Crypto-Backed Mortgages: Buying a House With a Crypto Loan


Crypto-backed mortgages are used to buy a home, backed up by digital assets such as cryptocurrency. The mortgages are ideal for those with little income but a wealth of digital assets. Crypto-backed mortgages do come with risks, however, such as the overall volatility of the cryptocurrency.

What does it mean to be a digital baron but a physical-asset pauper? These terms would be inconceivable 20 years ago, but with the rise of cryptocurrency and digital assets, they are becoming ever more prevalent. The rise of digital assets has resulted in scores of people around the world becoming rich on paper but still having difficulty making use of their burgeoning assets. The difficulty arises when they try to translate those assets into fiat currency or loans without having to sell and exit their positions.

Fortunately, versions of typical financial services catering to digital asset holders have recently become a more normal occurrence. Crypto-backed mortgages are an example. The crypto-backed mortgage concept is something that you should be aware of, whether you trade crypto already, are looking to get involved in the space, or just want to keep abreast of current trends as you plan out your financial future.

What is a crypto-backed mortgage?

Crypto loans, represented symbolically

A crypto-backed mortgage is a loan for a home that uses crypto holdings instead of the home as collateral. Investors can use their digital holdings to underwrite the loan, with an agreed-upon time frame to pay off the loan. The loan terms and structure can change based on the behavior of the cryptocurrency market.

Crypto-backed mortgages: the basics

Crypto-backed mortgages are really just crypto-backed loans that are used to buy a home. Call it a crypto-backed home loan, if you will. In fact, the only reason we use the word “mortgage” in this article is because we’re assuming that the loan will be used to buy a home. However, it’s important to note that, in most cases, the crypto lender doesn’t care what the loan is used for as long as the borrower pays it off.

The reason the crypto lender cares less about this than a traditional mortgage lender is that the security or collateral backing the loan differs. In a traditional mortgage, the asset backing up (securing) the loan is the property being purchased. With a crypto mortgage, the loan-securing asset is not a home. Instead, digital assets like cryptocurrency act as the security behind the loan.

Pro tip

It’s important to note that a crypto-backed loan behaves almost like a margin call when shorting a stock or asset. If the collateral price goes down, the investor will need to “cover the margin” and top off the crypto assets the lender holds. This makes crypto-backed loans and mortgages susceptible to the general volatility of the digital asset market, and thus the crypto mortgage lenders will request more collateral if the value of your collateral crypto drops.

Crypto loans could offer more opportunity

A crypto-backed loan provides opportunities for individuals who may not qualify for a traditional bank loan or other forms of credit. While cryptocurrency can be volatile, it offers a relatively straightforward means of acquiring funds. As a result, it can present an opportunity for individuals who may find themselves in more challenging financial circumstances.

Michael Caspers, founder and CMO of Unity Network, thinks crypto loans and mortgages are becoming ever more important.

How crypto-backed mortgages work

Remember, crypto mortgages are just another form of crypto loans. A crypto loan might work in the following fashion.


The loan will be issued on the basis of collateralizing digital assets. However, it’s important to note here that not all crypto assets are created equal. You have your altcoins, such as Neo (NEO) and Dogecoin (DOGE), and your blue-chip coins, such as Bitcoin (BTC) and Ethereum (ETH). Different lenders will have different rules determining what type of collateral you can use.

What about a drop in crypto?

In cases where there’s a drop in the value of the cryptocurrency that is backing up the loan, the lender will request more collateral. As noted earlier, this is similar to “margin calls,” where investors need to add to their collateral in order to hold their positions. For instance, if you have an agreement to use BTC as collateral, and the BTC price drops 50%, you might be required to add more bitcoin until you can meet the requirements.

Time frame

With standard crypto loans, the time frame can be very short, such as hours or months. In regard to crypto mortgages, some lenders have come on board offering crypto loans for 30 years, as long as the loan is used to buy real property.

Interest rate

In most cases, the interest rate on a crypto loan will be higher than what one would get with a standard mortgage, particularly if that standard mortgage is for a primary residence or second home. Furthermore, most crypto loans traditionally have been tied to a variable interest rate. Crypto-backed mortgages, on the other hand, offer interest rates that are fixed for a period of time, although this is still a new phenomenon.


When sending cryptocurrencies to an exchange, such as that used by lenders for collateral, you may be liable for capital gains tax (CGT) if the crypto goes up. This is similar to how you might be liable for capital gains tax should money in your bank account begin to produce yields that make you liable to pay CGT. This would be in addition to the CGT that you would pay on your real-world property, should you sell it for profit.

Since CGT only applies to realized gains, this shouldn’t become an issue until your lender returns some or all of your collateral to you, such as when you finish paying off your loan. Make sure you thoroughly understand how your lender handles collateral crypto as it rises in value, as you pay down your loan, and when you finally pay your loan off completely. Don’t risk an unpleasant tax surprise.

