Better Home & Finance Holding Company and Coinbase announced a milestone partnership to bring token-backed mortgages to millions of Americans. Token-backed mortgages are originated and serviced by Better, and benefit from the same backing of Fannie Mae as other conforming mortgages. Bitcoin and USDC pledges are powered by Coinbase.
Americans who qualify for a mortgage with Better will now be able to pledge Bitcoin or USDC as collateral to fund their cash down payment, securing a standard conforming mortgage without liquidating tokenized assets or potentially triggering a taxable event. The launch of the Better + Coinbase token-backed mortgage product marks the first time an AI-native mortgage lender has used secured digital asset loans and the platform of a major crypto exchange to create a direct pathway from digital wealth to homeownership. Token-backed mortgages empower Americans who own digital assets but lack sufficient downpayment funds, or prefer to keep downpayment funds liquid, to secure a home loan by pledging their tokenized assets as collateral.
The tokenized asset pledge acts as a substitute for the cash downpayment, meaning customers can utilize their digital assets, without selling them, to satisfy downpayment requirements for a mortgage. Token-backed mortgages originated by Better are designed in accordance with Fannie Mae guidelines and remain as standard conforming mortgage loans, identical to other conforming mortgages. The digital asset pledge is associated with a separate privately financed loan that will be used to fund the down payment.
All Coinbase One members who procure a token-backed or regular mortgage product through Better will be eligible for a rebate worth 1% of the mortgage value, capped at $10,000, to cover closing costs and fees. The token-backed mortgage will include key borrower benefits including: No margin calls, no top-ups. If BTC drops in value, the mortgage terms remain unchanged, and no additional collateral is required.
Market movements alone never trigger liquidation. For users interested in pledging Bitcoin or USDC as collateral in lieu of a cash down payment, their collateral is only at risk of liquidation in the event of a 60-day payment delinquency, similar to conforming mortgages. For users interested in pledging USDC, unlike a conforming cash down payment, pledged USDC earns rewards that can help offset mortgage payments, enabling borrowers to reduce their net effective interest rate, and making property financing more affordable than ever before.
Unlike traditional securities backed loans for downpayment, usually provided by private banks to their best clients, due to the unique architecture of Coinbase Custody, consumers will be able to pledge certain quantities and certain types of tokens, rather than having to pledge the entire value of their account. Better and Coinbase intend to partner to expand the digital assets eligible for the product over time, expanding it to tokenized equities, fixed income and other tokenized real estate assets.
