Mortgage Research Network Podcast

Welcome to the Mortgage Research Network Podcast. Just a note that this podcast audio is AI-generated, but the article on which it's based was produced by people. Content is also reviewed for accuracy. And your hosts, Tim and Craig, are real people. Without further ado, let's get into today's topic.
I'm your host, Tim Lucas, editor of MortgageResearch.com and a former mortgage professional, and with me is Craig Berry, a mortgage originator with 25 years experience.
Hi everyone.
Today we're talking about specialized loans and lenders that let you use crypto as collateral for your home loan. Why don't you walk us through how these work, Craig.
Well, in short, people are now buying half-million dollar homes using nothing but Bitcoin as collateral, often with no credit check, no income verification, just pure crypto wealth.
That's a pretty wild concept. How exactly does something like that even work?
Well, instead of the traditional down payment and mortgage process, you basically put your cryptocurrency in an escrow account with the lender. Let's say you want a $500,000 house. you'd need at least that much in Bitcoin or Ethereum as collateral, and the lender gives you the cash to buy the home.
Hmm... so you don't actually have to sell your crypto? That's actually pretty clever for investors who are sitting on large crypto holdings.
Exactly. and here's what's really interesting: you can skip all the usual hoops like credit checks and income verification. The lender only cares about your crypto holdings. Some recent data shows about 1% of all homebuyers are already using crypto proceeds for down payments.
But what happens if crypto prices crash while your Bitcoin is being held as collateral?
That's where things get dicey. If there's a significant drop in crypto value, you could face what's called a margin call. You'd either need to put up more crypto as collateral or risk having your holdings liquidated to cover the loan.
So you're essentially gambling your crypto investment on the stability of the crypto market?
In a way, yes. And here's another catch. these loans typically come with higher interest rates than traditional mortgages. Plus, while your crypto is locked up as collateral, you can't trade it or use it for anything else.
What kind of companies are actually offering these loans? I can't imagine traditional banks jumping into something this experimental.
Right now it's just a handful of specialized lenders like Milo and Figure. But here's something fascinating. while traditional mortgages take 30-45 days to close, these crypto mortgages can sometimes close in just a week because blockchain technology eliminates so much paperwork.
That's remarkably fast. Though I have to wonder about the risks if one of these specialized lenders goes under.
That's actually one of the biggest concerns. Since these aren't traditional banks, there's no FDIC protection. If the lender goes bankrupt, getting your crypto back could become a nightmare. And there's very little legal precedent for handling these situations.
So who's actually using these crypto mortgages? It seems like it would take a very specific type of buyer.
The sweet spot seems to be people with at least $200,000 in crypto who strongly believe in its long-term value according to an expert we talked to for this article. It's particularly attractive for self-employed individuals or international buyers who might struggle with traditional mortgage requirements. Some lenders even offer hybrid options where you can make a 20% cash down payment and use crypto as supplemental collateral.
That hybrid approach sounds more reasonable than going all-in on crypto collateral.
Definitely. And experts recommend several strategies to manage the risks, like using stablecoins that are pegged to the dollar instead of more volatile cryptocurrencies. Some suggest overcollateralizing by pledging more crypto than required to create a buffer against market drops.
You know what's fascinating about all this? It really shows how cryptocurrency is forcing us to rethink traditional financial systems.
Absolutely right. And while these crypto mortgages might seem exotic now, they're part of a bigger trend. Traditional lenders are starting to accept crypto proceeds for down payments, and we're seeing more integration between digital assets and real estate. The real question is whether this is just the beginning of a major shift in how we think about home financing.
Though it seems like we're still in the very early stages of figuring out how to make it all work safely.
That's the key point. this is still a young market with evolving regulations and risk frameworks. What looks risky today might become more stable as the market matures, or we might see entirely new approaches emerge. But one thing's certain. crypto is changing the game in ways we never expected, even in something as traditional as getting a mortgage.
Thanks for breaking down this exciting development in mortgage lending, Craig. Well, that's about all the time we have, but we go into even more detail on the site. To learn more, go to Mortgage research.com and type crypto backed mortgages in the search bar on the homepage. We'll see you next time on the Mortgage Research Network Podcast.