Homebuyers Can Use Bitcoin for Down Payments Without Margin Calls, but Default Triggers Remain

Better Mortgage and Coinbase revealed on August 26 that Better’s token-backed conforming mortgage is now generally available, with interested applicants able to begin the process on Better’s website.

Rather than using Bitcoin to secure the primary mortgage, the homebuyer secures two loans from Better: a conventional first mortgage conforming to Fannie Mae guidelines, and a secondary loan providing the cash down payment. This second loan is backed by the pledged Bitcoin and a junior lien on the property.

Under the current terms, Bitcoin is subject to a 40% advance rate, requiring a 250% collateral ratio. For instance, $250,000 in BTC secures a $100,000 down-payment loan. However, Better reserves the right to alter advance rates without notice, meaning these figures reflect the published structure rather than a guaranteed offer for every applicant.

The Bitcoin is moved into Better Mortgage’s custodial account on Coinbase Prime. Better’s terms forbid the borrower from selling, transferring, re-pledging, or encumbering the asset without prior written approval during the pledge period. While the borrower retains economic exposure to the Bitcoin, they forfeit standard control and liquidity.

Coinbase supplies the account-transfer and Prime infrastructure but does not originate or service the loans; Better manages the application, underwriting, closing, and ongoing servicing.

Payment default, not price, drives liquidation

Routine fluctuations in Bitcoin’s price do not trigger a margin call, a collateral demand, or forced selling under the current public terms. This distinguishes the product from a traditional crypto margin loan, where an increasing loan-to-value ratio can prompt automatic liquidation.

The actual trigger is payment delinquency. Better considers a borrower delinquent the day after a missed payment, granting them 30 days to bring the account current. If delinquency persists for 60 days, Better may liquidate the pledged Bitcoin. The individual loan documents ultimately dictate the borrower’s obligations and Better’s remedies.

This structure introduces risks independent of Bitcoin’s daily price volatility. A forced sale can erase future upside and may trigger a taxable event, according to Better’s terms. Additionally, the second lien grants the down-payment lender an extra secured claim against the property.

The product is not universally available to all U.S. borrowers. Applicants must possess a verified Coinbase account, meet Better’s underwriting and conforming-loan criteria, and purchase in an eligible jurisdiction. While Better’s program terms require a minimum 680 FICO score and note that the product might be restricted to certain states, a state-by-state list is not published.

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