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Crypto holders may find it easier to get mortgages after William Pulte, director of the Federal Housing Finance Agency (FHFA), directed that Fannie Mae and Freddie Mac should consider cryptocurrency assets in single-family mortgage risk assessments. In an X post, Pulte framed the move as aligned with President Trump’s vision of making the U.S. a crypto hub.
Fannie Mae and Freddie Mac don’t directly issue mortgages but set standards for the loans they’ll buy. That means lenders could accept digital assets as part of applicants’ financial profiles, potentially allowing borrowers to keep crypto rather than convert it to dollars to qualify. The central question: is it prudent to base mortgage underwriting on crypto holdings?
Summary
– The FHFA has asked Fannie Mae and Freddie Mac to consider cryptocurrency in mortgage risk assessments, which could make home loans more accessible to crypto holders.
– Crypto-backed mortgages avoid forced conversion to fiat, but extreme volatility poses significant risks if coins are used as collateral.
– Wider acceptance could open fairer financing for crypto owners, but strict collateral rules and limited token eligibility are major practical constraints.
The volatility of cryptocurrency
Cryptocurrencies are among the most volatile financial assets. Prices can swing dramatically over days or even hours. For example, Bitcoin has experienced large intra-year moves, rising hundreds of percent in some periods and plunging sharply in others. Such swings can magnify both gains and losses for borrowers using crypto to qualify for loans or as collateral.
Using crypto as mortgage collateral would allow owners to avoid liquidating positions in the hope prices recover. But the reverse is also true: a price crash could force liquidation of their holdings or trigger margin-like actions by lenders. That would require lenders and borrowers to monitor positions closely and set robust risk controls—like high collateralization ratios or rapid margin remedies—to avoid catastrophic outcomes.
The practicality of crypto as a source of funding
Crypto-backed mortgages aren’t entirely new. Some fintechs already offer loans secured by Bitcoin or Ethereum. Typically, these products require very high collateralization—often near 100% of the property value—so a buyer of a $400,000 home would need roughly $400,000 in crypto pledged. By contrast, conventional mortgages commonly require 5–20% down; FHA loans can be as low as 3.5%.
High collateral requirements reduce the leverage advantage of mortgages and limit who can benefit. Most programs also accept a narrow set of tokens—usually BTC, ETH, and sometimes major stablecoins like USDT or USDC. Holders of smaller-cap tokens such as DOGE or SOL may find their assets ineligible, unless Fannie Mae and Freddie Mac expand the list of acceptable assets.
Benefits of accepting crypto for mortgages
Allowing crypto to be considered in mortgage underwriting could address current friction for crypto owners who must convert assets to fiat to demonstrate liquidity. Some lenders penalize or reject applicants with crypto transactions in their statements, citing traceability and volatility concerns. Treating regulated, transparent crypto holdings as legitimate assets could level the playing field and help qualified crypto holders access fairer financing.
The FHFA’s guidance so far does not specify which tokens will be accepted. It does suggest assets should have evidence of ownership and be stored on U.S.-regulated centralized exchanges and subject to applicable laws. How lenders will translate that into underwriting criteria—eligible tokens, valuation methods, required hold periods, custodial proof, or haircuts for volatility—remains to be seen.
Risks and implementation hurdles
Key practical limits are likely: strict collateralization, conservative haircuts, restrictions to major tokens, and requirements for custody or liquidity proofs. Lenders will have to design policies to manage rapid price moves and legal/regulatory compliance. Borrowers should anticipate more stringent documentation and possibly higher costs or lower loan-to-value ratios compared with traditional mortgages.
Conclusion
FHFA’s direction could broaden mortgage access for crypto holders by recognizing digital assets in risk assessments. That would reduce the need to sell crypto to qualify for a mortgage and could improve fairness for crypto-native wealth. However, extreme volatility, narrow token acceptance, and high collateral requirements pose serious challenges. Whether this policy change becomes practical and safe for borrowers and lenders will depend on detailed underwriting rules, custody standards, and risk-management safeguards.
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