Bitcoin mortgages: using crypto to buy a home and what mortgage lenders review

"Bitcoin mortgage" describes three different arrangements. Bitcoin can be sold, with the documented dollar proceeds used for a down payment, closing costs or reserves. It can be evaluated as an asset during underwriting, although the agency rules and the lender's own rules decide whether it must first be converted to dollars. Or it can be pledged as collateral for a separate down-payment loan that sits beside a conventional mortgage. The costs and risks differ for each, and the difference starts with taxes and with what is put up as security.

What counts as a Bitcoin mortgage?

The phrase covers three paths, and a lender will want to know which one applies before anything else.

The first path is a sale. The borrower sells Bitcoin, the dollars land in a bank or brokerage account, and the mortgage proceeds like any other where the buyer has cash. The second is asset treatment, where a lender looks at Bitcoin holdings as part of the borrower's finances, for example as reserves. The third is a pledge, in which Bitcoin becomes collateral for a loan that funds some or all of the down payment.

A conventional mortgage stays secured by the home in every case. Only the pledge path adds a second piece of collateral.

How does Bitcoin fund a home purchase?

On the sale path, the home loan is an ordinary mortgage and Bitcoin only matters as the source of cash. On the asset path, what a lender may count depends on the investor behind the loan and on the lender's own overlays, which are extra rules a lender adds to the agency minimums.

The pledge path works differently. Better's published description (opens in a new tab) of its crypto-backed mortgage, offered with Coinbase, pairs a conforming Fannie Mae mortgage with a separate down-payment loan. That second loan is secured by pledged Bitcoin and by a second lien on the home. A lien is a legal claim on a property that can be enforced if a loan is not repaid, and a second lien ranks behind the main mortgage.

What does a mortgage lender review?

A lender reviews income, credit history, existing debts, reserves and the source of the funds needed at closing. For crypto, that adds transaction history, proof the borrower owns the account, and records showing how Bitcoin became dollars.

Under Fannie Mae's Selling Guide section B3-4.1-04 (opens in a new tab), virtual currency exchanged into dollars may be used for the down payment, closing costs and reserves when the exchange is documented, the dollars sit in a U.S. or state-regulated financial institution, and the dollars are verified before closing. A large deposit that came from the borrower's virtual-currency account also has to be documented by the lender. The same section does not allow virtual currency for an earnest money deposit.

Freddie Mac Bulletin 2021-36 (opens in a new tab), which covers Seller/Servicer Guide section 5501.3, requires cryptocurrency used for funds required for the transaction, including the down payment, closing costs and reserves, to be exchanged for U.S. dollars. It also requires monthly payments on debt secured by cryptocurrency to be included in the debt payment-to-income calculation. The lender can confirm what the current section 5501.3 says today.

Do FHA and VA loans treat Bitcoin differently?

Both programs focus on documented cash and liquid assets. HUD Handbook 4000.1 (opens in a new tab) is FHA's policy source, and lenders apply its asset, source-of-funds and large-deposit documentation rules to FHA loans. VA underwriting materials (opens in a new tab) require borrowers to have enough cash assets for closing costs, points, any required down payment and any gap between the sales price and VA's reasonable value, and they require verification of the liquid assets needed to close.

For both programs, the useful distinction is between Bitcoin and dollar proceeds. Sold Bitcoin becomes dollar proceeds that a lender may evaluate under the asset-verification rules. Whether a given lender will accept Bitcoin itself as available cash is a question for that lender, in writing.

Does Bitcoin have to be sold?

Under Fannie Mae's current guide, yes, for funds used toward a down payment, closing costs or reserves. The dollars must be documented and verified before closing.

A change has been directed but not shown to be in effect. On June 25, 2025, FHFA Decision No. 2025-360 (opens in a new tab) directed Fannie Mae and Freddie Mac to prepare proposals for considering cryptocurrency as an asset for reserves without converting it to U.S. dollars. The directive pointed to assets evidenced and stored on a U.S.-regulated centralized exchange, volatility adjustments, and risk-based limits on the share of reserves that cryptocurrency can represent. Each enterprise also needed board approval before submitting changes to FHFA.

A directive to prepare proposals is not the same as universal lender eligibility. A borrower can ask the lender whether it follows the current Selling Guide text or any later approved change, and whether self-custodied Bitcoin qualifies at all.

How does a Bitcoin-collateralized down-payment loan work?

Coinbase's help page (opens in a new tab) and Better's description lay out the same structure.

• Better originates and services the mortgage.
• The mortgage on the home is a conforming Fannie Mae loan.
• A separate down-payment loan is secured by pledged Bitcoin and a second lien on the home.
• Bitcoin collateral must be worth at least 250% of the down-payment loan amount.
• The Bitcoin moves into Better's custodial account on Coinbase Prime.
• Eligible applicants are U.S. residents with a verified Coinbase account in good standing and enough BTC.

Better's page shows an example: a $500,000 home, $250,000 of pledged Bitcoin and a $100,000 cash down-payment loan. It is a provider illustration, not a market average and not a quote.

The benefit is that Bitcoin does not have to be sold to fund the down payment, so the borrower keeps exposure to it. The price of that benefit is that the Bitcoin leaves the borrower's direct control and sits in custody while the loan is outstanding, and it may remain pledged until the loan is repaid or refinanced, depending on the terms. Better's investor announcement (opens in a new tab) also names USDC as eligible collateral alongside Bitcoin.

