Borrowers pledge crypto on regulated exchanges like Coinbase as collateral for a second loan. That loan funds the down payment on a traditional 30-year Fannie Mae mortgage. Crypto stays in the borrower's custody but is locked as security.
Bitcoin on Kraken, Coinbase, or Gemini qualifies. Cold wallets, DeFi positions, and peer-to-peer holdings do not. Regulators require custody arrangements they can monitor and enforce if a borrower defaults.
Crypto holders no longer need to sell and pay capital gains tax to buy a home. If Bitcoin rises during the mortgage term, the borrower's position grows while they build equity in the property.
Lenders typically require 150–200% collateral ratios. A 30% Bitcoin price drop can trigger margin calls, forcing borrowers to add more collateral or face liquidation of their crypto holdings.
The FHFA directive is binding guidance, but Fannie Mae and Freddie Mac must draft formal underwriting proposals. Scale depends on private lenders building infrastructure — programs from Coinbase and Better offer templates for the market to follow.
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