Pro tip

Crypto exchanges and crypto lending platforms can be either centralized or decentralized. As a general rule, centralization means greater ease of use, more features, and an ability to work with fiat currencies. But it can also mean less personal control and some lost security. Decentralization, on the other hand, can mean a steeper learning curve, fewer features, and an inability to work with fiat currencies. This is joined to greater personal control and possibly greater security, but it also means a greater ability to irretrievably damage yourself because no centralized custodian can undo your mistakes.

Loan-to-value ratio

A crypto mortgage works very differently from a traditional mortgage in terms of its loan to value (LTV). For instance, in a traditional mortgage, you might be able to borrow 80% of the asset’s value, using the home to collateralize the loan.

Crypto loans, in most cases, will lend 100% based on the value of the crypto, with no relation to the property you are buying. Furthermore, some lenders might require that you collateralize 200% of the loan’s value. This flips the LTV on its head, as you can see below.

70/30 standard mortgage100/200 crypto mortgage
The buyer borrows 70% from the bank and puts 30% down.The borrower borrows 100% and puts 200% down.

Crypto mortgage providers


A Florida-based startup that provides 100/100 LTVs with cryptocurrency. They will do a 30-year loan up to $5,000,000.

USDC Homes

USDC Homes offers up to $5,000,000 on mortgages in the state of Texas. Part of the crypto that is sent as collateral can be “staked,” meaning the investor can receive a partial interest payment to offset the mortgage.


Currently offering crypto mortgages in Canada, with the goal of being able to lend on US properties very shortly.

Pros and Cons of Crypto-Backed Loans

We spoke to Alexander Wermescher, a founding partner and CEO at CLC & Partners, which advises clients on Web3 and Blockchain strategy, among other things. Here is what he listed as his pros and cons of the crypto mortgage space.


Here is a list of the benefits and drawbacks to consider.

  • Capital Accessibility: They allow holders to access capital without needing to liquidate their crypto assets. In addition, borrowers can acquire 100% of the necessary funds for a home purchase with sufficient collateral.
  • Absence of Credit Checks: Many platforms don’t require a credit or FICO check, making loans accessible to those with poor or no credit history
  • Speed and Convenience: These loans can often be processed more quickly and with less paperwork than traditional loans, thanks to the automated nature of blockchain technology.
  • Opportunity Cost: The collateralized crypto cannot be staked or spot-traded which may represent a lost opportunity for additional income or appreciation.
  • Dependence on Crypto Value: A significant decrease in the crypto’s value can negate the benefits of the loan and compound the loss

Crypto loans for other types of real estate and assets

Many different industries are becoming more accepting of crypto. As mentioned above, crypto loans need not be used only for buying a traditional home. They can be used for other assets entirely, and for other types of real estate. In fact, some real estate investment companies are also considering crypto loans.

Eclipse Cottages


Can a crypto trader get a mortgage?

Yes, a crypto trader can get a crypto mortgage or a traditional mortgage, assuming he has a stable income that he can prove. A crypto trader might be more apt to get a crypto loan or mortgage because it offers him the chance to keep his assets in crypto rather than sell them. Many crypto traders, in the past, would have just taken out personal loans to avoid selling their assets.

Can crypto stop you from getting a mortgage?

No, crypto cannot stop you from getting a mortgage. However, if you want to use your crypto for a mortgage rather than going the traditional route, be prepared to have an LTV of 100/100 or 100/200 rather than 70/30 or 80/20. If you want a traditional mortgage, you will need to have some fiat currency for a down payment, as well as stable income and credit.

Which U.S. banks are crypto-friendly?

USAA and BankProv are two “crypto-friendly” banks with physical locations, not “online banks only.” As crypto becomes more mainstream, be prepared for more banks coming online that accept crypto mortgages. U.S. banks could also become more friendly to other blockchain technologies such as smart contracts.

How can I get a crypto mortgage?

The first order of business would be to determine the value of your crypto vs. the price of the home you want to buy. After that portion of due diligence is done, go online and compare rates and terms. Once done, contact the top 2 or 3 lenders that meet your needs, and inquire.

Key Takeaways

  • Crypto-backed mortgages are used to buy a home, backed up by digital assets such as cryptocurrency.
  • Crypto-backed mortgages center around individuals who have digital assets but would like to put them down as collateral to receive a mortgage or loan without having to sell them.
  • Unlike your standard 70/30 or 80/20 LTVs, crypto mortgages often come with many different LTV types, such as 100/100 and 100/200.
  • Crypto-backed mortgages can act similarly to margin calls: if the value of your crypto goes down, you might be required to deposit more crypto with the lender.
View Article Sources
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