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Following
BTC Coinbase and Better Mortgage expand Bitcoin mortgage services
Coinbase and Better Mortgage have further opened up access to a housing finance product. Eligible U.S. borrowers can pledge Bitcoin rather than sell it to raise cash for a down payment.
This product has previously been promoted early and led to the first U.S. mortgages guaranteed by Fannie Mae and using Bitcoin as collateral. Today, the product is fully available to Coinbase One members. Better is responsible for loan issuance and services, while Coinbase provides the infrastructure for transferring pledged bitcoins into custody.
This structure provides cryptocurrency holders with a way to enter the traditional mortgage market without having to liquidate long-held Bitcoin positions before the transaction is completed.
With the second loan, Bitcoin covers the down payment
The borrower will receive two loans when the transaction is completed. The first was a standard compliant mortgage, designed in accordance with Fannie Mae's guidelines. The second loan was used for a cash down payment and was secured by the borrower's Bitcoin and a second lien on the property.
Bitcoin collateral must reach at least 250% of the down payment loan amount. As a result, borrowers seeking a down payment of $100,000 need to pledge approximately $250,000 in Bitcoin.
Better deposits Bitcoin in its Coinbase Prime escrow account until the mortgage is repaid or re-financed. The two loans use the same interest rate and amortization period, and the borrower only needs to make one combined repayment per month.
This structure is no longer limited to the testing phase. In June, a Michigan couple completed their first Bitcoin-backed mortgage through Coinbase and Better without selling their Bitcoin positions.
Falling bitcoin prices will not trigger margin calls
Falling bitcoin prices alone will not force borrowers to add collateral or trigger liquidation. Better can liquidate the pledged bitcoins only if the borrower is 60 days overdue.
This is different from the stand-alone Bitcoin mortgage product Coinbase offers through Morpho-in which a decline in collateral value may prompt automatic liquidation of loans based on loan-to-value ratios.
Borrowers still need to go through Better's normal mortgage underwriting process, including credit status, income and other eligibility reviews. Bitcoin collateral replaces the cash required for a down payment, rather than the traditional mortgage underwriting process.
Coinbase One members who qualify for Better Financing can receive a lender credit line of 1% of settlement costs, up to US$10,000. The credit line also applies to Better's standard mortgage loans, home equity line of credit and refinancing.
Waiting list shows demand exceeding US$260 million
Prior to wider roll-out, early demand had pushed the projected loan size to more than $260 million. About 76% of waiting list respondents are already Coinbase One members, while 60% said they plan to buy a home within six months.
This expansion is a continuation of previous efforts to introduce Bitcoin collateral into mortgages without requiring borrowers to convert assets they hold into dollars before applying for loans.
Better also found that 41% of its pre-approved customers met income and credit requirements, but lacked enough cash to make traditional down payments-creating a group of borrowers who held significant wealth outside of traditional bank accounts but were eligible for mortgages.
