Better and Coinbase Launch Bitcoin-Backed Mortgages That Rehypothecate Collateral

Better and Coinbase have opened their bitcoin-backed mortgage to the general public, and Better told CoinDesk that pre-applications have already reached $360 million in requested loan volume since the rollout, above the $260 million it projected from an earlier waitlist. The product lets homebuyers pledge bitcoin to fund a cash down payment without selling their holdings, but it comes with a notable condition: Better can rehypothecate the pledged bitcoin, and borrowers cannot recover their crypto until the primary mortgage is fully repaid or refinanced, according to CoinDesk’s September 6 report.

A Two-Loan Structure Backed by Bitcoin

At closing a borrower receives two loans. The first is a standard Fannie Mae-conforming mortgage secured by the home, while the second funds the cash down payment and is secured by the borrower’s bitcoin plus a second lien on the same property. The bitcoin-backed loan starts at a 250% collateral ratio, meaning a buyer must pledge $2.50 in BTC for every $1 borrowed for the down payment. In Better’s example, a buyer purchasing a $500,000 home could pledge $250,000 of bitcoin to fund a $100,000 down payment. Both loans are originated by Better and collected through one combined monthly payment.