan presented mortgage financing as a practical, real-world use case for crypto, arguing that the digital asset could unlock wealth for early investors and help address one of the biggest barriers to home ownership – the down payment.
“There is a place for working-class people in digital assets… all the way up to getting a home,” Ryan said. “To see the industry moving forward in the housing space… it’s really great.”
Affordability remains a major challenge for American home buyers. Despite slower activity linked to low inventory and higher mortgage rates, the median home price still exceeded $405,000 in the fourth quarter.
A 20% down payment is often required to avoid private mortgage insurance, which will still cost buyers more than $80,000, a hurdle that may now be less daunting for crypto investors.
Additional reporting by Sam Borghi and Turner Wright.
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