Fannie Mae is set to accept cryptocurrency-backed mortgages for the first time, marking a significant shift in how digital assets can be used in home financing. The move comes through a partnership between crypto exchange Coinbase and mortgage firm Better Home & Finance. The arrangement allows prospective home buyers to use Bitcoin or the USDC stablecoin as collateral for down payments. The program was first reported by the Wall Street Journal.
Under the structure, borrowers transfer their digital assets from Coinbase into a Better custody wallet while retaining ownership of those assets. This approach is designed to avoid the need to sell cryptocurrency holdings, which would otherwise trigger taxable events. For those holding USDC, the arrangement also allows them to continue earning rewards on their assets while those assets serve as collateral.
The mortgages will carry interest rates between 0.5 and 1.5 percentage points higher than standard 30-year loans, with the exact rate depending on individual borrower profiles, according to a Coinbase spokesperson. This premium reflects the additional risk associated with using volatile digital assets as collateral, though the structure differs notably from typical crypto lending products in several respects.
One key distinction is the absence of margin calls. If Bitcoin’s value declines, borrowers are not required to post additional collateral and the terms of the mortgage remain unchanged. Liquidation risk arises only after a borrower falls 60 days behind on payments, placing the product closer in structure to a conventional mortgage than to standard crypto-backed lending arrangements.
The development follows regulatory groundwork laid in the prior year, when the U.S. housing chief directed Fannie Mae and Freddie Mac to prepare for the assessment of cryptocurrency in mortgage applications. The housing regulator has been studying how crypto holdings might factor into the mortgage qualification process more broadly. Institutional interest in the space has been growing, with mortgage lender Newrez, which manages a $778 billion portfolio, announcing earlier this year that it was evaluating Bitcoin and Ethereum for use in mortgage qualification as part of wider adoption trends.
The program represents a notable step toward integrating digital assets into mainstream home financing, offering a pathway for crypto holders to leverage their holdings without liquidating positions. Whether broader adoption follows will likely depend on regulatory developments and the performance of early participants in the program.
Originally reported by Decrypt.
