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.
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 lender's 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 Better's custodial account on Coinbase Prime.
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.
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, Coinbase's entry into this space is definitely notable.