What does it cost?

Three kinds of figures appear in this market, and they answer different questions.

Freddie Mac's Primary Mortgage Market Survey (opens in a new tab) reported a 7.03% average for a 30-year fixed-rate mortgage and 6.42% for a 15-year fixed for the week of September 24, 2026. It is context for a conventional first mortgage. It is not a quote, and it cannot be compared with a crypto-backed product unless the loan amount, term, points, APR, underwriting and fees match.

For the pledged-Bitcoin structure, a borrower can ask for the interest rate and APR on the second loan, the combined monthly payment on both loans, and any origination, custody, servicing, transfer, liquidation and closing fees. An interest rate is the yearly price of the money alone; the APR adds certain fees to show a fuller cost. Without matching figures for a conventional alternative, calling either option cheaper is a guess.

What can go wrong?

Each risk of pledging Bitcoin comes from a specific mechanism, and several sit beside a benefit.

Taxes on a sale. Selling Bitcoin to fund a down payment can create a capital gain or loss. That is the tax cost of the sale path.

Price movement while pledged. Bitcoin's value can change a lot while it is pledged. The 250% starting coverage in the Better and Coinbase structure is one risk control. Under Better and Coinbase's terms, price moves alone do not trigger margin calls, which in other crypto loans are demands for more collateral or repayment when the loan-to-value ratio rises. That is a feature of this provider's terms and does not apply to every crypto loan.

Missed payments and liquidation. Pledged Bitcoin may be liquidated if the borrower is 60 days delinquent, and liquidation can be a taxable disposition even though the borrower did not choose to sell. A missed payment can also threaten the home loan, because the Bitcoin-backed loan carries a second lien on the same home. In a foreclosure, a second lien holder has a claim of its own.

Custody and counterparty failure. Pledged Bitcoin sits in a custodial account, not in the borrower's wallet. Questions worth putting in writing: how the Bitcoin is segregated from the custodian's own assets, whether it can be rehypothecated (lent out again by the custodian), and what happens if the lender, the custodian or the exchange fails.

Fees. Origination, custody, servicing, transfer, liquidation and closing fees may apply, and they can change the real cost of a loan with a modest-looking rate.

What taxes apply?

The IRS (opens in a new tab) requires reporting of the sale, exchange or other disposition of a digital asset. For a personal or investment asset, the gain or loss depends on basis (generally what was paid), fair market value, the date, and the holding period. Selling Bitcoin for dollars to fund a down payment is a disposition, so a taxable gain or loss may result.

Pledging Bitcoin as collateral is not automatically a sale under the general facts of a loan, but a later liquidation of the pledged Bitcoin is a disposition. Other transfers or loan terms can have their own consequences, and the IRS's 2024 proposed digital-asset regulations (opens in a new tab) discuss open questions about certain loan transactions. The general principles for dispositions of convertible virtual currency appear in an IRS memorandum (opens in a new tab).

Records worth keeping include transaction dates, units, dollar value, basis, wallet or exchange records, and liquidation records. A tax professional can apply them to the specific structure.

What should a borrower check before closing?

Most closed-end mortgage applicants should receive a Loan Estimate within three business days after applying and a Closing Disclosure at least three business days before closing (opens in a new tab), according to the Consumer Financial Protection Bureau (CFPB). The CFPB's Closing Disclosure checklist (opens in a new tab) lists what to compare between the two: loan amount, interest rate, APR, monthly payment, closing costs, cash to close, prepayment penalty, balloon payment, and escrowed taxes, insurance and assessments.

For a crypto-backed structure, the questions extend past the disclosures:

1. Is the Bitcoin being sold, counted as reserves, or pledged?
2. Which entity originates and services each loan?
3. What are the collateral coverage requirement, delinquency trigger and notice before liquidation?
4. Who holds the Bitcoin, and can the custodian rehypothecate it?
5. Where do the rate, APR, fees and lien terms appear in the disclosures?

Before transferring any crypto, a borrower can confirm the lender's and the loan originator's licensing through NMLS Consumer Access (opens in a new tab) and state regulators, and confirm that the product is offered where they live.

Frequently asked questions

Can I use Bitcoin for a mortgage down payment?

Fannie Mae's published guide requires virtual currency to be exchanged into U.S. dollars, held in a U.S. or state-regulated financial institution, and verified before closing. A pledge structure such as Better and Coinbase's is a separate route that uses a second loan.

Can Bitcoin count as mortgage reserves?

FHFA directed Fannie Mae and Freddie Mac to prepare proposals for counting cryptocurrency as reserves without conversion, with conditions such as exchange custody and volatility adjustments. The directive did not itself create eligibility at every lender, so the lender's current written rules control.

What happens if Bitcoin falls?

It depends on the product. Under Better and Coinbase's terms, price moves alone do not trigger margin calls, but collateral may be liquidated after 60 days of payment delinquency. Other loans can set a threshold tied to price.

Can FHA and VA loans use Bitcoin?

FHA and VA materials call for documented cash or liquid assets. Dollar proceeds from a Bitcoin sale can be evaluated under those documentation rules, and the lender decides how it treats them.

Next step

The Bitcoin borrowing series goes deeper on how Bitcoin-backed loans work, liquidation, custody and taxes.