Better Mortgage Lets Buyers Use 250% of Their Bitcoin as Collateral

Better Mortgage has launched its crypto-backed mortgage product, which allows US buyers to use their Bitcoin as collateral for a home loan without selling it. The lender partners with Coinbase to provide custody for the Bitcoin, and the loans come with two connected components: a conventional mortgage meeting Fannie Mae's requirements and a second loan that supplies cash for the deposit.

For this product, borrowers must pledge 250% of the deposit amount in Bitcoin, meaning a $100,000 deposit loan would require $250,000 worth of Bitcoin. The lender holds the pledged Bitcoin in its account on Coinbase until the borrower repays or refinances the loan. Borrowers can choose between 15-year and 30-year fixed terms and make one combined monthly payment.

Better's arrangement allows buyers to hold onto their Bitcoin while still accessing the funds needed for a mortgage deposit, but a large portion of the asset remains tied up in the loan until it is repaid. The lender has stated that Ethereum and Solana will be accepted in the future, but for now, only Bitcoin is supported.

The crypto-backed mortgages also come with some risks: if borrowers fall behind on payments, Better may sell their pledged Bitcoin after 180 days, in line with Fannie Mae's rules. However, market fluctuations will not trigger a sale of the Bitcoin, and borrowers are protected from being forced to add more collateral.