Cryptocurrency has moved closer to the mortgage mainstream through a partnership between Better Mortgage and Coinbase, which has launched a token-backed mortgage that adheres to Fannie Mae standards. The loan is a conforming mortgage with favorable underwriting guidelines and potentially lower rates than other token-backed loans. Borrowers can pledge Bitcoin or USDC as collateral to fund their cash down payment without liquidation. Coinbase One members receive a 1% lender credit, capped at $10,000, to help cover closing costs.
The program is facilitated by Coinbase Custody and could expand to additional digital assets over time, including tokenized equities and tokenized real estate. There are no margin calls or top-ups; collateral isn’t liquidated due to market movements unless the borrower becomes 60 days delinquent, aligning with conforming mortgage practices. Better notes that holders of USDC can earn rewards that help offset mortgage payments, potentially reducing the effective rate. This move, part of a broader push to bring crypto into mortgage markets, should improve liquidity for crypto holders seeking home ownership.
Higher liquidity means the loan is more saleable to investors in mortgage-backed securities, which can support lower mortgage rates all else equal. The arrangement requires the borrower to meet underwriting guidelines; borrowers may find it easier to get approved without triggering a taxable event by selling their assets. Borrowers should compare rates, fees, and total costs across lenders to secure the best deal, even with promotional promos.
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