Big news this week. Fannie Mae just signed off on the first ever crypto-backed mortgage product, built by Better Home and Finance with Coinbase. If you have been sitting on Bitcoin wondering if it could ever help you buy a home in LA, now it can.
Here is the basic idea. Instead of selling your crypto and dealing with a big tax hit, you pledge it as collateral for a second loan. That loan covers your down payment. You end up with one monthly payment to Better, and your crypto stays locked in a Coinbase account until that loan is paid off. If crypto drops in value, nothing changes on the mortgage as long as you keep making payments. No margin calls.
Quick example
On a $500k home, you could pledge $250k in Bitcoin to secure a $100k down payment loan. Your crypto stays in custody and comes back to you when the loan is repaid. Coinbase One members also get a 1% rebate on the mortgage, capped at $10k.
Why this is actually a big deal
Other crypto mortgage products existed before this, but they were expensive and hard to access. This is the first one Fannie Mae has backed, which is a different thing entirely. When Fannie moves, lenders everywhere follow. The door just opened for a lot of buyers who had the assets but not the right kind of assets.
About 52 million Americans own digital assets. A lot of them are in LA, a lot of them want to buy homes here, and a lot of them have been stuck because their wealth doesn't look like a traditional bank account. That is exactly who this was built for.
Just keep in mind
Two loans means two interest payments. It works out for a lot of people, especially if you don't want to liquidate a position you've held for years. But run the numbers first and make sure it makes more sense than just saving up a traditional down payment.
Also, your crypto is locked for the life of the loan. You can't trade it. For some people that's fine. For active traders, that's worth thinking through.
Want to talk through it?
Whether you're holding crypto or going the traditional route, there are more paths to buying in LA right now than most people realize. Happy to walk through whatever fits your situation.