Fannie Mae Opens Door to Crypto-Backed Mortgages

Cryptocurrency is inching deeper into the housing market.

Fannie Mae is set to accept crypto-backed mortgages for the first time, giving borrowers a way to leverage digital assets like bitcoin toward a home purchase without liquidating them, the Wall Street Journal reported. The move comes via a product from Better Home & Finance and Coinbase, which was unveiled this week.

The program allows buyers to pledge cryptocurrency as collateral for a separate loan that effectively replaces a traditional cash down payment. Borrowers still take out a standard 15- or 30-year mortgage backed by Fannie, but layer on a second loan secured by holdings like bitcoin or USDC.

Because Fannie and Freddie Mac set underwriting norms across the industry, their embrace of crypto assets signals a potential shift from fringe financing tool to mainstream utility.

The push has policy precedent: Federal Housing Finance Agency director Bill Pulte directed the agencies to prepare to count crypto as part of borrower assets last year. Only assets that can be tracked and stored on a U.S.-regulated centralized exchange would be eligible for consideration, according to Pulte’s order, but that would still mark a shift from the assets typically eligible for consideration, such as stock investments and holdings deemed to be less volatile.

The shift would unlock a cohort of would-be buyers sitting on volatile but sizable crypto gains. About 14 percent of U.S. adults owned digital assets last year, according to Gallup, while a Redfin survey found roughly 13 percent of younger buyers had already sold crypto to fund down payments. This product lets them avoid both a sale and the associated tax hit.

There’s a tradeoff, though. Carrying two loans can push borrowing costs higher with rates running up to 1.5 percentage points above standard mortgages. And once pledged, the crypto collateral is effectively locked, limiting flexibility if prices swing.

So far, the model has struggled to gain traction without the government enterprises’ backing. Miami-based Milo, an early entrant, has closed just over 100 loans since 2022, according to chief executive officer Josip Rupena.

— Holden Walter-Warner