#What is the innovative mortgage that uses Bitcoin as collateral?
A couple from Michigan recently made headlines by purchasing a home with Bitcoin serving as collateral for a Fannie Mae-backed mortgage, all without selling their cryptocurrency. This groundbreaking loan transaction closed on June 4, facilitated by a partnership between Coinbase and Better Home & Finance Holding Co. It marks a significant milestone, as it is the first instance of a government-sponsored enterprise accepting a mortgage structured in this manner.
#How does this dual-loan system operate?
This unique mortgage setup comprises two distinct loans finalized at the closing stage. The first loan is a conventional Fannie Mae-backed mortgage, while the second is a separate loan that is collateralized by the borrower's digital assets. The digital assets are secured in custody at Coinbase Prime, which is recognized for institutional-grade storage solutions. When borrowers offer Bitcoin as collateral, they must provide 250% coverage; this means that for every $100,000 borrowed, they must pledge Bitcoin worth $250,000. If they choose to use USDC, a stablecoin, the coverage requirement drops to 125%.
A borrower will not face liquidation of their crypto assets until they have been 60 days delinquent on payments. Once the loan is fully paid, the borrower regains ownership of their Bitcoin.
#What regulations support this new mortgage offering?
In June 2025, the Federal Housing Finance Agency issued a directive that prompted both Fannie Mae and Freddie Mac to factor in digital asset holdings when assessing mortgage risks. The collaboration between Better and Coinbase was announced on March 26, and after months of development, they launched this innovative product. Better takes care of the lending aspects, while Coinbase oversees custody and compliance. A nationwide expansion is anticipated by summer 2026, at which point Bitcoin and USDC will be accepted as collateral.
#Why should crypto holders consider this mortgage option?
The primary financial benefit for crypto holders lies in tax efficiency. According to current US tax laws, selling Bitcoin to make a down payment can trigger capital gains taxes. This new mortgage structure circumvents that issue. Borrowers can pledge their Bitcoin without the need to sell it. This means no sale leads to no taxable event, allowing borrowers to maintain ownership and benefit from any future value increases while unlocking capital trapped within their cryptocurrency.
However, there are still substantial risks to consider. A sudden decline in Bitcoin's value could lead to mass liquidations across these second loans. Historically, Bitcoin has seen price drops of 70% or more on multiple occasions. The 250% coverage ratio mitigates some risks, but it isn’t foolproof.