Coinbase and Better Home & Finance have completed the first Fannie Mae-backed mortgage in the United States that uses bitcoin as collateral. The move marks a major step in bringing bitcoin into the traditional housing market.

The first loan was issued to Joe and Amy, a married couple from Ann Arbor, Michigan. The couple used their bitcoin holdings to help secure a mortgage for their first home without having to sell their digital assets.

Traditionally, homebuyers need cash for a down payment. Many bitcoin investors have wealth tied up in digital assets instead of bank accounts. Until now, they often had to sell some of their BTC to buy a home, which could trigger taxes and reduce their future investment gains.

With this new mortgage product, borrowers can pledge bitcoin or the stablecoin USDC as collateral for a separate loan that helps cover the down payment. The digital assets remain in a custodial account and are returned when the loan is repaid.

Coinbase believes the launch shows how digital assets can be used in real-world financial products. “At Coinbase, we believe that bitcoin should do more than sit in a wallet. It should work for the people who hold it,” said Mark Troianovski, Coinbase’s Head of Consumer and Platform Partnerships.

“Tens of millions of Americans have built real wealth in digital assets. That wealth now has a direct path to homeownership,” he added.

According to Coinbase, the process is designed to be simple. After being approved for a mortgage through Better, borrowers can transfer their digital assets into a Coinbase custody account with a few clicks. The assets then serve as collateral for the down payment loan.

Joe said the program allowed him and his wife to buy a home without giving up an investment they had built over many years. He said:

The mortgage structure includes two loans. The first is a standard Fannie Mae-backed mortgage used to purchase the home. The second is a bitcoin-backed loan that helps fund the down payment. Both loans share the same term and interest rate, resulting in a single monthly payment for the borrower.

For example, a buyer purchasing a $500,000 home could receive a traditional mortgage for $400,000 and use a separate bitcoin or stablecoin-backed loan for the remaining $100,000 down payment. Bitcoin collateral must generally be worth about 2.5 times the amount of the down payment loan.

One feature that sets the product apart from many similar loans is that normal market price swings do not trigger margin calls. Better says borrowers will not be forced to add more collateral simply because bitcoin's price falls. The collateral is generally only at risk if the borrower falls seriously behind on payments.

This results in a loan-to-value (LTV) ratio of approximately 40%, a level widely regarded as the conservative sweet spot in today’s bitcoin-backed lending market.

“The 30-year fixed mortgage was designed for a generation that kept its savings in a bank account,” said Better founder and CEO Vishal Garg. “That’s not the financial reality of millions of qualified buyers today that are building real wealth in digital assets.”

The involvement of Fannie Mae is one of the most important parts of the announcement. Because the mortgage follows Fannie Mae standards, it operates within the traditional US mortgage system instead of outside it. This gives the product more credibility and access to the existing housing finance market.