Homebuyers who hold cryptocurrency may now have a new way to finance real estate purchases in the United States as digital assets begin to find a place in traditional mortgages.
Housing giant Fannie Mae will accept cryptocurrency as collateral for down payments through a new partnership between mortgage company Better Home & Finance and cryptocurrency exchange Coinbase, according to a statement issued Thursday, Fortune reported.
The move allows borrowers to leverage their cryptocurrency holdings without selling them directly. Under the partnership, eligible customers can pledge their digital assets held in Coinbase accounts to support mortgage applications processed by Better, marking the first time Fannie Mae has accepted cryptocurrency-based collateral in the home loan process.
Making home ownership more accessible to young people
The new policy aims to make home ownership more accessible to younger people, who are more likely to own digital assets such as Bitcoin, Ethereum, Solana and others.
“Token-backed mortgages are a major first step in unlocking homeownership for younger generations who have struggled with traditional down payment savings,” Max Branzburg, Coinbase’s head of consumer and business products, told Fortune.
The rationale for launching such a product is to help individuals who may hold significant wealth in cryptocurrency but lack sufficient liquid cash to purchase homes. Under this model, a home buyer would take out a traditional 15- or 30-year mortgage, but instead of paying a full down payment in cash, they could secure a separate loan backed by their bitcoins or stablecoins.
This new offering would also allow them to hold their crypto without having to sell it and pay capital gains taxes.
However, there is a downside to the trade-off – a second loan would increase the overall cost of owning the home, as the buyer would also have to service it.
What happens to stalled crypto units?
Once the home buyer has pledged their cryptoassets, they cannot trade them on the exchange. If the value of digital assets falls, mortgage loans will not be affected as long as the owner continues to make monthly payments, the report said.
The product comes at a time when more young people are turning to cryptocurrencies to build wealth instead of relying solely on traditional financial assets.
Gen Z and Millennials say 25% of their portfolios are in non-traditional assets like cryptocurrencies, and 73% of people in these generations say it’s harder for them to build wealth through traditional means, according to a recent Coinbase report.
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Bitcoin has been under severe pressure since the beginning of the US-Israeli conflict with Iran, and has fallen by around 20%, amid rising risk-on investor sentiment. The decline highlighted the limitations of the long-held view in cryptocurrency circles that bitcoin can reliably function as a safe-haven asset in times of crisis.
Owners of the largest cryptocurrency have borne the brunt of the decline in recent months as the asset has pulled back sharply from its peak. It is currently trading at $68,000, down nearly 46% from October last year.
(With wired inputs)
