The era of buying houses with Bitcoin has arrived? Coinbase partners with Fannie Mae to launch crypto-backed mortgages

From the fringe to the mainstream, Coinbase and Fannie Mae bring Bitcoin mortgages to everyday American homebuyers.

Written by: Micah Zimmerman

Compiled by: AididiaoJP, Foresight News

Coinbase is collaborating with Better Home & Finance to launch Bitcoin mortgages backed by Fannie Mae.

This partnership marks a significant step towards the integration of digital assets into the traditional housing finance system. The joint launch of crypto mortgages supported by Fannie Mae creates new pathways for the application of digital assets in the housing finance sector.

This innovative product allows eligible borrowers to use Bitcoin or USDC as collateral for their down payment without having to sell their held digital assets. This move can avoid potential capital gains tax and allows borrowers to maintain market exposure to their assets.

The aforementioned mortgage is designed as a compliant loan product, with standards and protections consistent with traditional Fannie Mae-backed loans. Better is responsible for originating and servicing the loans, while Coinbase provides custody and related infrastructure support for the pledged Bitcoin and other crypto assets.

The product aims to address a long-standing barrier in the housing market: the upfront capital needed for a down payment.

According to data from Better, approximately 41% of American households are unable to purchase homes due to a lack of sufficient liquid funds, even though these households hold other forms of wealth.

Vishal Garg, CEO of Better, stated, “For decades, the pathway for Americans to achieve homeownership has been limited to selling assets, liquidating investments, or tapping into retirement savings. This partnership will provide a new avenue for millions of Americans holding digital assets.”

According to a press release from the company, the two companies estimate that approximately 52 million people in the U.S. have owned digital assets, accounting for about 20% of the adult population.

The product allows borrowers to use crypto assets as collateral instead of cash, aiming to leverage their asset portfolios to facilitate home purchases.

Bitcoin-backed mortgages

Unlike traditional crypto asset-backed loans, this product is designed to minimize the volatility risk faced by borrowers. The loans do not require margin calls or additional collateral. Even if the price of Bitcoin falls, borrowers are not required to add extra collateral, and mere market fluctuations will not trigger asset liquidation.

Only if borrowers are at least 60 days late on their mortgage payments will their collateral face the risk of being disposed of. This arrangement is consistent with standard foreclosure processes in traditional housing finance.

Mortgages supported by crypto assets are expected to have interest rates that are about 0.5 to 1.5 percentage points higher than standard 30-year mortgages, depending on the borrower’s situation. Coinbase believes that for those looking to avoid liquidating assets, the cost of this interest rate difference may be worthwhile.

Max Branzburg, head of Consumer and Business Products at Coinbase, stated, “Converting digital wealth into home purchasing power is a landmark advancement. Token-backed mortgages are the first step we are taking to open pathways to homeownership for the younger generation.”

This product reflects a shift in wealth holding patterns, especially among younger Americans. Data from Coinbase shows that 45% of young investors hold crypto assets, while the figure is only 18% among older demographics. This indicates that digital assets are gradually becoming a primary store of value for the new generation.

Meanwhile, housing affordability continues to worsen. Home prices have outpaced income growth, leading many potential homebuyers to fall into the “asset-rich, cash-poor” dilemma. Token-backed mortgages attempt to view crypto assets as usable collateral rather than speculative investments to bridge this gap.

Better has previously explored alternative collateral models. In 2023, the company allowed some Amazon employees to use their stock holdings as down payment collateral. Company executives indicated that incorporating Bitcoin and crypto assets would significantly expand loan demand. Garg estimated that if the company had launched such products earlier, its loan issuance could have avoided losses of up to $40 billion.

The product structure also introduces new features unique to digital assets. Borrowers who collateralize USDC can continue to earn returns on their held assets, which can be used to offset some of the mortgage costs. Additionally, Coinbase’s custody model allows users to only collateralize specific portions of their portfolios without locking up all their assets.

The two companies indicated plans to gradually expand the types of eligible collateral, potentially including tokenized stocks, fixed income products, and real estate assets.

Although crypto asset-backed mortgages have previously existed in limited wealth management channels, Fannie Mae’s involvement signifies that such products are moving toward broader adoption. As a government-sponsored enterprise, Fannie Mae sets standards for a substantial portion of the U.S. mortgage market.

By combining Bitcoin collateral with a compliant loan structure, the collaboration between Coinbase and Better positions digital assets as part of mainstream financial infrastructure rather than as a separate parallel system.

Coinbase describes this product as “as American as apple pie” and claims it is an evolution of housing finance methods rather than a departure from traditional models.