Better Mortgage Reuses Pledged Bitcoin for Down Payments

Better Mortgage has launched a new home loan product in partnership with Coinbase that allows borrowers to use their Bitcoin as collateral. The product, which is now available to the general public, has already generated $360 million in pre-applications since its launch last week.

The loan works by providing two mortgages at closing: one is a standard Fannie Mae-conforming mortgage secured by the home, while the second funds the down payment and is secured by the borrower's Bitcoin. The Bitcoin-backed loans have a 250% collateral ratio, meaning that borrowers must pledge $2.50 of BTC for each $1 borrowed.

Better Mortgage has disclosed that it may reuse the pledged Bitcoin as long as it keeps an equivalent amount available to return. This means that borrowers are not assured that the same coins will remain untouched throughout the loan period, but rather that they will receive an equivalent quantity of Bitcoin when the loan ends.