FHFA Explores Bitcoin for Mortgage Qualification Amid Housing Market Challenges

The Federal Housing Finance Agency (FHFA) is exploring the integration of cryptocurrency, particularly Bitcoin, into mortgage qualification processes. This move comes at a time when the US housing market is facing significant challenges, including a decline in mortgage originations. The FHFA's consideration of Bitcoin for mortgage qualification could reshape lending practices, addressing housing market challenges and expanding crypto adoption in home financing.

Bill Pulte, FHFA Director, emphasized on X that the agency will “study the usage of cryptocurrency holdings as it relates to qualifying for mortgages,” highlighting a growing openness to digital assets in traditional finance. This initiative is a response to the significant downturn in mortgage originations, influenced by supply constraints, rising interest rates, and shifting demographic trends. The Federal Reserve’s monetary tightening aimed at curbing inflation has particularly affected mortgage originations—the process by which lenders approve and fund home loans.

By potentially recognizing Bitcoin and other digital assets as valid components of a borrower’s financial profile, the FHFA could facilitate greater access to credit for a segment of the population that holds significant crypto wealth but may lack traditional income documentation. This move reflects an innovative approach to counteract the headwinds facing the housing market.

The regulatory environment has historically posed challenges for crypto-backed lending. Until early 2025, Staff Accounting Bulletin No. 121 (SAB 121) mandated that financial institutions treat cryptocurrencies as liabilities rather than assets, effectively restricting their use in loan underwriting. The repeal of SAB 121 under the Trump administration marked a pivotal change, enabling banks to reconsider crypto assets in their balance sheets. Despite this progress, federal mortgage programs such as FHA, VA, and USDA loans have yet to formally incorporate cryptocurrency as acceptable collateral or down payment sources. The FHFA’s current study could pave the way for standardized policies that integrate crypto assets into federally backed mortgage lending frameworks.

Integrating cryptocurrency into mortgage qualification could unlock substantial benefits. With over 760,000 single-family mortgages issued by the FHA in 2024 alone, the inclusion of crypto assets could expand the borrower pool significantly. Advocates argue that Bitcoin’s inherent transparency and liquidity make it an ideal form of collateral. However, the volatility of cryptocurrencies remains a critical concern. Companies like Strike warn that sudden price fluctuations can trigger margin calls or forced liquidations, complicating loan-to-value assessments. Lenders must develop sophisticated risk models to account for the dynamic nature of crypto assets, balancing innovation with prudent underwriting standards.

Although mainstream adoption is nascent, a handful of specialized lenders already offer crypto-backed loans. Milo, for example, requires borrowers to fully collateralize loans with crypto holdings and primarily serves investors purchasing secondary or investment properties. These platforms highlight both the demand and challenges in the crypto mortgage niche. Borrowers benefit from rapid approvals and leveraging digital assets, but must navigate risks associated with price volatility and regulatory uncertainty. As the FHFA explores formal recognition, these early adopters may set precedents for broader market integration.

Crypto ownership in the US is becoming increasingly mainstream, with approximately 20% of Americans—around 65 million people—holding digital assets. Most crypto portfolios are modest, with 74% valued under $50,000, indicating a broad retail investor base rather than a concentration among high-net-worth individuals. Allowing crypto assets to be used in mortgage qualification or down payments could democratize access to homeownership for this growing demographic. As regulatory frameworks evolve, integrating crypto into housing finance could provide a vital bridge between emerging digital wealth and traditional real estate markets.

The FHFA’s initiative to study cryptocurrency’s role in mortgage qualification marks a significant development in the intersection of digital assets and traditional finance. By potentially legitimizing Bitcoin and other cryptocurrencies as part of the lending process, the agency could help address persistent challenges in the US housing market, including declining mortgage originations and limited credit access. While risks related to volatility and regulatory clarity remain, this move signals a forward-thinking approach that could expand homeownership opportunities and accelerate crypto adoption within federal lending programs. Stakeholders should closely monitor forthcoming FHFA guidelines and prepare for a transformative shift in mortgage underwriting standards.