How To Buy A Home In The US With Bitcoin

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Last Updated February 6th 2023
3 Min Read

In our increasingly digital world, everything is on the table. You can now use cryptocurrency to purchase significant assets such as a home, assuming you understand a few caveats. Over a third of small businesses reportedly accept cryptocurrency payments. Some experts predict cryptocurrency mortgage payments will become more common in the coming years.

Fintech platforms are making it easier to transfer Bitcoin peer-to-peer between consumers, and some mortgage lenders have already begun to experiment with allowing customers to pay in cryptocurrency. For example, United Wholesale Mortgage, the country's second-largest mortgage lender, announced a short-lived plan last August to accept bitcoin payments but quickly abandoned the program due to high costs and regulatory uncertainty. Start your trading journey by visiting a reputable trading platform like Quantum AI.

However, purchasing a home with cryptocurrency may be too appealing for developers and innovators to give up.

How To Buy A House With Bitcoin

Here are some current options for savvy crypto natives and crypto-curious homebuyers.

Use Your Bitcoin as Collateral

One way to use your Bitcoin for real estate is as a down payment. Several new fintech platforms are releasing products specifically for this purpose. BlockFi, Celsius, and Unchained Capital, for example, offer crypto-backed loans with annual percentage rates ranging from 1% to 6%. People can use the loans to make large purchases such as automobiles and real estate. By leveraging crypto assets, these companies claim to help everyone, from the unbanked to high-net-worth individuals, expand their lending options.

A crypto-collateralized loan is appealing because borrowers are not required to liquidate their crypto holdings to obtain financing. And this eliminates the need to cash out your cryptocurrency and avoids the creation of a taxable event to purchase a home.

The tricky part about crypto-collateralized loans is that (A) they aren't yet available in all states, and (B) the loan-to-value (LTV) ratio is difficult to determine because cryptocurrencies are highly volatile. If you get a loan at a 1:1 ratio and use 1 BTC as collateral, you could theoretically get a loan for $47,500. Each lender will use a different LTV formula.

Buyer-to-seller Cryptocurrency Transfer

Nothing prevents two people from going into a private agreement to sell a home in exchange for cryptocurrency via a direct wallet-to-wallet transfer. It's a good idea to get your deal in writing and consult with a lawyer knowledgeable about real estate law and cryptocurrency.

This method is unlikely to work if you use a real estate agent who is unlikely to accept a commission in cryptocurrency. 

Cashing out Your Bitcoin

In the same way, you can pay for a house with cryptocurrency in a for-sale-by-owner situation; you can also pay in cash. Similarly, if you require funds for financing, you can cash out a portion of your crypto holdings to contribute to the initial down payment.

Why Should You Buy A House With A Decentralized Asset?

Before deciding on one of the above options and proceeding with your real estate purchase, consider why you want to buy a house with cryptocurrency in the first place.

Satoshi Nakamoto designed this cryptocurrency as a decentralized asset, whereas the mortgage industry depends on a network of lenders and financing-centralized banks. Consider taking out a bank mortgage and using a novel, permissionless. Fully decentralized algorithmic currency to repay the fiat (government) currency borrowed to buy a physical asset in the real world.

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