Coinbase, the largest cryptocurrency exchange in the U.S., has teamed up with Better Mortgage, a leading mortgage provider, to provide conforming mortgages backed by Bitcoin and USDC. This initiative aims to cater to approximately 120 million potential homebuyers and 50 million Bitcoin users across the nation.
Collaboration Between Coinbase and Better Mortgage for Crypto-Backed Mortgages
In a joint announcement released today, the new offering allows homebuyers to use their Bitcoin or USDC as collateral for mortgages, eliminating the need to sell their assets or incur capital gains taxes.
This innovative product is backed by Fannie Mae and includes both standard mortgage loans and down payment loans. The down payment loan is supported by the client’s cryptocurrency, requiring 250% collateral for Bitcoin and 125% for USDC. Both loans will have identical interest rates and payment schedules, facilitating a single monthly payment.
Once Homebuyers are approved, Coinbase Prime facilitates the transfer of cryptocurrency assets into a custodial escrow account at Better Mortgage. It’s worth noting that users cannot withdraw or trade these assets during the loan repayment period, yet they can benefit from 100% of the market gains while holding.
Market Volatility, Liquidation Terms, and Benefits
Unlike traditional margin loans, price changes will not trigger margin calls or modify mortgage terms. Liquidations of pledged cryptocurrencies will only occur if a client delays payment for a period of 60 days.
To offset the lack of margin calls, these loans typically come with interest rates that are 0.5% to 1.5% higher than conventional 30-year fixed-rate mortgages not involving cryptocurrency.
Importantly, this program is available solely to verified Coinbase One members, which streamlines the verification process compared to the extensive paperwork needed by traditional banks. Members also receive a 1% lender rebate (with a cap of $10,000) directly applied to their closing costs.
History of Development
Although announced today, the crypto-backed mortgage initiative was first accessible to 1 million Coinbase One subscribers on August 12.
The groundwork for this offering was laid with a March approval from Fannie Mae, permitting the use of cryptocurrency as collateral for loans. This was followed by a successful test phase in June, generating $260 million in projected loan demand. The new product encompasses home loans, HELOCs (Home Equity Lines of Credit), and refinancing options.
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