Bitcoin can now be used to finance the purchase of a house in the United States without going through the sales box. Better Mortgage and Coinbase have just opened their digital asset-backed home loan to a large scale. Bitcoin serves as collateral to finance the initial contribution. The owner maintains his exposure to bitcoin for the duration of the credit.
In brief
- Better and Coinbase generalize their real estate loan guaranteed by Bitcoin.
- BTC can replace the cash contribution without having to be sold.
- The waiting list already represented more than $260 million in potential loans.
Bitcoin enters American real estate credit
The project had started a few months earlier. The United States was already working to bring cryptos into the evaluation of real estate loans. Coinbase and Better are now moving to the commercial stage. The product is available to eligible Better customers. It allows you to use bitcoins as collateral to cover the deposit requested when purchasing a house.
No need to sell bitcoins. A buyer who has $250,000 in bitcoin, for example, can get up to $100,000 for their contribution. Better requires a crypto guarantee equivalent to at least 250% of the loan dedicated to this contribution.
The bitcoins are then transferred to a Better custodial account on Coinbase Prime. They remain there until the loan is repaid or refinanced. Once the credit is repaid, the bitcoins are returned according to the conditions of the contract.
Two loans behind the same house
The arrangement does not simply consist of handing over your bitcoins to a bank in exchange for a property loan. It combines two credits. The first corresponds to a traditional mortgage loan compliant with Fannie Mae rules. The second finances the contribution and uses Bitcoin as security, with also a second security on the accommodation.
Both loans share the same rate and amortization period. The borrower then makes a single monthly payment. Better grants the credit and monitors it. Coinbase mainly provides the infrastructure to transfer and store the bitcoins used as collateral.
The model brings Bitcoin a little closer to traditional credit. JPMorgan had already started accepting Bitcoin and Ethereum as collateral for some institutional loans.
This time, the product is aimed at individuals who want to buy their home. Coinbase One also adds a discount. Eligible members can receive a credit equal to 1% of the loan amount toward their closing costs, with a cap of $10,000.
More than $260 million already in the queue
Better and Coinbase had opened a waiting list before the generalization of the product. The first numbers were pretty quick. 76% of registrants were already using Coinbase One. 60% planned to purchase a home within six months.
The envisaged loan volume exceeded $260 million. Better also speaks to a much broader market. Around 52 million Americans are believed to own digital assets. Obviously not everyone wants to buy a house tomorrow.
Not everyone will be eligible either. Bitcoin used as collateral remains subject to another well-known problem: its price can fall sharply. The borrower retains his exposure to BTC instead of selling when purchasing the home.
He therefore also keeps the risk. Credit backed by bitcoin is nevertheless growing. A recently discussed report estimated that the Bitcoin-backed lending market could one day reach $1 trillion. Coinbase and Better are now giving it a very concrete use. A house. And Bitcoin as collateral rather than a check for the contribution.
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