Better lets borrowers use $250K in Bitcoin for a down payment

Better Mortgage and Coinbase announced on Aug. 26 that a token-backed conforming mortgage is generally available. The product pairs a standard first mortgage that meets Fannie Mae guidelines with a separate second loan that provides cash for the down payment.

The second loan is secured by Bitcoin pledged by the borrower and by a second lien on the home. Under Better’s published terms, the program applies a 40% advance rate on pledged Bitcoin, which equals a 250% collateral requirement in the company’s example: $250,000 of Bitcoin backing a $100,000 down-payment loan. Better’s materials state advance rates can change without notice.

Applicants must have a verified Coinbase account, meet Better’s underwriting and conforming-loan requirements, and purchase in an eligible jurisdiction. Better’s public terms specify a minimum 680 FICO score and say the product may be limited to select states.

Pledged Bitcoin is transferred to Better Mortgage’s custodial account on Coinbase Prime. Borrowers keep economic exposure to price changes but give up ordinary control and liquidity; the terms prohibit selling, transferring, re-pledging or otherwise encumbering the pledged Bitcoin without prior written consent during the pledge period. Coinbase provides custody and account-transfer infrastructure; Better handles application, underwriting, closing and servicing.

Price movements alone will not trigger a margin call or forced sale under Better’s current public terms. The liquidation trigger is payment performance. Delinquency begins the day after a missed payment, and borrowers have 30 days to cure the account. If a borrower remains delinquent for 60 days, Better may liquidate the pledged Bitcoin. Individual loan documents set the borrower’s obligations and Better’s remedies.

Liquidation of pledged Bitcoin can remove future upside and may create taxable events, according to Better’s terms. The down-payment lender’s second lien creates a secured claim on the property in addition to the custodial hold on the crypto. Better’s example figures reflect the published structure and are not guaranteed for every applicant.

The program’s public materials list the program terms, custody arrangements, advance rates, potential tax implications and state availability.