Canadians Turn to Crypto for Home Down Payments But Face Cash Conversion Hurdles

Cryptocurrency ownership in Canada has surged, with 25% of Canadians now holding crypto assets, up from 10% in 2023. This rise has led many to wonder if they can use crypto to buy a home. However, Canadian mortgage lenders won’t accept crypto directly but may accept cash converted from crypto, provided it meets certain criteria.

The key to using crypto for a down payment is converting it to Canadian dollars well in advance. True North Mortgage, a top brokerage, reports that success often depends on whether the crypto has been converted early enough for the bank to clear it. Ben Skerrett, a broker at True North, notes that many clients underestimate the prep time required, often opting for traditional funds instead.

Canadian lenders avoid direct crypto transactions due to its volatile and unregulated nature. To comply with anti-money-laundering rules, lenders require a clear paper trail for any down payment derived from crypto. This includes bank deposit records, exchange buy/sell records, and wallet transaction history. Additionally, selling crypto is a taxable event, so consulting a tax professional is advisable.

For those who haven’t ‘seasoned’ their crypto funds, meaning the cash hasn’t been in their account for at least 90 days, options still exist. Monoline lenders may consider funds sooner if they come from trusted platforms, while alternative lenders might accommodate for a higher rate. Specialized international crypto-lending platforms or family gifts can also bridge the gap.

First-time homebuyers have another option: holding crypto ETFs in registered accounts like RRSPs, TFSAs, or First Home Savings Accounts (FHSAs). Withdrawing from these accounts can provide access to insured mortgages with lower rates and no seasoning time required.

As regulations evolve, the future may bring simpler ways to use crypto for home purchases. Canada’s recent Stablecoin Act, set to take effect in 2027, could streamline the process. For now, planning ahead and consulting with experts like those at True North Mortgage can help navigate the complexities of using crypto for a down payment.