FHFA Directs Lenders to Consider Cryptocurrencies for Mortgage Loans

On June 25, the Federal Housing Finance Agency (FHFA) issued a directive to housing loan institutions, instructing them to consider cryptocurrencies as assets for assessing the risk of residential mortgage loans. The FHFA oversees Fannie Mae and Freddie Mac, two major players in the U.S. housing mortgage market. Analysts suggest that this move could open the door for borrowers to use cryptocurrency assets to apply for home loans.

The directive marks a potential significant shift in how the U.S. government evaluates the asset standards for mortgage loan qualifications, aligning with the Trump administration's goal of promoting the widespread use of cryptocurrencies in the country. The FHFA has the authority to regulate Fannie Mae and Freddie Mac, which have been under U.S. government control since suffering substantial losses during the 2008 subprime mortgage crisis. These institutions guarantee over half of all mortgages in the U.S.

In a directive signed on Wednesday, the FHFA director stated that considering other assets held by borrowers, such as cryptocurrencies, would enable Fannie Mae and Freddie Mac to more comprehensively assess the financial situation of borrowers. This could provide "sustainable homeownership for creditworthy borrowers." The directive instructs Fannie Mae and Freddie Mac to consider only cryptocurrencies that can be stored on centralized exchanges in the U.S. and whose existence can be verified. However, the directive does not specify which cryptocurrencies should be considered.

Analysts believe that the FHFA's move aims to help homebuyers with cryptocurrency assets qualify for loans. In recent years, the U.S. has faced a housing crisis, with a sharp decline in mortgage loan applications. Despite the U.S. homeownership rate remaining relatively stable at around 62% over the past 50 years, the number of new applicants has plummeted in recent years, forcing a record number of young Americans to live with their parents or struggle with rental housing for decades.

Data shows that in mid-2024, the volume of mortgage loans issued in the U.S. plummeted to near-historic lows. Although there was a slight improvement in the first quarter of 2025, interest rates remained prohibitively high for most homebuyers. The decline in mortgage loan issuance, particularly in refinancing, is attributed to several factors, including insufficient housing supply to meet demand. Housing construction in the U.S. has lagged behind, with more homes being purchased by investors rather than potential first-time homebuyers. Additionally, older homeowners are choosing to age in place rather than move to retirement communities.

Furthermore, borrowing costs in the U.S. remain high, with many attributing the decline in loan issuance to the Federal Reserve's interest rate hikes aimed at curbing inflation. The FHFA director has repeatedly criticized the Federal Reserve's interest rate policies, even calling for the resignation of Federal Reserve Chairman Powell. Facing industry headwinds, the FHFA director is seeking to open up more viable lending channels for homebuyers, with cryptocurrencies emerging as a potential breakthrough.

Previously, some small U.S. lenders had already allowed borrowers to use cryptocurrency as collateral, but the FHFA's official recognition is a significant breakthrough, especially given the current low volume of mortgage loan applications. Due to the Securities and Exchange Commission's (SEC) accounting rule, which required financial institutions to list cryptocurrencies as liabilities rather than assets on their balance sheets, most banks were unable to offer cryptocurrency-supported loans or mortgages before January 23, 2025. This rule was quickly repealed after Trump took office.

However, loans obtained through federal programs such as the Federal Housing Administration, the Department of Veterans Affairs, and the USDA are still not allowed to use cryptocurrency as collateral. Some federal loans do not even allow the use of dollars obtained from converting cryptocurrency for down payments. Personal finance expert Andrew Lockner has advised those planning to use Bitcoin earnings to buy a home to "carefully preserve all transaction records and supporting documents."

On Wednesday, many Bitcoin supporters praised the FHFA director's open stance, noting that this digital asset has the qualities favored by lenders, such as transparent transaction records. Mitchell Askew, an analyst at Blockware, a Bitcoin mining service company, stated that the liquidity and transparent custody mechanism of cryptocurrencies (i.e., their public blockchain) make them an "ideal collateral" for home loans.

If the FHFA officially recognizes cryptocurrency assets, it could open up a massive federal loan program channel for more borrowers. In 2024, the Federal Housing Administration issued 760,000 individual home loans, totaling 230 billion dollars. However, the drawbacks of cryptocurrencies are also evident—they are known for their high volatility, with prices often experiencing dramatic fluctuations, sometimes without any apparent reason. In February, the largest cryptocurrency, Bitcoin, experienced its largest weekly decline in two years, plummeting 16% before rebounding sharply.

An industry insider noted, "The risk model for such loans will be extremely complex. Traditional mortgages assume that the borrower's income and assets are relatively stable. Now, the borrower's net worth could fluctuate by 50% in a week. When the collateral includes a range of assets from Bitcoin to random DeFi tokens, how do you stress-test the portfolio?"