For many people, Bitcoin is viewed as new asset class but, fundamentally, it’s a currency that can be used to buy or sell goods and services.
For this reason, you should be able to use Bitcoin to buy real estate. But are there businesses offering these services?
Bitcoin-Based Home Loans
If you buy a property with cash, you hand over the money, sign the deed, and after going through a standard legal process, take ownership of the property. The same is true if you pay the full price with bitcoin, as long as the seller is willing to accept the currency.
The problem is this: the majority of homebuyers don’t have enough cash to buy a property outright. They need a mortgage to fund the difference between what they have, and the market value of the house. And that’s where problems start. Most banks don’t offer Bitcoin (BTC) home loans.
Fortunately, things are changing. We’ve seen two attempts to bring BTC into the mortgage space:
1. The ability to pay the down payment in BTC
2. The ability to take out a home loan using BTC as collateral
BTC Down Payments
Most U.S. banks require buyers to pay at least 20 percent of the value of a property upfront before accessing the remaining 80 percent in the form of a mortgage loan. The majority pay in cash, though some lenders will also allow payment in other forms, such as physical equipment, equity in other properties, and blanket liens. BTC, though, is noticeably absent from most deals.
However, in August 2021, United Wholesale Mortgage said that it would begin accepting BTC deposits. The policy ran for a few months before the company abruptly stopped its crypto services, citing “regulatory uncertainty” and “incremental costs.”
BTC Home Loans
On the BTC home loans front, there is more positive news. Goldman Sachs-backed cryptocurrency firm, Abra, will soon be moving forward with crypto-backed home loans. It will partner with Propy, allowing buyers to secure home loans, using crypto as collateral.
Another fintech company, Milo, is also getting into the space. The Florida-based startup, which has raised more than $17 million since March 2022, will offer crypto-backed mortgages for certain buyers, offering 30-year loans of up to $5 million. Both Ethereum and bitcoin-backed mortgage products are available.
In the future, consumers may get even more choices. Ledn, a crypto savings platform founded in 2018, says that it has raised more than $103.9 million to date to capitalize its mortgage lending service. Buyers cannot take out a home loan on the platform yet, but they can sign up for a waitlist.
Crypto-backed mortgage provider Figure Technologies is planning a similar home loan scheme. Users will get a 100 percent loan to value, as long as they stake BTC or ETH equivalent to the value of the mortgage they want to take out. The company says that borrowers can make payments using crypto collateral.
The Bottom Line
While right now there are relatively few crypto mortgage products on the market, interest is growing. If things carry on as they are, using Bitcoin to buy real estate may be the norm by 2030.
