'This is really very scary': A Michigan couple may be the first to use Bitcoin for a standard mortgage — but experts worry about what comes next

Better’s crypto mortgage product is the first of its kind to be backed by Fannie Mae, distinguishing it from a similar crypto mortgage product offered by the fintech company Milo.

Bitcoin is used as collateral to secure the loan with Better, meaning borrowers don't have to liquidate their crypto holdings — which would require them to pay taxes on capital gains.

Moneywise asked for an interview with Joe and Amy (last names withheld) and was declined. Better also provided an image of the house the couple reportedly bought.

“Buying our first home has always been the goal, but I wasn’t willing to give up a decade of investing to get there,” Joe said in the press release. “With this mortgage, I didn’t have to choose. We closed on our home and my Bitcoin stayed intact.”

Sounds like the 21st-century American dream. But critics like Hilary Allen, who teaches financial regulation at American University’s Washington College of Law, warn the reality is less rosy and more risky.

“If you don’t know what you're getting into here, this is really very scary,” Allen told Moneywise.

Here’s how crypto-backed mortgages work and what you need to know about them.

How Better’s crypto-backed mortgage works

To take out a crypto-backed mortgage with the company, Better told Moneywise you need to:

• Have a Coinbase account, with holdings in either Bitcoin or Circle’s stablecoin, the USD Coin (not to be confused with the Trump family’s stablecoin, the USD1).
• Take out:

1. A conventional 15- or 30-year mortgage with Better, backed by Fannie Mae, which you must pay off like any other mortgage holder, and
2. A second loan with Better (in lieu of a cash down payment) that you must pay off like any borrower, backed by the USD Coin or bitcoin as collateral, to fund the down payment on the mortgage.

• Pay off the second loan in full before getting your crypto assets back.
• Commit to making regular payments on time on both the mortgage and second loan. As long as you do, the loan terms won’t change — even if the value of your crypto falls. If you’re delinquent 60 days or more, your crypto assets will be liquidated to cover the loans. If you’re delinquent for 180 days, Better may start foreclosure proceedings.

It sounds like the perfect option for someone like Joe. According to a 2025 Gallup poll, Joe fits the mold for a crypto investor: an upper-income, college-educated male aged 18 to 49.

Better founder and CEO Vishal Garg commented that this is a great opportunity to open up the housing market to more people who have built crypto wealth but don’t have enough for a cash down payment.

“We’re excited to expand access to all qualified borrowers to fix an ongoing issue: buyers who qualify on every measure that matters but cannot clear the down payment hurdle because their wealth isn’t where the system expects to find it,” he said in the press release.

But how big is the crypto mortgage market? Joe is closer to the exception than the rule when it comes to having enough Bitcoin to use as collateral on a home.

In fact, only 9% of Americans bought or held cryptocurrency of any amount in 2025, according to the Federal Reserve — let alone enough to use for collateral on a crypto mortgage.

Professor Allen says that means any marketing that implies there is “some vast sleeping market with huge amounts of crypto” for residential mortgages is misleading.

Even if some Americans have sufficient digital assets to get a crypto mortgage, she warns there are too many risks involved.

The risks of token-based mortgages

Allen studies financial crises and regulation and is an expert on the 2008 financial crisis — triggered by a collapse in subprime mortgages and a related lack of regulatory oversight.

The crypto trading platform Bitsgap itself notes that when it comes to mortgages, there is “less regulatory oversight” over crypto lenders than banks.