Crypto Mortgage Lending: How Bitcoin-Backed Home Loans Work, What They Cost

Crypto mortgage lending is a way to use Bitcoin or Ethereum holdings to qualify for a home loan without selling the assets. Three models exist: the collateral-pledge model (up to 100% LTV, 1× property value in crypto), the Fannie Mae-conforming dual-loan model (40% of pledged Bitcoin credited toward the down payment), and the asset-verification model where crypto holdings support qualification without liquidation.

Crypto mortgage lending lets homebuyers pledge Bitcoin or Ethereum as collateral to secure a home loan instead of selling those assets for a cash down payment. Three distinct models exist today: a collateral-pledge structure offering up to 100% loan-to-value, a conforming dual-loan structure that Fannie Mae accepted for the first time in March 2026, and an asset-verification model that treats crypto like a savings account on your application without touching your holdings. Knowing which structure you are evaluating changes everything about your tax exposure, your liquidation risk, and how much cash you will actually need at closing.

In brief

• Crypto mortgage lending splits into three models: collateral-pledge (Milo, up to 100% LTV), dual-loan Fannie Mae-conforming (Better + Coinbase), and asset-verification (Newrez). Each carries different tax and liquidation risk.
• Pledging crypto as collateral generally does not trigger a taxable event; selling crypto to fund a down payment does. The dual-loan model may blur this line, so review loan documents carefully.
• Milo's 7–9% fixed rate and 1× collateral requirement mean the product works best for Bitcoin-heavy borrowers who face a large embedded capital gain and can meet the collateral threshold.
• No crypto mortgage lender publicly discloses its full liquidation mechanics. Ask about margin-call thresholds, cure periods, and custodian insurance before pledging assets.
• Verify every crypto mortgage lender's state license through NMLS Consumer Access and consult a tax advisor before committing to any structure.

What Crypto Mortgage Lending Actually Is: Three Distinct Models

Crypto mortgage lending means using cryptocurrency holdings to secure home financing, either as collateral for the loan itself or as proof of assets to strengthen your mortgage application. The industry has split into three structural models, each with different mechanics, tax implications, and risk profiles. Understanding which model a lender offers before you apply is non-negotiable: the differences determine whether your Bitcoin stays untouched, gets pledged into a custody arrangement, or must be partially sold.

The table below maps each model against the criteria that matter most: how much crypto you need, whether Fannie Mae backstops the loan, and whether you trigger a sale of your holdings.

Each model targets a different borrower profile. A Bitcoin-heavy investor with minimal cash may gravitate toward the collateral-pledge model. A borrower wanting the protections of a conforming mortgage might choose the dual-loan path. Someone with diverse assets who simply wants crypto counted as part of their financial picture can use the asset-verification route.

The collateral-pledge model (Milo)

Milo structures its crypto mortgage as a single loan secured by your Bitcoin or Ethereum. The borrower pledges crypto worth at least 1× the property value, held in custody at BitGo or Coinbase, and receives a 30-year fixed-rate loan at 7–9% APR with up to 100% LTV and a minimum loan amount of $275,000 (Milo, 2026). No cash down payment is required. The crypto remains pledged for the life of the loan and the borrower keeps the upside exposure on those assets, though they cannot freely trade or withdraw the pledged collateral while the loan is outstanding.

Comprendre le fonctionnement du crypto lending explained est essentiel pour évaluer ces produits.

The dual-loan / Fannie Mae-conforming model (Better + Coinbase Prime)

Better Home and Finance, in partnership with Coinbase, announced the first Fannie Mae-conforming crypto-backed mortgage product in March 2026 (CNBC, March 26, 2026). Instead of selling Bitcoin for cash, the borrower pledges crypto held at Coinbase Prime. Better credits 40% of the pledged Bitcoin value toward the down payment requirement. The structure involves two loans: a conforming Fannie Mae mortgage on the property and a separate loan secured by the crypto collateral. Coinbase One members may qualify for up to $10,000 in closing cost credits (Better, 2026), though prospective borrowers should verify current program terms directly with the lender.

