Token-Backed Mortgage Reaches General Availability

Better Mortgage, operated by Better Home & Finance Holding Co. (Nasdaq: BETR), the digital lender behind Better.com that went public through a SPAC merger in 2023, and cryptocurrency exchange Coinbase (Nasdaq: COIN) opened their token-backed mortgage product to general availability on Aug. 26. The product pairs a conforming home loan with a separate bitcoin-secured loan that covers the buyer's cash down payment. The expanded offering first became available to eligible members of Coinbase One, the exchange's paid subscription program, on Aug. 12.

The two companies stated: "These first-of-its-kind mortgages will be originated and serviced by Better, powered by Coinbase, and designed in accordance with guidelines from Fannie Mae, making the first lien a standard, conforming mortgage."

Better Mortgage Chief Technology Officer Ziggy Jonsson described the companies' objective: "This partnership has always been about expanding access to homeownership by meeting borrowers where they are."

Bitcoin never enters the conforming loan itself, which keeps the first lien a standard Fannie Mae product. The first loan is a conforming mortgage secured by the home, while a separate loan funds the down payment and is secured by pledged bitcoin and a second lien on the property. Better originates both loans and holds the bitcoin in its custodial account on Coinbase's platform.

Fannie Mae, the government-sponsored enterprise whose guidelines, together with loan-size limits the Federal Housing Finance Agency sets annually, define which mortgages qualify as conforming, generally requires virtual currency used for a down payment, closing costs, or reserves to be converted into U.S. dollars before closing. The separate crypto-secured loan allows the first mortgage to follow Fannie Mae standards without treating unconverted bitcoin as the direct source of funds for the conforming loan. Because the first lien must remain conforming, any change in how the GSE treats crypto-linked funding would directly shape how products built on this two-loan template can operate.

Coinbase One Credit Extends Across Better Products

The companies initially unveiled the structure on March 26, with plans to accept bitcoin or USDC as collateral. The original token-backed mortgage announcement described an early-access offering, while Better's current product terms identify bitcoin as the collateral accepted at launch. Whether USDC follows as accepted collateral, as the companies originally outlined, remains an open variable as availability widens.

Borrowers can pledge bitcoin valued at 250% of the down-payment loan, meaning $100,000 in bitcoin provides $40,000 toward the down payment. The model emerged as housing costs consumed 34% of median household income for a typical new home during the fourth quarter of 2025.

Coinbase and Better reported that 76% of waitlist respondents already subscribed to Coinbase One, while 60% planned to buy a home within six months. The mortgage also forms part of Coinbase's broader expansion into stocks, lending, and other consumer financial services.

The companies added: "Waitlist data also revealed over $260 million in projected loan volume, before general availability. Better and Coinbase are now scaling that early success, bringing traditional mortgage and HELOC offerings to Coinbase's broader membership."

Bitcoin Collateral Avoids Price-Based Margin Calls

Unlike many cryptocurrency loans, Better's product does not require borrowers to add collateral when bitcoin's price declines. Market movements alone do not trigger liquidation, although Better may sell pledged assets after 60 days of payment delinquency. By contrast, other Coinbase crypto-backed loans can liquidate collateral when loan balances reach defined thresholds.

Other lenders are increasingly testing structures that separate repayment failures from swings in cryptocurrency prices. Strike shortened its bitcoin-backed loans to six-month terms in July to eliminate price-triggered liquidations, although missed payments or failure to repay at maturity can still result in collateral sales.

Collateralized borrowing lets asset holders obtain funds without selling their cryptocurrency, but custody arrangements, interest charges, and default provisions remain important distinctions between products. Crypto lending can involve centralized companies holding borrowers' pledged assets until repayment. The stakes of that custody model became clear in 2022, when centralized lenders Celsius Network and BlockFi filed for bankruptcy and customers waited through multiyear court proceedings to recover pledged assets.

Approved Coinbase One members can receive a Better-funded credit equal to 1% of eligible mortgages, refinances, or home equity line of credit balances, up to $10,000.

Source: Bitcoin.com