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 are bringing Bitcoin mortgages to the average American homebuyer.

Written by: Micah Zimmerman

Compiled by: AididiaoJP, Foresight News

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

This partnership marks a gradual integration of digital assets into the traditional housing finance system. Coinbase and Better Home & Finance are jointly launching crypto mortgages backed by Fannie Mae, opening new pathways for the application of digital assets in housing finance.

This innovative product allows eligible borrowers to use Bitcoin or USDC as collateral for their down payment without having to sell their digital assets. This approach not only helps avoid potential capital gains taxes but also enables borrowers to retain their market exposure to their assets.

The mortgages are designed as compliant loan products, with standards and protections consistent with traditional Fannie Mae-supported 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 obstacle in the housing market—the upfront capital needed for down payments.

According to Better’s data, about 41% of American households are unable to purchase a home due to a lack of sufficient liquid funds, despite holding other forms of wealth.

Better’s CEO Vishal Garg stated, “For decades, Americans’ path to homeownership has been limited to selling assets, liquidating investments, or tapping into retirement savings. This partnership will provide a new route for millions of Americans who hold digital assets.”

According to a press release from the companies, they estimate that approximately 52 million Americans 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 unlock their asset balance sheets 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 additional margin or supplemental collateral. Even if Bitcoin’s price declines, borrowers are not required to add extra collateral, and market fluctuations alone will not trigger asset liquidation.

Only if a borrower is at least 60 days overdue on their mortgage payments will their collateral be at risk of disposition. This arrangement aligns with standard foreclosure procedures in traditional housing finance.

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

Max Branzburg, Coinbase’s head of consumer and business products, said, “Transforming digital wealth into home buying power is a milestone. Token-backed mortgages are our first step toward opening up homeownership pathways for the younger generation.”

This product reflects changing patterns of wealth ownership, especially among younger Americans. Coinbase data shows that 45% of young investors hold crypto assets, compared to only 18% among older groups. 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, leaving many potential buyers “asset-rich but cash-poor.” Token-backed mortgages aim to treat crypto assets as usable collateral rather than speculative investments, helping 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. Executives have indicated that including Bitcoin and other crypto assets would significantly expand loan demand. Garg estimates that if the company had launched such products earlier, it could have avoided losses of up to $40 billion in loan issuance.

The product structure also introduces new features unique to digital assets. Borrowers pledging USDC can continue earning yields from their holdings, which can offset part of the mortgage costs. Additionally, Coinbase’s custody model allows users to pledge only specific portions of their portfolio without locking up all assets.

Both companies plan to gradually expand the types of eligible collateral, potentially including tokenized stocks, fixed income products, and real estate assets.

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

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

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