Better·Coinbase officially launches Bitcoin-collateralized home loans

Better and Coinbase have officially announced the nationwide launch of a cryptocurrency-backed mortgage product that allows homebuyers to use Bitcoin (BTC) as collateral to fund their down payments, without having to sell their Bitcoin. The two companies initially introduced this product in March as an early-access program, and are now transitioning to a general release. This product combines a Fannie Mae-guaranteed mortgage with a BTC-backed down payment loan. Borrowers must provide BTC as collateral, equivalent to at least 250% of the down payment loan amount, which is then transferred to a custody account within Coinbase Prime held by Better. Both loans have the same interest rate and repayment period, and are paid off with a single monthly payment. The BTC provided as collateral will be returned to the borrower according to the loan terms, upon full repayment of the mortgage or completion of a refinancing. An important condition is that a margin call or changes to the mortgage terms will not occur solely due to a decrease in the price of BTC. However, if the borrower is more than 60 days late on payments, Better may liquidate the collateralized BTC. To be eligible, applicants must be U.S. residents with a verified Coinbase account and meet Better's credit and income requirements. Coinbase One members are also eligible for a 1% cashback reward, up to a maximum of $10,000, which can be used for closing costs and other expenses. This launch aligns with a broader trend of integrating cryptocurrency into the U.S. housing finance market. The Federal Housing Finance Agency (FHFA) has instructed Fannie Mae and Freddie Mac to incorporate the risk assessment of single-family mortgages, even if the cryptocurrency held in a regulated centralized exchange within the U.S. is not converted to dollars. This guidance also requires the two government-sponsored enterprises (GSEs) to develop risk mitigation strategies for cryptocurrency volatility, subject to board approval and FHFA review. Mortgage lender Newrez also began recognizing certain cryptocurrency holdings in mortgage applications, including for home purchases and refinancing, starting in February of this year. Meanwhile, U.S. home prices remain near historical highs. According to data from the U.S. Census Bureau and the Department of Housing and Urban Development, compiled by the Federal Reserve Bank of St. Louis, the median sales price of new homes in the U.S. has been declining since 2022, but remains at historically high levels, around $400,000. In this environment, the expansion of BTC-backed mortgages is attracting attention.