Bitcoin (BTC) Mortgages Now Available, But There's a Catch With Your Collateral

Better Mortgage, in collaboration with cryptocurrency exchange Coinbase, has launched a new bitcoin-backed mortgage product enabling U.S. homebuyers to leverage their digital assets as down payment collateral without selling their holdings. The structure pairs a traditional Fannie Mae-conforming home loan with a secondary down payment loan backed by pledged bitcoin, requiring a 250% collateral ratio (such as pledging $250,000 in bitcoin for a $100,000 down payment). The program has already attracted $360 million in pre-application volume, with nearly 36% of applicants holding over $500,000 in crypto. However, the product introduces structural and counterparty considerations. Better Mortgage retains the right to rehypothecate the pledged bitcoin, creating potential solvency risks over long loan durations. Additionally, borrowers cannot unlock their pledged crypto early through prepayments until the primary mortgage is fully paid off or refinanced. Unlike typical crypto lending platforms, there are no margin calls on price drops, with liquidation occurring only after 60 days of missed payments.