The asset-verification model (Newrez Smart Series)

Newrez announced on January 30, 2026 that borrowers can use eligible cryptocurrency holdings when verifying assets or calculating income on a mortgage application, without liquidating those holdings (Newrez, 2026). This model is fundamentally different: crypto functions like a bank statement or brokerage account in the underwriting process. The loan itself is a standard mortgage, not a crypto-backed product. No custody arrangement, no separate collateral pledge, and no Fannie Mae innovation is required for the crypto aspect; the lender simply accepts verified digital-asset balances as part of your financial picture.

LTV Math and Collateral Requirements: A Worked Example

Take a concrete case: a borrower wants to buy a $500,000 home using Bitcoin they accumulated over several years. They hold $80,000 in BTC with a cost basis of $20,000. Under a traditional mortgage, they would need roughly $100,000 for a 20% down payment plus closing costs. Selling that $80,000 in BTC would trigger a taxable gain of $60,000. At a 20% long-term capital-gains rate, that generates a $12,000 tax bill, and they still fall short of the cash down payment target.

You'll find all the details in flexlend crypto lending: eth loans & ltv math (2026).

The crypto mortgage models re-route this math entirely. The question is which route fits their situation and what risks each path introduces.

Step 1: Calculate collateral needed under each model

Under the Milo collateral-pledge model, the borrower must pledge 1× the property value in BTC or ETH, meaning $500,000 worth of Bitcoin at current market price. Our borrower holds only $80,000 in BTC and does not qualify: they would need additional crypto, a smaller loan, or a lower-priced property. Milo's minimum loan is $275,000 and the LTV can reach 100%, but the collateral requirement effectively caps the accessible loan size to whatever crypto balance the borrower can pledge.

Pour ceux qui cherchent des alternatives, un crypto loan without collateral peut exister sous certaines conditions spécifiques.

Pour des options sans garantie, il est utile de savoir ce qui existe réellement en matière de crypto loan no collateral.

Under the Better/Coinbase dual-loan model, the borrower pledges their $80,000 in Bitcoin and Better credits 40% of that value toward the down payment: $32,000. Compare this to Better's own traditional-approach calculation: selling $30,000 in BTC at a 20% capital-gains rate generates a $6,000 tax bill and still requires $50,000 in cash for the down payment, totaling $86,000 in cash required (Better, 2026). By pledging instead of selling, the borrower avoids that taxable event and the cash crunch.

Under the Newrez asset-verification model, the borrower simply reports their $80,000 in BTC holdings. No liquidation, no pledge, no custody transfer. The crypto balance strengthens their asset profile, potentially improving loan terms, but it does not directly substitute for a cash down payment.

Step 2: What happens to your down payment math

The Better/Coinbase model changes the down payment equation in a specific way. The 40% credit on pledged BTC is not a dollar-for-dollar substitute for cash. Using the same $80,000 BTC pledge and a $500,000 home, the $32,000 credit covers part of the down payment, but the borrower must still fund the remainder with cash or other liquid assets. The conforming Fannie Mae mortgage on the property follows standard underwriting guidelines: debt-to-income ratios, credit scores, and employment verification all apply.

For borrowers comparing models, the math reduces to a single question: do you hold enough crypto to meet the collateral requirement of the pledge model (1× property value), or are you better served by the partial-credit approach of the dual-loan model (40% of pledged value)? If the answer is neither, the asset-verification model may still help by making your overall financial picture stronger, even though it does not directly fund the down payment.

Step 3: The liquidation threshold: when your crypto is at risk

Lenders using the collateral-pledge model tie the loan's health to Bitcoin's price. If BTC drops sharply, the pledged collateral loses value relative to the loan balance. At a predetermined threshold (the liquidation LTV), the lender can liquidate part or all of the collateral to protect its position. Milo does not publicly disclose its exact liquidation trigger, which is standard in crypto lending but makes risk assessment harder for borrowers. Knowing the margin-call threshold before signing is essential: a 30% BTC price drop that triggers forced liquidation looks very different from a structure that allows the borrower to post additional collateral to cure the shortfall.

