Better Mortgage Requires 250% Crypto Collateral for Home Loans

Financial services company Better Mortgage has launched a new product allowing homebuyers to use their Bitcoin as collateral for mortgages, but borrowers must pledge a significant amount of cryptocurrency.

The crypto-backed mortgage involves two connected loans: a conventional mortgage meeting Fannie Mae's requirements and a second loan secured by the borrower's Bitcoin that covers the cash needed for the deposit. This arrangement places a second claim on the property and allows buyers to hold onto their Bitcoin while still using it as collateral.

According to Better, borrowers must pledge 250% of the separate deposit loan amount in Bitcoin, meaning that for a $100,000 deposit loan, they would need to provide $250,000 worth of Bitcoin. The cryptocurrency is held in Better's account on Coinbase until the borrower repays or refinances the loan.

Better says that borrowers can choose between 15-year and 30-year fixed terms and make one combined monthly payment. However, if the borrower falls behind on payments, there is a risk of the pledged Bitcoin being sold to cover the debt.