FHFA Explores Crypto for Mortgage Qualifications Amid Housing Crisis

The US federal home loan regulator is exploring the potential of crypto holdings to assist mortgage seekers in qualifying for home loans. This initiative comes at a time when the number of mortgage applications has been declining, exacerbating the housing crisis in the US.

In a statement released on June 23, Bill Pulte, the head of the Federal Housing Finance Agency (FHFA), announced that his agency will conduct a study on the use of cryptocurrency holdings in relation to mortgage qualifications. This move is significant as it could pave the way for broader acceptance of crypto in the housing market, especially given the recent downturn in mortgage application numbers.

Homeownership rates in the US have remained relatively stable over the past 50 years, with approximately 62% of the population owning homes. However, the number of new mortgage applicants has seen a sharp decline in recent years. Some boutique lenders have already started allowing borrowers to use their crypto as collateral, but official recognition from the FHFA would mark a major advancement in crypto adoption within the mortgage industry.

The US housing market is currently facing significant challenges. The number of mortgage originations, which involves a lender working with a borrower to form a mortgage loan, reached near-record lows in mid-2024 and has shown little improvement in the first quarter of 2025. Several factors contribute to this decline, including a shortage of housing supply, increased investor purchases, and elderly homeowners remaining in their homes rather than moving to senior living accommodations.

Additionally, borrowing costs have risen, with many attributing the slump in originations to the Federal Reserve's higher interest rates aimed at combating inflation. Pulte has been critical of the Fed's rate policies, even calling for the resignation of Chair Jerome Powell, who is set to testify before Congress on June 26.

In response to these challenges, Pulte is exploring ways to make borrowing more feasible for homeowners. Acknowledging crypto officially at the FHFA could open up sizeable federal lending programs to more borrowers. In 2024, the FHA alone issued over 760,000 single-family mortgages worth $230 billion.

Until January 23, 2025, most banks were unable to offer crypto-backed loans or mortgages due to a banking rule from the Securities and Exchange Commission that required financial institutions to count cryptocurrencies as a liability rather than an asset on their balance sheet. This rule was repealed quickly after President Donald Trump took office.

However, loans secured through federal programs like FHA, VA, and USDA currently do not allow borrowers to use their crypto as collateral. Some federal loans may not even permit dollar liquidations from crypto sales to be used for down payments. Personal finance expert Andrew Lokenauth advised that would-be homeowners looking to buy with their Bitcoin proceeds need to “be careful to document everything and save the paperwork.”

Bitcoin advocates have welcomed Pulte’s openness to Bitcoin, highlighting features such as a transparent paper trail built into the digital asset. Mitchell Askew, an analyst at Bitcoin mining-as-a-service Blockware, noted that Bitcoin’s liquidity and transparent custody, namely its public blockchain, make it a “perfect collateral” for home loans.

CJ Konstantinos, founder of Bitcoin mortgage and bond company People’s Reserve, suggested that Bitcoin could further help derisk the mortgage-backed securities market overseen by the FHFA by regulating Fannie Mae and Freddie Mac.

There are already a small number of lenders that allow borrowers to offer up their crypto as collateral, but these lenders cater more toward the investor class of home buyers and carry risks that some may not be ready to stomach. Milo, a company that approves loans for borrowers instantly, requires them to show that they have enough crypto to cover the entire value of the loan. Milo CEO Josip Rupena stated that many clients were buying their second homes, vacation properties, or investment properties.

Strike, another company offering Bitcoin-collateralized loans, noted that there are risks associated with crypto loans, particularly volatility. If Bitcoin’s price decreases dramatically, the loan-to-value rate increases, which can trigger margin calls or liquidations. Lenders are also open to risk, as traditional mortgages assume relatively stable income and assets, whereas crypto borrowers’ net worth can fluctuate significantly.

Crypto ownership in the US is becoming increasingly common, with lawmakers and regulators moving to implement rules and legal frameworks that are friendly to the industry. Recent studies indicate that crypto is no longer just the domain of the ultra-wealthy but is increasingly seen as a legitimate retail asset among normal investors. Allowing crypto for down payments or as collateral could unlock homeownership for the growing number of investors if Bitcoin joins the list of other securities they can use to get a mortgage.