Il est important de se renseigner sur les best crypto collateral loans pour mieux comprendre les pratiques du marché.

The dual-loan model partially insulates the borrower because the property mortgage conforms to Fannie Mae guidelines. But the separate crypto-secured loan carries its own collateral maintenance requirements. If BTC falls far enough, the lender on that tranche can demand additional collateral or liquidate. The asset-verification model carries no such risk because crypto is never pledged.

Real Rates, Fees, and Lender Comparison

Crypto mortgage lending remains a thin market. Milo, Better, and Newrez represent three approaches, but none publishes a complete, audited rate sheet comparable to what conventional mortgage borrowers expect. The data available comes from lender disclosures and press announcements, not from the kind of standardized HMDA reporting that conventional mortgages undergo.

What exists: Milo advertises a 7–9% fixed rate on a 30-year term with a $275,000 minimum loan (Milo, 2026). Better's product, announced in March 2026, does not disclose a public rate range for the crypto-backed component. Newrez does not publish a separate rate for its asset-verification program because the mortgage itself is a standard product. For perspective, conventional 30-year fixed mortgage rates in mid-2026 sit in the mid-6% range, making Milo's 7–9% range a meaningful premium, though one that may be acceptable to borrowers who avoid triggering a six-figure capital-gains event by not selling their crypto.

What is not disclosed: liquidation LTV thresholds, margin-call mechanics, whether rates adjust if collateral value drops, and the exact terms of the separate crypto-secured loan in the dual-loan model. These gaps matter because they shape the borrower's real cost of capital and risk exposure.

Interest rates and loan terms: what the market looks like today

Milo's 7–9% fixed rate sits roughly 100 to 300 basis points above prevailing conventional mortgage rates. The 30-year term and up to 100% LTV make the product structurally familiar, but the collateral requirement (1× property value in BTC or ETH) and the undisclosed liquidation mechanics mean the headline rate does not tell the full story. Borrowers should ask: what triggers a margin call, how much notice do I get, and can I post additional collateral to avoid liquidation?

Better's Fannie Mae-conforming product carries conforming loan limits (up to $806,500 in most counties for 2026, higher in high-cost areas), and the primary mortgage rate should track conventional 30-year fixed rates. The rate on the separate crypto-backed loan tranche is not publicly posted. Coinbase One members may access up to $10,000 in closing cost credits, though the program terms and eligibility criteria require direct verification with Better.

Newrez's asset-verification program does not change the interest rate equation; it simply allows crypto to count toward asset and income verification. Borrowers get whatever rate their standard mortgage profile qualifies for.

Fees and closing costs: what to budget for

Closing costs on crypto mortgage products range from standard mortgage fees (origination, appraisal, title, escrow) to crypto-specific costs. Custody fees at BitGo or Coinbase may apply for collateral-pledge and dual-loan models. Coinbase One membership, which Better references for its closing cost credits, carries its own cost and terms.

A concrete point of comparison: Better's traditional-approach worked example shows that selling $30,000 in BTC generates a $6,000 capital-gains tax bill at 20% and still requires $50,000 in cash down payment, totaling $86,000 in cash required (Better, 2026). For a borrower who can pledge instead of sell, the avoided tax bill effectively subsidizes the mortgage premium. The math flips if the borrower would owe little or no capital-gains tax on a sale (for example, if their cost basis is near the current market price).

Pour une comparaison des différentes offres, une analyse des best crypto backed loans est recommandée.

How to vet a crypto mortgage lender: FTC red flags

Crypto mortgage lending is new enough that even sophisticated borrowers lack a playbook for vetting lenders. The Federal Trade Commission (FTC, 2026) advises consumers to verify any financial service provider's licensing, check for complaints with state and federal regulators, and never rely solely on a polished website or marketing materials.

