Better, Coinbase Expand Bitcoin-Backed Mortgages

Better is expanding access to a Bitcoin-backed mortgage product that allows crypto holders to use BTC as collateral for a home purchase without immediately selling their digital assets.

The product combines a standard conforming mortgage with a separate loan secured by pledged Bitcoin. Better originates and services both loans, while Coinbase provides the infrastructure used to custody the cryptocurrency collateral through Coinbase Prime.

Under the arrangement, borrowers can pledge Bitcoin instead of funding their entire down payment with cash. Better requires the pledged BTC to be worth at least 250% of the down payment loan.

For example, someone purchasing a $500,000 home could pledge $250,000 worth of Bitcoin to support a $100,000 down payment. The precise collateral requirement may vary depending on Better's underwriting standards and the borrower's circumstances.

Unlike some crypto-backed lending products, the structure does not include margin calls caused by ordinary Bitcoin price fluctuations. The pledged cryptocurrency remains in Better's custodial account on Coinbase Prime while the loans are outstanding.

Better initially launched the crypto-backed mortgage product in March, allowing eligible borrowers to pledge either Bitcoin or USDC. The company has now made the offering more broadly available while adding an incentive aimed at Coinbase One members.

Eligible Coinbase One customers can receive a lender-funded credit worth 1% of the mortgage amount, capped at $10,000. The incentive could make the product more attractive to cryptocurrency investors looking to purchase property while retaining exposure to Bitcoin.

Borrowers remain responsible for repaying both the traditional mortgage and the separate Bitcoin-collateralized loan.

Crypto-backed mortgages have appeared before. Canadian crypto lender Ledn announced a Bitcoin-backed mortgage product in December 2021, while Miami-based fintech Milo unveiled what it described as the first U.S. crypto mortgage in January 2022.

Still, Coinbase's involvement gives the sector a prominent crypto infrastructure provider as Bitcoin increasingly intersects with traditional financial services and real estate lending.