Better Home & Finance Pioneers Crypto-Backed Mortgages with Coinbase

Vishal Garg, CEO of Better Home & Finance, has been seeking a solution to make it easier for homebuyers to pledge assets instead of liquidating them for cash. In March this year, his company partnered with Coinbase to launch a solution that allows borrowers to pledge Bitcoin or USDC to obtain two loans: one first-lien mortgage loan compliant with Fannie Mae standards, and another independent private financing loan secured by crypto assets.

The collateral ratio is key to the product's design. Pledging Bitcoin requires meeting a 250% collateral requirement, while pledging price-stable USDC requires a 125% collateral ratio. Garg believes this will become an important channel for digital assets to formally access the banking system.

However, seven senators have raised concerns about the 250% collateral clause, calling it a risk control mechanism that is actually admitting that crypto assets are high-risk assets. They estimate that combined financing costs could be up to 1.5 percentage points higher than standard Fannie Mae mortgage rates.

Garg has stated that his company plans to support various mainstream tokenized assets subsequently, including equity tokens of companies such as SpaceX and Tesla. He also believes that parents can pledge retirement account assets to help their children buy houses.