Author: The Defiant

Translation: TechFlow

TechFlow Introduction: 52 million American adults hold digital assets, yet have been unable to use these assets for traditional mortgage applications—this product changes that.

Bitcoin or USDC can be used directly as collateral for the down payment, without selling the coins, avoiding triggering tax events, and obtaining a Fannie Mae endorsement, with the same interest rate as a regular compliant mortgage. This is the most significant step for crypto assets to enter the traditional financial collateral system.

The full text is as follows:

Coinbase and Better Home & Finance announced a partnership on Thursday to launch a token-backed mortgage product. This product aims to broaden home buying channels and has received Fannie Mae endorsement like other compliant mortgages.

Qualified Americans can now pledge Bitcoin or USDC as collateral to make a cash down payment, thereby obtaining a standard compliant mortgage without having to sell digital assets or triggering taxable events.

How it works

Borrowers do not need to raise cash for the down payment; instead, they can pledge crypto assets as collateral for a separate loan that covers the down payment. At closing, there are two loans: one is a standard Fannie Mae mortgage for the property, and the other is a second loan secured by the pledged crypto assets. Both loans share the same interest rate and repayment term, and the borrower only needs to manage a combined monthly payment—both companies claim this is a market first.

These mortgages are designed according to Fannie Mae guidelines, structured as standard compliant loans, and both companies state that this will result in significantly lower interest rates compared to traditional token-backed loans.

No margin calls triggered

If the value of Bitcoin declines, the terms of the mortgage remain unchanged, and no additional collateral is required. Market fluctuations alone will not trigger liquidation. Liquidation risk for collateral is limited to situations where the borrower is 60 days overdue, consistent with the treatment of compliant mortgages.

For borrowers pledging USDC, the collateral can earn rewards, helping to offset part of the mortgage repayment, thus lowering the net effective interest rate.

Coinbase One members who successfully obtain a crypto-supported mortgage or a standard mortgage through Better can receive a rebate equivalent to 1% of the mortgage amount, up to $10,000, to cover closing costs.

Why it matters

For decades, the path to homeownership for Americans has required selling assets, liquidating investments, or tapping into retirement savings to make a cash down payment, often triggering capital gains taxes or early withdrawal penalties. Market reports show that approximately 52 million American adults, or about 20% of the adult population, have held digital assets.

Previously, borrowers could not obtain credit recognition for these assets in traditional mortgage approval processes unless they first liquidated digital assets. Crypto-supported mortgages have changed that, allowing on-chain wealth to be transformed into real-world home buying opportunities while preserving long-term investment positions and broadening purchasing channels.

Better CEO Vishal Garg stated that this partnership "opens a new path for the 52 million Americans who hold digital assets to achieve the American Dream."

The two companies plan to expand the types of acceptable collateral over time, including tokenized stocks, fixed-income products, and other tokenized real estate assets, depending on market and regulatory conditions.