Cryptocurrency in Mortgage Lending

Due to a new policy direction from the Federal Housing Finance Agency (FHFA) and growing borrower demand, your crypto portfolio could now be a valuable part of your homebuying strategy. Last year, the FHFA directed Fannie Mae and Freddie Mac to begin incorporating cryptocurrency into mortgage risk assessments. This policy directive, combined with more homebuyers, especially higher-earning Gen-Z and Millennial buyers, holding a meaningful portion of their wealth in digital assets, is forcing the mortgage industry to adapt. As a result, cryptocurrency, once considered too volatile or difficult to verify, is becoming an important factor in the mortgage process.

Borrowers can now use crypto holdings, without having to liquidate them, as part of their reserve assets. Lenders, like Newrez, one of the wholesale mortgage lenders we partner with, have begun considering crypto assets in mortgage qualification, but have established important guidelines to manage risk. For example, these assets must be held on lender-approved, U.S.-regulated crypto exchanges; the assets must be clearly documented; and conservative valuations are being applied to account for market volatility.

In addition to crypto being used for reserve assets, just last week, Coinbase and Better Home and Finance announced a partnership to offer a Fannie Mae-approved mortgage product that allows buyers to use their crypto assets as collateral for their down payment without having to liquidate the assets. These “token-backed” mortgages are the first conforming loan product that allows cryptocurrency to be used for a down payment without having to liquidate. These new programs are helping to meet the needs of the growing share of buyers who hold crypto and prefer not to sell it, whether to avoid taxes or preserve long-term growth potential.

So, what does this mean for you? If you have significant crypto holdings, these changes could create flexibility in how you qualify for a mortgage, potentially increasing your buying power without disrupting your investment strategy. That said, this is still an evolving space, and guidelines will vary by lender and loan type. The best approach is to plan ahead. Keep assets on compliant crypto exchanges, maintain clear documentation of your crypto assets, and work with a mortgage professional who understands how to position these assets effectively. If you’re curious how your crypto assets could factor into your homebuying plans, we’d be happy to help. Contact us today.