Coinbase announced that the first Fannie Mae-backed conventional home loan in the U.S., secured by Bitcoin as a down payment, has been settled in Michigan. This product, launched in partnership with mortgage lender Better, allows borrowers to use their crypto assets for home purchase financing without having to sell them.
The loan structure is divided into two parts.
According to Coinbase, these homebuyers will receive two loans simultaneously. One is a standard mortgage that complies with federal government and Fannie Mae rules, while the other is related to crypto assets and exists as a second lien on the home.
The Better website indicates that if a homebuyer needs a $100,000 down payment, they can arrange this by establishing a second lien on the property and pledging $250,000 worth of Bitcoin. The platform states that daily market fluctuations will not trigger margin calls, nor will it lead to sudden liquidation due to short-term price drops in Bitcoin.
However, if borrowers continue to default, the pledged assets may still be disposed of. Better stated that after 60 days of overdue payments, the platform can decide whether to liquidate the pledged crypto assets.
The policy stance began to shift last year.
Bill Pulte, president of the U.S. Housing Finance Agency, last year called for regulatory bodies to recognize crypto assets held in custody on centralized exchanges, a move seen as a crucial prerequisite for the advancement of such products. At the time, digital assets in self-custodied wallets were not considered; only assets held on centralized platforms were recognized.
For a long time, traditional mortgage assessments in the United States have primarily relied on financial assets such as stocks and bonds, while crypto assets are often difficult to incorporate into down payment assessments due to their high price volatility. This product launch signifies that Bitcoin is beginning to enter practical applications within government-supported housing finance.
Coinbase plans to further expand its coverage.
Coinbase says the product was first announced in March of this year and will be gradually rolled out to eligible borrowers across the U.S. in the coming months, initially supporting Circle's USDC stablecoin.
The company stated that this arrangement allows holders to utilize their holdings without selling their digital assets, thus avoiding capital gains tax incurred from asset sales. The report also mentioned that Newrez, a US wholesale lender, indicated in January that it was beginning to recognize Bitcoin and Ethereum, but at that time it only applied to non-institutional guaranteed loan products and applied a significant discount to the valuation of crypto assets.
Additional information:U.S. Senator Elizabeth Warren criticized the policy shift in January, saying it could pose additional risks to consumers and the U.S. housing and financial markets.
