Pledge

Core

Bitcoin

Better

<h2 style="margin: 30px 0 12px; font-size: 0.9em; letter-spacing: 0.12em; text-transform: uppercase; color: #0891b2;" id="key-takeaways">Key Takeaways</h2>
<div style="margin: 0 0 28px;">
 <p style="margin: 0 0 8px; padding: 12px 16px; border-left: 5px solid #0891b2; background: rgba(8, 145, 178, 0.1); color: inherit;"><strong>Collateral ratio: $2.50 of Bitcoin per $1</strong></p>
 <p style="margin: 0 0 8px; padding: 12px 16px; border-left: 5px solid #0891b2; background: rgba(8, 145, 178, 0.1); color: inherit;"><strong>Missed payments: Bitcoin liquidation possible after 60 days</strong></p>
 <p style="margin: 0 0 8px; padding: 12px 16px; border-left: 5px solid #0891b2; background: rgba(8, 145, 178, 0.1); color: inherit;"><strong>Pre-applications reached $360 million in requested loans</strong></p>
 <p style="margin: 0; padding: 12px 16px; border-left: 5px solid #0891b2; background: rgba(8, 145, 178, 0.1); color: inherit;"><strong>$130,000 loan at 7.40%: about $900 monthly</strong></p>
</div>
<p>The <a href="https://www.ft.com/content/42176f60-b2fd-431c-9f2c-e7e015b07315" rel="noopener noreferrer nofollow">Financial Times reported on October 22</a> on a buyer who took a $130,000 Bitcoin-backed loan alongside a conventional mortgage, pledging $325,000 of Bitcoin, 2.5 times the loan.</p>
<h2 id="better-s-pitch-leaves-out-the-second-loan">Better’s pitch leaves out the second loan</h2>
<p>Better and Coinbase <a href="https://www.businesswire.com/news/home/20260326569749/en/Better-and-Coinbase-Launch-the-First-Token-Backed-Conforming-Mortgage" rel="noopener noreferrer nofollow">announced the product in March</a> and made it <a href="https://www.businesswire.com/news/home/20260826839882/en/Better-Coinbase-Announce-General-Availability-of-First-Token-backed-Conforming-Mortgage-to-Expand-Homeownership-Access-for-a-New-Generation-of-Mortgage-Borrowers" rel="noopener noreferrer nofollow">generally available in August</a>. Better later told CoinDesk that pre-applications had reached $360 million in requested loan volume, above the $260 million it had projected from its waitlist.</p>
<p>Borrowers receive two loans at closing. The first is a conforming Fannie Mae mortgage on the home. The second funds the cash down payment and is secured by the pledged Bitcoin and a second lien on the property. Better originates both, in 15- or 30-year fixed terms, and the pledged Bitcoin does not help a borrower qualify for the main mortgage.</p>
<p>Better’s <a href="https://better.com/crypto-backed-mortgages" rel="noopener noreferrer nofollow">product page</a> frames the choice as selling against pledging. Its default example produces an “Est. net benefit” of $46,000 upfront, mostly the cash a buyer no longer has to put down. The comparison stops at closing day.</p>
<div style="margin: 24px 0; overflow-x: auto;">
 <table style="width: 100%; border-collapse: collapse; text-align: left; font-size: 0.95em; color: inherit;">
  <caption style="caption-side: bottom; padding-top: 8px; font-size: 0.85em; text-align: left; opacity: 0.8;">
   Figures from the default example on Better’s product page, which assumes a 20% capital gains tax.
  </caption>
  <thead>
   <tr style="background: #0e7490; color: #ffffff;">
    <th style="padding: 12px 14px;" scope="col">Better’s example</th>
    <th style="padding: 12px 14px;" scope="col">Sell Bitcoin</th>
    <th style="padding: 12px 14px;" scope="col">Pledge Bitcoin</th>
   </tr>
  </thead>
  <tbody>
   <tr>
    <td style="padding: 12px 14px; border-bottom: 1px solid rgba(8, 145, 178, 0.35);">Bitcoin sold</td>
    <td style="padding: 12px 14px; border-bottom: 1px solid rgba(8, 145, 178, 0.35);">$30,000</td>
    <td style="padding: 12px 14px; border-bottom: 1px solid rgba(8, 145, 178, 0.35);">$0</td>
   </tr>
   <tr>
    <td style="padding: 12px 14px; border-bottom: 1px solid rgba(8, 145, 178, 0.35);">Tax on the sale</td>
    <td style="padding: 12px 14px; border-bottom: 1px solid rgba(8, 145, 178, 0.35);">$6,000</td>
