Author: The Defiant
Compiled by: TechFlow TechFlow
TechFlow Dive: 52 million American adults hold digital assets but have been unable to use them in traditional mortgage applications—this product changes that.
Bitcoin or USDC can be used directly as collateral for down payments without selling the cryptocurrency, without triggering tax issues, and with Fannie Mae's backing, offering the same interest rates as regular compliant mortgages. This is the most significant step for crypto assets to enter the traditional financial collateral system.
The full text is as follows:
Coinbase and Better Home & Finance announced a partnership on Thursday to launch a token-backed mortgage product. The product aims to broaden homeownership opportunities and is backed by Fannie Mae, just like other compliant mortgages.
Eligible Americans can now pledge Bitcoin or USDC as collateral to pay a cash down payment for a standard, compliant mortgage without having to sell their digital assets or triggering a taxable event.
Operating methods
Instead of raising cash for the down payment, borrowers pledge their crypto assets as collateral for a separate loan that covers the down payment. At the time of closing, there are two loans: a standard Fannie Mae mortgage on the property and a second loan secured by the pledged crypto assets. Both loans share the same interest rate and repayment terms, and borrowers only need to manage a single consolidated monthly payment—a first in the market, according to the two companies.
These mortgages are designed according to Fannie Mae guidelines and are structured as standard compliant loans, which the two companies say will result in interest rates significantly lower than those of traditional token-backed loans.
No margin call triggered
If the value of Bitcoin falls, the mortgage terms remain unchanged, and no additional collateral is required. Market fluctuations alone will not trigger liquidation. Liquidation of collateral only occurs when the borrower is more than 60 days late on payments, and this is handled the same way as with compliant mortgages.
For borrowers who pledge USDC, the collateral can earn rewards, which can help offset some mortgage repayments and thus reduce the net real interest rate.
Coinbase One members who successfully apply for a crypto-enabled or regular mortgage through Better will receive a 1% rebate on their mortgage, up to a maximum of $10,000, to cover transaction fees.
Why it is important
For decades, the path Americans have taken to homeownership has required selling assets, liquidating investments, or withdrawing retirement savings to make a cash down payment, often triggering capital gains taxes or early withdrawal penalties. Market reports indicate that approximately 52 million U.S. adults, or about 20% of the adult population, have held digital assets.
Previously, borrowers could not obtain creditworthiness for their digital assets in the traditional mortgage approval process without first liquidating those assets. Crypto-enabled mortgages change this, allowing on-chain wealth to be converted into real-world home-buying opportunities, broadening home-buying channels while maintaining long-term investment positions.
Better CEO Vishal Garg stated that this partnership "opens a new path for the 52 million Americans who hold digital assets to achieve the American Dream."
The two companies plan to expand the types of acceptable collateral over time, including tokenized stocks, fixed-income products, and other tokenized real estate assets, depending on market and regulatory conditions.
