Borrowers across the US have gained access to the crypto-backed mortgage offering introduced by Coinbase and Better Mortgage.
The product pairs a standard conforming mortgage with a separate loan secured by pledged Bitcoin.
Better originates and services both loans. In the meantime, Coinbase provides the infrastructure for holding the crypto collateral.
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Bitcoin as a down payment
Borrowers pledge Bitcoin instead of putting up the entire down payment in cash.
The arrangement does not involve margin calls triggered by normal market movements. For example, a borrower buying a $500,000 home could pledge $250,000 in Bitcoin to support a $100,000 down payment. The exact amount depends on the lenders underwriting and collateral requirements.
Better says the pledged BTC must be worth at least 250% of the down payment loan amount.
The Bitcoin that serves as collateral is held in Betters custodial account on Coinbase Prime.
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The company first introduced the product in March. It initially allowed borrowers to pledge Bitcoin or USDC. Now, the mortgage is broadly available. On top of that, it comes with a new incentive for Coinbase One members.
Eligible Coinbase One members can receive a lender-funded credit equal to 1% of the mortgage amount (the sum is capped at $10,000).
In such a way, crypto holders can tap their Bitcoin holdings without immediately selling them.
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Borrowers remain responsible for the mortgage and the collateralized loan.
Crypto-backed mortgages are not exactly novel. Ledn, the Canadian crypto lender, announced a Bitcoin-backed mortgage in December 2021. For instance, Miami-based fintech Milo announced its “first U.S. crypto mortgage” in January 2022. That said, Coinbases entry into this space is definitely notable.