As a mortgage broker, I often get asked "can I buy a house with my cryptocurrency?". The simple answer is yes, but you'll need to follow certain guidelines if you're planning to obtain a mortgage on the property while using your cryptocurrency for down payment and/or closing costs.
Of course, if you have enough cryptocurrency to buy the house outright, that's one option. Simply cash out and write a cash offer. But most of us don't want to trade all of our digital assets for a physical one, when leverage is so cheap. With interest rates as low as they are (well under 3% currently), the savvy investor knows to put as little down as possible and finance the rest, while keeping the majority of their funds invested elsewhere. So that means you'll need to obtain a mortgage, which means playing by the rules that lenders currently set when it comes to cryptocurrency.
So what are the rules?
If you have good credit, you'll likely want to obtain a conventional loan, which means you'll have to follow the guidelines that Fannie Mae or Freddie Mac set. According to both Fannie Mae and Freddie Mac, cryptocurrency can be used for assets as long as it is converted to US currency and deposited into an eligible asset account (checking, savings, etc). It also then requires that deposit to be verified according to their standard deposit requirements, which is where things can get tricky depending on how you hold your cryptocurrency. You'll need to have held the money in a way that they're able to paper trail and connect to your name, which can be difficult considering the nature of cryptocurrency. Provide the
But what if you hold your cryptocurrency in a way that is not easily paper trailed? After all, that is one of the main reasons people use cryptocurrency. If that's the case and you plan to use cryptocurrency for a home purchase, sell the amount you need 3 months prior to whenever you'd need the funds. The lender will only ask for 2 months of bank statements so they wouldn't see the large deposit from selling cryptocurrency. This does require a bit of planning and foresight, but it will at least allow you to use those funds for your home purchase.
As cryptocurrency becomes more mainstream, lenders will continue to come across borrowers with cryptocurrency. Work with a mortgage broker that understands how to utilize ALL of your assets, not just your traditional ones but your digital ones as well, to make sure your money is working for you.
If you found this helpful or interesting, I'll be showcasing these various strategies as well in my upcoming blogs:
- how to get a mortgage with zero income if you have significant cryptocurrency
- how to collateralize your cryptocurrency for additional leverage
- how to leverage your home equity to invest in cryptocurrency
Thanks for reading!
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