Better Mortgage and Coinbase now let U.S. homebuyers use up to $250,000 in Bitcoin as collateral for a down payment loan, sidestepping margin calls from price swings but exposing borrowers to liquidation if payments are missed
U.S. homebuyers can now use Bitcoin as collateral for a down payment loan on a conforming mortgage, following the launch of a new product from Better Mortgage in partnership with Coinbase. The offering, now generally available, allows eligible borrowers to pledge up to $250,000 in Bitcoin to secure a separate down payment loan, while the primary mortgage remains a standard Fannie Mae-conforming product. This structure is designed to avoid the margin calls that typically threaten crypto-backed loans when Bitcoin's price drops, but it introduces other risks that borrowers must weigh carefully.
How the Structure Works
Under the program, buyers take out two loans from Better: a traditional first mortgage and a second loan that covers the down payment. The down payment loan is secured by both the borrower's Bitcoin-transferred to Better's custodial account on Coinbase Prime-and a second lien on the property. Better currently applies a 40% advance rate, meaning $250,000 in Bitcoin can back a $100,000 down payment loan. The company notes that these terms, including the advance rate, may change without notice and are not guaranteed for every applicant.
Custody, Control, and Liquidation Risk
Borrowers must transfer their Bitcoin to Better's custodial account on Coinbase Prime, where it cannot be sold, transferred, or re-pledged without written consent during the loan period. While borrowers retain economic exposure to Bitcoin's price movements, they lose direct control and liquidity over the pledged assets. Unlike typical crypto margin loans, day-to-day Bitcoin price volatility does not trigger a margin call or forced sale. Instead, the risk of liquidation arises only if the borrower becomes delinquent on payments. According to Better, a missed payment starts the delinquency clock, and after 60 days of unresolved delinquency, the company may liquidate the pledged Bitcoin. This forced sale could eliminate future upside and may create a taxable event for the borrower.
Eligibility and Geographic Limits
The product is not universally available. Applicants must have a verified Coinbase account, meet Better's underwriting and conforming loan requirements, and purchase property in an eligible jurisdiction. The program requires a minimum FICO score of 680 and may be limited to select states, though Better does not publish a full list of eligible locations. Coinbase provides the custodial infrastructure but does not originate or service the loans; all lending and servicing is handled by Better.
For context, the intersection of crypto and traditional finance continues to evolve. Recent market events, such as the rapid move in Bitcoin's price following U.S. Treasury buyback plans, have highlighted the volatility and interconnectedness of digital assets and broader financial markets. For example, a recent surge in Bitcoin's price was linked to shifts in Treasury yields and triggered significant liquidations in crypto derivatives markets.
According to data from CoinGecko, Bitcoin's price has fluctuated between $60,000 and $70,000 over the past month, with daily trading volumes regularly exceeding $20 billion. These swings underscore the importance of understanding the risks associated with using volatile assets as collateral, especially in products that tie crypto to traditional financial obligations like mortgages.
Using Bitcoin as collateral for a down payment loan introduces a new set of trade-offs for U.S. homebuyers. While the structure avoids margin calls from routine price swings, borrowers must accept the loss of direct control over their Bitcoin and the risk of forced liquidation if they fall behind on payments. The second lien on the property also means the down payment lender has an additional secured claim, which could complicate matters in the event of default or foreclosure. As crypto-backed lending products expand into mainstream financial services, borrowers should carefully review the terms, eligibility requirements, and potential tax consequences before pledging digital assets for major purchases.
