What Is a Bitcoin Mortgage and Should You Get One?

Saving for a home keeps getting harder. The median age of first-time home buyers just hit 40—up from 33 in 2021.² A lot of people are fed up with waiting, and some are looking at Bitcoin (a cryptocurrency—digital money not backed by any government or bank) as the answer. One lender now lets buyers use Bitcoin to fund a down payment without selling it. At Ramsey, we call this a dumb idea. Let’s unpack why.

 

How Does a Bitcoin-Backed Mortgage Work?

A Bitcoin mortgage means taking on two loans.

The first loan is backed by Fannie Mae, a government-sponsored company that buys mortgages from lenders and sells them to investors. Loans backed by Fannie Mae are the most common types of mortgages. But Fannie Mae won’t accept Bitcoin directly as collateral (security for the loan).

So Better Mortgage, a digital mortgage lender, adds a second loan: a Bitcoin-backed loan that covers your cash down payment, secured by both your Bitcoin and a second lien on the home. A lien is a legal claim the lender holds on the property until the loan is paid off.

Right now, Better Mortgage is the only U.S. lender offering a Bitcoin-backed mortgage that meets Fannie Mae’s mortgage guidelines. Because it originates both loans, it combines them into one monthly payment—but you’re still legally on the hook for two separate debts.

How Much Bitcoin Do You Need?

Better Mortgage only gives you 40 cents of down payment credit for every dollar of Bitcoin you pledge. For a $40,000 down payment, you’d have to hand over $100,000 in Bitcoin.

Once you transfer your Bitcoin to Better Mortgage’s custodial account on Coinbase—a platform where people buy, sell and hold Bitcoin and other digital currencies—you lose access to it. You can’t sell it, trade it or move it. It stays locked until you pay off the down payment loan.  

Bitcoin Mortgage vs. Conventional Mortgage for a $400,000 Home

	Bitcoin Mortgage	Conventional Mortgage
What you need at closing (assuming a 10% down payment)	$100,000 in Bitcoin (equal to a $40,000 down payment)	$40,000 in cash
Number of loans	Two	One
Available mortgage options	15- and 30-year fixed-rate only	15- and 30-year fixed-rate and more
If Bitcoin crashes	Your Bitcoin is locked—so you’re stuck with the loss	You paid in cash—so you lose nothing
If you’re 60 days late on your payments	Lender can sell your Bitcoin	Lender charges late fees, and late payments damage your credit score
If you’re 180 days late on your payments	Foreclosure process starts	Foreclosure process may start (timing varies)
Available lenders	One—Better Mortgage	Many—including Churchill Mortgage
Ramsey recommendation	Skip the Bitcoin mortgage	Choose a conventional mortgage instead

What Are the Risks of a Bitcoin Mortgage?

You’ll pay interest on two loans at once and lock up 2.5 times your down payment’s worth in Bitcoin.

Your Bitcoin can still increase in value while it sits in custody. But you can’t access those gains until you pay off the down payment loan—which you’ll repay over the same 15- or 30-year term as your mortgage.

The only way a loan like this works in your favor is if the value of Bitcoin grows fast enough to offset the amount of interest you’ll pay on the two loans. Are you hearing alarm bells yet? History shows Bitcoin can lose most of its value in a single year.³ Its price is driven entirely by what someone else is willing to pay for it at any given moment.

Traditional currencies fluctuate too, but Bitcoin is far more volatile because it’s newer, less regulated, and has no government backing. That’s why Ramsey calls cryptocurrency speculation, not an investment. It’s just a step above gambling. Tying it to your home doesn’t change what it is—it just raises the stakes.

“I would never own one penny of freaking Bitcoin . . . I don’t buy currencies. They’re not investments—they’re speculation.” — Dave Ramsey

What Happens if Bitcoin’s Value Drops?

A Bitcoin mortgage has no margin calls—that means the lender won’t force you to add more collateral or automatically sell your Bitcoin just because the market crashed. But you can’t do anything to minimize your loss because your Bitcoin is locked. Here’s how it would play out:

Stage 1: Bitcoin crashes.

Say Bitcoin drops around 76%—the same as the 2021–2022 crash.⁴ Your $100,000 in Bitcoin is now worth $24,000.

Stage 2: You just watch.Your Bitcoin is locked in Better Mortgage’s custodial account. You can’t sell it, move it, or access it to cut your losses.

Stage 3: Your loans don’t adjust.The debt you took on when Bitcoin was worth $100,000 doesn’t change just because Bitcoin’s value does. You still owe the same monthly payment on both loans—backed by collateral now worth less than a quarter of what you pledged.

Stage 4: The pressure builds.If you’re using Bitcoin as a safety net instead of having a cash emergency fund, your safety net is gone and you’re in danger of losing your Bitcoin and your home. It’s one more reason why we always say you need an emergency fund separate from your down payment before you buy a house.

The problem isn’t that the lender comes after you the moment Bitcoin’s price drops. It’s that you have no way to respond to a crash. With stocks, a downturn hurts—but you still have control over what you do next. With a Bitcoin mortgage, those options are gone—your collateral is locked, your payments are fixed, and all you can do is keep making your payments no matter what the market does.

Is a Bitcoin Mortgage a Good Idea?

No. Not for first-time home buyers, not for experienced investors, not for anyone.

A Bitcoin mortgage funds your family's most valuable asset with an “asset” that’s no better than a bet. Your home is where your family lives, not a financial experiment.

Bitcoin-backed mortgages and any other shortcut to homeownership—like low- and no-down-payment loans and buying a home without an emergency fund saved separately from your down payment—always end up being riskier and more expensive. Yes, buying a house costs more than ever. But that doesn’t make shortcuts a good idea—they’ll only turn your home into a burden.

What’s the Right Way to Buy a Home?

Follow Ramsey’s 7 Baby Steps to make homeownership a blessing instead of a burden:

• Baby Step 2: Pay off all consumer debt.
• Baby Step 3: Build a fully funded emergency fund.
• Baby Step 3b: Save your down payment in cash. It’s okay to pause retirement investing (Baby Step 4) during this step—just don’t pause it for more than two years.

Aim for at least a 20% down payment so you can skip private mortgage insurance (PMI), which only protects your lender and can add hundreds of dollars to your mortgage payment. If you're a first-time home buyer, a smaller down payment—at least 5%—is okay. But be ready to pay for PMI as part of your monthly mortgage payment.

If you have Bitcoin and you’re thinking about using it toward a home purchase, sell it and use the proceeds toward a cash down payment instead. Even if you end up having to pay capital gains tax, that’s still better than locking your crypto in a custodial account for decades while you pay interest on two loans.

Keep your mortgage payment to no more than 25% of your take-home pay. That includes principal, interest, property taxes, home insurance, PMI and homeowners association (HOA) fees. If the home you want pushes you beyond that 25% limit, keep saving and look at less expensive homes in your area.

Get a 15-year fixed-rate conventional mortgage. Not a 30-year mortgage. Not an FHA or VA loan that comes with fees and higher interest rates. And certainly not a Bitcoin-backed product with two loans. A single conventional 15-year fixed-rate mortgage will save you money over the long term without the extra risk. For a $360,000 mortgage, choosing a 15-year (6% interest) over a 30-year (6.5% interest) saves you more than $270,000 in total interest, according to our Mortgage Payoff Calculator.

Our friends at Churchill Mortgage will help you find a mortgage you can afford—no speculation, no gambling.

Frequently Asked Questions