The news: Better and Coinbase have announced the first Fannie Mae-backed mortgage that uses Bitcoin as collateral, creating a new pathway to homeownership for crypto investors. The fintechs plan to make the product available nationwide by this summer.

Zoom in: Qualified borrowers who own Bitcoin will be able to pledge the digital assets themselves as collateral instead of needing to sell them to generate funds for a down payment. This will benefit prospective homebuyers who have the income and credit to qualify for a mortgage but whose assets are tied up in crypto. According to Better, 41% of its preapproved customers qualify for a mortgage but do not have enough cash available for a traditional down payment.

Why this matters: The Better-Coinbase announcement reflects a trend highlighted in EMARKETER's “US Home Lending Trends” report: Crypto’s role in mortgage lending is growing. Rather than requiring borrowers to liquidate their digital assets, lenders are increasingly exploring ways to incorporate crypto holdings into financial profiles.

For banks, this could expand the pool of eligible borrowers at a time when high mortgage rates and sluggish housing activity are intensifying competition for loans. They would be better able to reach borrowers whose wealth is concentrated in digital assets.

The strategy may be especially relevant for younger consumers. Around 16% of 18- to 24-year-olds, and 20.2% of 25- to 34-year-olds, currently own cryptocurrencies according to EMARKTER’s forecasts, and it could become an important source of wealth for future homebuyers. 

Implications for banks: Nonbank lenders are moving faster than traditional banks on mortgage innovation. While regulatory and risk-management concerns keep many banks wary of crypto, fintech and nonbank players are experimenting with emerging technology-based products that could reshape customer expectations and differentiate them in a crowded market.

But the crypto mortgage opportunity comes with significant challenges. Price volatility creates risks around collateral valuation, risk management, and compliance. Banks will need strong partnerships, custody solutions, and risk controls before entering the markets.

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