Bitcoin Down Payment Option Gains Traction
Bitcoin holders can now use up to $250k of their BTC for a house down payment without facing margin calls, thanks to a new offering from Better Mortgage and Coinbase. The program allows borrowers to take out two loans: a standard first mortgage that conforms to Fannie Mae guidelines, and a separate loan that supplies the cash down payment, secured by pledged Bitcoin.
The second loan has an advance rate of 40%, meaning $250k in BTC supports a $100k down-payment loan. However, borrowers will give up normal control and liquidity over their Bitcoin during the pledge period.
Payment default, not price movements, drives liquidation under this program. A missed payment triggers a 30-day delinquency period, after which the lender may liquidate the pledged Bitcoin if the borrower remains delinquent for 60 days. This means borrowers face risks separate from Bitcoin's day-to-day price.
Applicants must have a verified Coinbase account and meet Better's underwriting requirements, including a minimum FICO score of 680. The offer is currently available in select states, but a state-by-state list is not published.