New Products Signal Fannie and Freddie Warming To Cryptocurrency in the Mortgage Market

Fannie Mae and Freddie Mac may be warming to the idea of homeowners using cryptocurrency as collateral in buying a house.

Mortgage company Better Home & Finance and Coinbase unveiled a cryptocurrency-backed mortgage product on Thursday. It would allow buyers to use their coins as collateral for mortgages that get the same Fannie Mae backing as other kinds of mortgages.

Cryptocurrency-related products have trickled into the market over the past few years, but products like this one mark an elevated role for the mortgage giants. Some products required users to sell off their cryptocurrency and use the proceeds for a down payment.

These more recent products signal that the mortgage giants will allow homebuyers to hold their cryptocurrency assets. In this way, they'd be treated similarly to other assets and investments they continue to hold, the Wall Street Journal reports.

“The ability to transform digital wealth into housing access is an exciting milestone in our mission to increase economic freedom,” said Max Branzburg, head of Consumer and Business Products at Coinbase.

“Token-backed mortgages are a major first step to unlocking homeownership for the younger generations that have struggled with barriers to saving for a traditional down payment.”

Thawing of Rules

President Donald Trump has pushed cryptocurrency-friendly policies in the government. His administration has followed suit. Last year, Federal Housing Finance Agency Director Bill Pulte ordered Fannie and Freddie to consider ways to incorporate cryptocurrency as an asset in single-family mortgage risk assessments.

New products have followed. Christie's last year opened a division for cryptocurrency-exclusive transactions.

Realtor.com® research shows many who are familiar with cryptocurrency don't understand how it can be used for home purchases.

Meanwhile, younger people are more than twice as likely as older generations to hold cryptocurrency. Almost two-thirds of token holders are younger than 45. A quarter of them make less than $75,000 a year, Coinbase found.

That makes cryptocurrency a possible solution for a generation that has been priced out of much of the housing market, and is increasingly pessimistic about it.

Early days of a transition

The new clarity to the market is good, Josip Rupena, CEO of Milo, tells Realtor.com. His Miami-based company provides home loans to cryptocurrency consumers nationwide.

Milo has fielded 10,000 inquiries since it launched the category in 2022 and has done $100 million in business. It qualifies people based on the bitcoin they currently hold. It's popular with people who now have a significant portion of their net wealth in cryptocurrency.

"All of these rules are good. It shines a light on the fact that people in the country are holding digital assets," Rupena said. "We are in the early days of what seems to be a transition."

Rupena sees more on-ramp for cryptocurrency in the housing market. Investors have seen their coins inflate to six-figure value, and they want to hold their assets for the long term. Selling these coins triggers tax consequences based on their gains, after all.

Lenders treating these investments as an active asset—as opposed to fixating on a credit score, which is one snapshot in time—underscores the financial reality younger people face today, Rupena says.