Better Home & Finance Holding Company (NASDAQ: BETR) and Coinbase (NASDAQ: COIN) have partnered to introduce token-backed mortgages. This initiative allows borrowers to pledge Bitcoin (BTC) or USD Coin (USDC) as collateral for conforming home loans, funding their cash down payment without liquidating digital assets or incurring a taxable event. Better, an AI-native mortgage originator, will originate and service these loans. These loans benefit from Fannie Mae backing, similar to other conforming mortgages. Coinbase, a cryptocurrency exchange, will power the Bitcoin and USDC pledges.
This launch marks the first time an AI-native mortgage lender has utilized secured digital asset loans and a major crypto exchange platform to create a direct path from digital wealth to homeownership. Vishal Garg, CEO and founder of Better, said, “Better was founded to make homeownership more accessible for all Americans, and this partnership with Coinbase introduces a new pathway to realizing the American Dream for the 52 million Americans who own digital assets.” This development offers a new avenue for mortgage professionals to engage with a growing segment of potential borrowers.
For decades, homeownership required selling assets, liquidating investments, or withdrawing retirement savings for a cash down payment. These actions often triggered capital gains taxes or early withdrawal penalties. This new product addresses this by allowing borrowers to pledge tokenized assets as a substitute for a cash down payment. This means customers can use their digital assets without selling them, satisfying down payment requirements for a mortgage. Mortgage professionals should note that the tax treatment of crypto pledges can vary. Borrowers are responsible for their own tax reporting, requiring consultation with independent tax advisers.
Market reports indicate that 52 million American adults, or 20% of the adult population, have owned digital assets. Token-backed mortgages empower individuals who may lack sufficient traditional down payment funds or prefer to keep those funds liquid. Max Branzburg, head of consumer and business products at Coinbase, said, “The ability to transform digital wealth into housing access is an exciting milestone in our mission to increase economic freedom.” This shift aligns with the evolving financial landscape, where other lenders embracing crypto are also exploring how digital assets can impact underwriting and loan qualification.
Homeownership has become challenging for younger Americans due to the divergence of home prices and income. Coinbase’s 2025 State of Crypto Report indicates that 45% of younger investors own crypto, compared to 18% of older investors. This makes younger generations 2.5 times more likely to be token holders. As younger generations build wealth through digital assets, traditional pathways to homeownership, often based on home equity and financial markets, no longer fully align with modern wealth creation. The token-backed mortgage bridges this gap, providing younger Americans with greater access to housing.
The NCA 2025 State of Crypto Holders report highlights that tokenized-asset ownership is demographically diverse. Sixty-seven percent of token holders are 45 years old or younger, and 26% earn less than $75,000 annually. Furthermore, 12.7% of Gen Z and Millennial homebuyers have already sold tokenized assets to fund a down payment, compared to 3.5% of Gen X and 0.5% of baby boomers, according to Redfin in 2025. This data underscores the relevance of digital assets for a significant portion of the homebuying demographic.
Borrower Benefits Of Token-Backed Mortgages
The token-backed mortgage product includes several borrower benefits. There are no margin calls or top-ups. If Bitcoin drops in value, mortgage terms remain unchanged, and no additional collateral is required. Liquidation is only triggered by a 60-day payment delinquency, similar to conforming mortgages. For those pledging USDC, the collateral earns rewards that can help offset mortgage payments, potentially reducing the net effective interest rate. Unlike traditional securities-backed loans, which private banks often provide to their best clients, the unique architecture of Coinbase Custody allows consumers to pledge specific quantities and types of tokens rather than the entire account value.
Better and Coinbase plan to expand the eligible digital assets over time to include tokenized equities, fixed income, and other tokenized real estate assets.
Crucially, token-backed mortgages originated by Better are designed in accordance with Fannie Mae guidelines, maintaining their status as standard conforming mortgage loans. This structure enables significantly lower interest rates than those typically associated with Non-QM token-backed loans. The digital asset pledge is associated with a separate, privately financed loan that funds the down payment. This approach ensures that the primary mortgage remains within established agency parameters, offering a clear path for mortgage professionals to underwrite and process these loans.
Coinbase One members who secure a token-backed or regular mortgage product through Better are eligible for a rebate worth 1% of the mortgage value, capped at $10,000, to cover closing costs and fees. For example, a Coinbase One member securing an $800,000 mortgage through Better would receive an $8,000 rebate. Better pays and provides this rebate. This initiative builds on Better’s focus on leveraging its AI-native Tinman platform, which has funded over $110 billion in loan volume since 2016. Mortgage professionals interested in how Better operates can review our coverage on Better from March 2025.
This partnership provides a tangible mechanism for mortgage loan originators, brokers, and banks to cater to a growing demographic of digital asset holders. Understanding the mechanics of these token-backed conforming loans and their Fannie Mae alignment is critical for maintaining pipeline volume and adapting to evolving borrower financial profiles.
