U.S. homebuyers can use bitcoin as collateral for mortgage as Better, Coinbase launch product

A mortgage product has been launched that allows U.S. homebuyers to use bitcoin to fund a down payment without selling it.

On Aug. 26 local time, blockchain media outlet Cointelegraph reported that Better Mortgage, a unit of home finance company Better Home Finance, and Coinbase opened to retail customers a home loan product that provides a down payment loan backed by bitcoin.

The product combines a Fannie Mae-guaranteed mortgage with a bitcoin-backed down payment loan. Borrowers must pledge bitcoin equal to at least 250 percent of the down payment loan amount. The bitcoin posted as collateral is transferred to a Better custodial account within Coinbase Prime.

The loan structure is also designed differently from a typical mortgage. Coinbase said the two loans carry the same interest rate and the same repayment period, and borrowers need to make one monthly payment. Borrowers can get back the bitcoin posted as collateral after fully repaying or refinancing the mortgage, in line with the loan terms.

Even if the bitcoin price falls, there will be no margin call for additional collateral or changes to the mortgage terms. If a borrower is delinquent for more than 60 days, Better can liquidate the collateral bitcoin.