Specific red flags for crypto mortgage lenders: no state mortgage lending license disclosed, no physical US address, promises of guaranteed approval regardless of credit, pressure to transfer crypto before loan documents are signed, and refusal to provide a Loan Estimate form (a federal requirement for most residential mortgage transactions). The SEC oversees crypto assets as securities in certain contexts (SEC, 2026), while the Federal Reserve (2026) sets the monetary and regulatory backdrop for mortgage lending. A legitimate crypto mortgage lender should be able to name its state and federal regulators without hesitation.

IRS Treatment: Does Pledging Crypto Trigger a Taxable Event?

The single most common tax mistake borrowers make with crypto mortgage lending is assuming that pledging crypto and selling crypto are the same thing. They are not. Pledging cryptocurrency as collateral for a loan generally does not constitute a taxable realization event under current IRS guidance, because ownership has not changed hands. Selling crypto to fund a down payment, by contrast, is a disposition that triggers capital-gains tax on any appreciation since acquisition.

The distinction matters enormously for the dual-loan model. If one tranche of a Better-style structure requires liquidating a portion of the pledged Bitcoin (rather than merely posting it as collateral), the borrower incurs a taxable event on that portion. Better's own marketing materials flag the traditional-approach comparison: selling $30,000 of BTC generates a $6,000 tax bill at the 20% long-term capital-gains rate (Better, 2026). Borrowers who misread their loan documents and discover mid-process that a sale is required may face an unexpected, unbudgeted tax liability.

This section explains the tax framework. It is not tax advice. Consult a qualified tax professional before structuring any crypto-backed mortgage transaction.

Pledge vs. sale: the tax distinction every borrower must know

The IRS treats cryptocurrency as property, not currency (IRS Notice 2014-21). A disposition of property (sale, exchange, or transfer) triggers recognition of gain or loss. Posting crypto as collateral does not transfer ownership: the borrower retains title to the assets, subject to a security interest held by the lender. That security interest alone does not constitute a sale.

Le concept de What is crypto lending? est donc fondamental pour appréhender ces distinctions fiscales.

What can trigger a taxable event: the lender foreclosing on the collateral and selling it, the borrower voluntarily selling pledged crypto to meet a margin call, or a loan structure that requires the borrower to sell crypto as part of the transaction (as may occur in one tranche of a dual-loan model). The asset-verification model (Newrez) sidesteps this entirely because crypto is never pledged or sold; it is merely reported as an asset on the application.

The dual-loan trap: when part of your structure triggers a taxable sale

The Better/Coinbase dual-loan model pairs a conforming Fannie Mae mortgage with a separate crypto-backed loan. Whether the crypto tranche requires a sale or merely a pledge depends on the specific loan documents. Better's public materials emphasize that borrowers can "pledge Bitcoin and receive two loans" without selling, but the absence of full, publicly available loan documentation means borrowers must verify this point in writing before committing.

The trap: a borrower who assumes the entire structure involves only pledging, but whose loan agreement for the crypto tranche authorizes the lender to sell a portion of the collateral at origination to prefund a reserve or fee account, may unknowingly trigger a taxable event. The capital-gains liability arrives as a surprise at tax time, months after closing. Review every loan document with a tax advisor who understands digital-asset taxation before signing.

What records to keep for IRS purposes

Borrowers who pledge crypto for a mortgage should maintain (or have their custodian maintain) records of the following for IRS purposes: the date, amount, and fair market value of crypto pledged; the cost basis and acquisition date of every lot of pledged cryptocurrency; any correspondence with the lender regarding margin calls, forced sales, or partial releases of collateral; and all Form 1099-B or equivalent statements issued by the lender or custodian.