    <td style="padding: 12px 14px; border-bottom: 1px solid rgba(8, 145, 178, 0.35);">$0</td>
   </tr>
   <tr>
    <td style="padding: 12px 14px; border-bottom: 1px solid rgba(8, 145, 178, 0.35);">Total cash required</td>
    <td style="padding: 12px 14px; border-bottom: 1px solid rgba(8, 145, 178, 0.35);">$86,000</td>
    <td style="padding: 12px 14px; border-bottom: 1px solid rgba(8, 145, 178, 0.35);">$40,000</td>
   </tr>
   <tr>
    <td style="padding: 12px 14px; border-bottom: 1px solid rgba(8, 145, 178, 0.35);">New down-payment loan</td>
    <td style="padding: 12px 14px; border-bottom: 1px solid rgba(8, 145, 178, 0.35);">None</td>
    <td style="padding: 12px 14px; border-bottom: 1px solid rgba(8, 145, 178, 0.35);">$40,000</td>
   </tr>
   <tr style="background: rgba(8, 145, 178, 0.12);">
    <td style="padding: 12px 14px;"><strong>Interest on that loan</strong></td>
    <td style="padding: 12px 14px;">None</td>
    <td style="padding: 12px 14px;"><strong>Not shown</strong></td>
   </tr>
  </tbody>
 </table>
</div>
<h2 id="what-it-costs-to-keep-130-000-in-bitcoin">What it costs to keep $130,000 in Bitcoin</h2>
<p>The FT borrower pledged $325,000 of Bitcoin, but that is not the amount of exposure the loan preserved. His alternative was to sell roughly $130,000 worth, plus any tax, and keep the rest. The second loan pays for continued exposure to that $130,000 slice, while the whole $325,000 stays locked.</p>
<div style="margin: 24px 0; padding: 20px 22px; border: 2px solid #0891b2; border-radius: 10px; color: inherit;">
 <p style="margin: 0 0 14px; font-size: 0.85em; letter-spacing: 0.08em; text-transform: uppercase; color: #0891b2;"><strong>The down-payment loan alone</strong></p>
 <div style="display: flex; flex-wrap: wrap; gap: 18px;">
  <div style="flex: 1 1 140px;">
   <p style="margin: 0; font-size: 0.85em; opacity: 0.8;">Borrowed</p>
   <p style="margin: 2px 0 0; font-size: 1.4em; font-weight: 800;">$130,000</p>
  </div>
  <div style="flex: 1 1 140px;">
   <p style="margin: 0; font-size: 0.85em; opacity: 0.8;">Monthly payment</p>
   <p style="margin: 2px 0 0; font-size: 1.4em; font-weight: 800;">≈ $900</p>
  </div>
  <div style="flex: 1 1 140px;">
   <p style="margin: 0; font-size: 0.85em; opacity: 0.8;">Interest over 30 years</p>
   <p style="margin: 2px 0 0; font-size: 1.4em; font-weight: 800;">≈ $194,000</p>
  </div>
 </div>
 <p style="margin: 14px 0 0; font-size: 0.85em; opacity: 0.85;">Illustrative only: 360 payments at 7.40%, Freddie Mac’s 30-year average as of October 15. Better’s pricing depends on underwriting. Excludes the main mortgage, fees, property tax and insurance, and assumes no early repayment.</p>
</div>
<p>At <a href="https://fred.stlouisfed.org/graph/?g=1XU7Y" rel="noopener noreferrer nofollow">Freddie Mac’s latest weekly average</a> of 7.40%, the borrower is paying about $900 a month to hold on to $130,000 of Bitcoin. The pledge works out only if that slice gains more than the interest and fees, after tax. The payments are fixed; the gains are not.</p>
<h2 id="day-60-for-the-bitcoin-day-180-for-the-house">Day 60 for the Bitcoin, day 180 for the house</h2>
<p>Better says a falling Bitcoin price never triggers a top-up or a forced sale. Its FAQ contrasts this with margin loans, where collateral can be liquidated automatically at a set loan-to-value ratio even when payments are current.</p>
<div style="display: flex; flex-wrap: wrap; gap: 10px; margin: 24px 0;">
 <div style="flex: 1 1 160px; padding: 14px 16px; border-top: 4px solid #0891b2; background: rgba(8, 145, 178, 0.08); color: inherit;">
  <p style="margin: 0 0 4px; font-weight: 800; color: #0891b2;">Day 1</p>
  <p style="margin: 0; font-size: 0.92em;">Delinquency starts the day after a missed payment.</p>
 </div>
 <div style="flex: 1 1 160px; padding: 14px 16px; border-top: 4px solid #0891b2; background: rgba(8, 145, 178, 0.08); color: inherit;">
  <p style="margin: 0 0 4px; font-weight: 800; color: #0891b2;">Day 30</p>
