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Buying a Home with Crypto is Challenging

In April 2021, Bitcoin hit an all-time high in the price of its coins, virtual trader Coinbase went public with a valuation of $86 billion, Ethereum hit an all-time high, and Venmo, owned by PayPal, announced it’s adding support for cryptocurrencies. All of these give access to customers who can now easily buy, sell and pay for items with cryptocurrencies for lower fees, more privacy and more security than they currently get through traditional banking. 

Coinbase.com explains that cryptocurrencies are simply decentralized monies to be used over the Internet. No governments, banks, companies or other entities are in charge of it, allowing anyone who wants to participate to be able to. Transactions are safer as they don’t include personal information to merchants, lenders, payment processors, advertisers, or credit reporting agencies.  

According to CNBC.com, all you need is for the buyer and seller “to agree on exchanging bitcoin for the property.” Or another cryptocurrency, if you prefer. All transactions are public and transparent through an open book technology called blockchain. 

While the coins are volatile, you can turn your virtual coins into dollars, as one homebuyer did in Texas in 2017 using a currency converter called Bitpay. Another homebuyer had more challenges. He wanted to use his cryptocurrency profits for a down payment and closing costs, and opted for a low-interest mortgage so he could keep his most of his money in crypto.  But his lender’s mortgage origination/underwriting software didn’t have cryptocurrency listed as a trackable asset to show proof of funds. He was finally able to get the lender and the title company on the same page and is currently using cryptocurrency profits to pay the mortgage. 

One reason why using cryptocurrency to buy a home with a mortgage is challenging is that Fannie Mae, in order to securitize the loan, requires cryptocurrency to be converted into U.S. currency to be considered eligible assets as well as documentation that shows the digital currency was owned by the borrower. Freddie Mac does not recognize cryptocurrency as proof of funds as yet, so while buyers and sellers may be willing, lenders are lagging behind. 

Meanwhile, the real estate industry already has brokers who specialize in cryptocurrency transactions, including listing properties where the seller only wants to be paid in cryptocurrency, sometimes from a particular concern like Bitcoin or Ethereum. 

If you don’t have enough bitcoin cash to buy a home, no worries. You can start saving for your down payment by using USD Coin, which is tracks 1:1 with the U.S. dollar. Customers who hold USDS coins can earn rewards, an alternative to a traditional savings account, says Coinbase, so start saving for your down payment now.