If liquidation occurs, the borrower must report the resulting gain or loss on IRS Form 8949 and Schedule D of Form 1040. The character of the gain (short-term vs. long-term) depends on the holding period of the specific lots liquidated. Custodians like Coinbase and BitGo typically provide transaction histories, but the borrower bears the ultimate responsibility for accurate tax reporting. The SEC and FTC do not set tax policy, but the SEC's oversight of crypto-asset markets (SEC, 2026) and the FTC's consumer protection mandate (FTC, 2026) mean that fraudulent or deceptive lending practices involving crypto may be reportable to either agency.

Is Crypto Mortgage Lending Right for You? Key Considerations

Crypto mortgage lending is not a mass-market product. It suits a narrow slice of borrowers: those with significant Bitcoin or Ethereum holdings, a low cost basis that makes selling punitive from a tax perspective, and a tolerance for the custody and liquidation risks that come with pledging volatile assets as collateral.

The upside is real. A borrower who bought Bitcoin at $20,000 and watches it trade at $80,000 faces a $60,000-per-coin taxable gain on any sale. Pledging those coins instead of selling them preserves the upside exposure and defers the tax bill. The borrower gets the house without liquidating the asset they believe will appreciate further. If they are right about Bitcoin's trajectory, the strategy works. If they are wrong, the margin call arrives.

For borrowers who do not face a large embedded gain, or who hold crypto that no mortgage lender currently accepts (only BTC and ETH are referenced in available lender materials), a conventional mortgage funded by a partial or full crypto sale may produce a better net result. The 7–9% rate on a Milo mortgage exceeds the cost of a conventional 30-year fixed loan, and that premium compounds over three decades.

Les produits comme les Compound Crypto Loans présentent également des dynamiques de taux et de risque spécifiques.

Crypto mortgage lending is also not right for borrowers who need the full range of consumer protections embedded in the conventional mortgage system. The collateral-pledge model operates outside Fannie Mae's framework. If the lender fails, the path to recovering pledged collateral is less clear than the path to asserting rights under a conforming mortgage backed by a government-sponsored enterprise.

Who benefits most, and who faces the most risk

High-net-worth crypto holders with a low cost basis and strong conviction in Bitcoin's long-term value stand to benefit most from the collateral-pledge or dual-loan models. These borrowers avoid a taxable sale, preserve upside exposure, and access home financing that conventional lenders would not underwrite against volatile digital assets.

Borrowers with smaller crypto holdings, a high cost basis, or assets outside BTC and ETH face limited options. The Milo model requires crypto worth at least the property value. The Better model credits only 40% of pledged value toward the down payment. The Newrez model helps with asset verification but does not directly fund the purchase. For many crypto holders, a conventional mortgage funded by selling a portion of their holdings may be simpler and cheaper, especially if the taxable gain is small or offset by capital losses.

Regulatory and custody risks to factor in

Regulatory risk is material. The SEC's jurisdiction over crypto assets continues to evolve, and the classification of certain digital assets as securities could affect their eligibility as collateral for mortgage products. The Federal Reserve's monetary policy directly influences mortgage rates, and any tightening cycle affects the cost of both conventional and crypto-backed borrowing.

Custody risk is equally important. Borrowers pledging crypto to Milo, Better, or any lender with a custody arrangement are relying on third-party custodians (BitGo, Coinbase Prime) to safeguard their assets. The history of crypto exchange failures and custody breaches, while not specific to these providers, underscores the importance of understanding where and how pledged assets are held. Ask the lender: who is the custodian, what insurance covers custody losses, and what happens to your pledged crypto if the lender or custodian becomes insolvent.

Before applying, complete this checklist:

1. Verify the lender's state mortgage license and any federal registration with the NMLS Consumer Access portal.
2. Obtain and review the loan documents for the exact language governing margin calls, liquidation thresholds, and whether any portion of the structure requires a crypto sale.
3. Consult a tax advisor who can model the capital-gains implications of your specific situation under each available model.
4. Confirm the custody arrangement: who holds the crypto, under what terms, and with what insurance or recovery rights if the custodian fails.

The information provided here is general in nature and is not a substitute for advice from a licensed financial advisor. Review your situation with a professional before committing.