  <p style="margin: 0; font-size: 0.92em;">Window to bring the account current.</p>
 </div>
 <div style="flex: 1 1 160px; padding: 14px 16px; border-top: 4px solid #dc2626; background: rgba(220, 38, 38, 0.08); color: inherit;">
  <p style="margin: 0 0 4px; font-weight: 800; color: #dc2626;">Day 60</p>
  <p style="margin: 0; font-size: 0.92em;">Better may liquidate the pledged Bitcoin.</p>
 </div>
 <div style="flex: 1 1 160px; padding: 14px 16px; border-top: 4px solid #dc2626; background: rgba(220, 38, 38, 0.08); color: inherit;">
  <p style="margin: 0 0 4px; font-weight: 800; color: #dc2626;">Day 180</p>
  <p style="margin: 0; font-size: 0.92em;">Foreclosure proceedings on the home can begin.</p>
 </div>
</div>
<p>The protection covers price, not income. A household hit by falling crypto prices and a lost job escapes a margin call, but still has to make the payment that keeps the Bitcoin from being sold at day 60. Because the down-payment loan also holds a second lien, the house secures it as well.</p>
<h2 id="locked-until-the-mortgage-is-gone-and-possibly-reused">Locked until the mortgage is gone, and possibly reused</h2>
<p>Better’s FAQ gives three different answers on when the Bitcoin comes back. One says it is returned once the down-payment loan is repaid. Another says only after the main mortgage is fully repaid or refinanced. A third says it is released when the home is sold and the down-payment loan is paid off. Better told <a href="https://www.coindesk.com/business/2026/09/06/better-and-coinbase-s-bitcoin-backed-mortgages-can-reuse-borrowers-collateral" rel="noopener noreferrer nofollow">CoinDesk</a> that the collateral stays locked until the conventional mortgage is repaid or refinanced, which on a 30-year loan can mean decades.</p>
<p>The coins may not sit untouched in the meantime. Better told CoinDesk it may rehypothecate pledged Bitcoin, using it elsewhere, as long as it keeps an equivalent amount available to return at payoff. The borrower is owed the same quantity of Bitcoin, not necessarily the same coins, and depends on Better being able to deliver it. Coinbase acts only as custodian and technology provider, with no role in extending credit or deciding on liquidation, the companies told CoinDesk.</p>
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<h2 id="the-tax-case-and-the-test-that-matters">The tax case, and the test that matters</h2>
<p>Avoiding a sale can avoid a tax bill. The <a href="https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-digital-asset-transactions" rel="noopener noreferrer nofollow">IRS treats digital assets as property</a>, so selling can realise a capital gain. Better’s example applies a flat 20%, but federal long-term rates are 0%, 15% or 20% depending on income, short-term gains are taxed as ordinary income, and the result also depends on the holder’s cost basis. Better itself tells borrowers to consult a tax adviser. For more on how the product works, see our guide to <a href="https://coindoo.com/home-buyers-can-now-use-bitcoin-as-a-down-payment-in-us-here-is-how-it-works/" rel="noopener noreferrer nofollow">using Bitcoin as a down payment</a>.</p>
<p>The deciding question is cash flow. The pledged Bitcoin cannot be used to make payments while it is locked, so the borrower’s income has to cover both loans for as long as they run.</p>
<p style="text-align: center; font-size: 0.9em;"><em>This article is for informational purposes only and does not constitute financial, legal or tax advice. Loan terms and eligibility vary; calculations are illustrative.</em></p>
<p>The post <a href="https://coindoo.com/bitcoin-mortgages-let-buyers-keep-their-crypto-and-debt/" rel="noopener noreferrer nofollow">Bitcoin Mortgages Let Buyers Keep Their Crypto – and Debt</a> appeared first on <a href="https://coindoo.com" rel="noopener noreferrer nofollow">Coindoo</a>.</p>

Bitcoin Mortgages Let Buyers Keep Their Crypto – and Debt

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