Borrowers can now use $250k in Bitcoin for a house down payment without margin calls, but one trap remains

Better Mortgage and Coinbase announced on Aug. 26 that Better's token-backed conforming mortgage had reached general availability. Better's product page says interested borrowers can start an application.

The structure does not use Bitcoin to secure the primary mortgage. Instead, a homebuyer takes two loans from Better: a standard first mortgage on the home designed to conform to Fannie Mae guidelines, and a separate loan that supplies the cash down payment. The second loan is secured by pledged Bitcoin and a second lien on the property.

Under Better's current product terms, Bitcoin carries a 40% advance rate, equal to a 250% collateral requirement. In the company's example, $250,000 of BTC supports a $100,000 down-payment loan. Better's program terms say that advance rates can change without notice, so those figures describe the published structure rather than a guaranteed offer for every applicant.

The Bitcoin is transferred to Better Mortgage's custodial account on Coinbase Prime. Better's terms prohibit the borrower from selling, transferring, re-pledging or otherwise encumbering it without prior written consent during the pledge period. The borrower keeps economic exposure to the Bitcoin, but gives up normal control and liquidity.