US Federal Home Loan Regulator Explores Crypto Holdings for Mortgages Amid Housing Crisis

The US federal home loan regulator is investigating how cryptocurrency holdings could assist mortgage seekers in qualifying for home loans. This initiative is being considered as the number of mortgage applications has declined in recent years due to a housing crisis in the US.

On June 23, Bill Pulte, head of the Federal Housing Finance Agency (FHFA), announced on X that the agency will “study the usage of cryptocurrency holdings as it relates to qualifying for mortgages.”

Over the last 50 years, homeownership in the US has remained relatively stable, with approximately 62% of the population owning homes. However, the number of new applicants has significantly decreased in recent years.

While some boutique lenders already permit borrowers to use their cryptocurrency as collateral, recognition and study by the FHFA would mark a significant advancement for crypto adoption, especially amidst declining mortgage application numbers.

FHFA Embraces Crypto for Mortgages as Housing Rates Decline

Though details are sparse, Pulte’s pro-crypto comments emerge at a time when the US housing market faces serious challenges.

The number of mortgage originations dropped to near-record lows in mid-2024 and has shown little improvement in the first quarter of 2025. The decline in originations, particularly in refinancing, is attributed to several factors:

• Insufficient growth in housing supply to meet demand.
• Investors buying more housing, reducing availability for potential homeowners.
• Elderly homeowners retaining their homes instead of moving to senior living accommodations.

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

Amid these challenges, Pulte seeks ways to make borrowing more accessible for homeowners.

Potential for FHFA Approval to Enhance Crypto Use in Lending

Official recognition of cryptocurrency by the FHFA could unlock significant federal lending programs for more borrowers. In 2024, the FHA issued over 760,000 single-family mortgages totaling $230 billion.

Until January 23, 2025, most banks couldn’t offer crypto-backed loans or mortgages due to Staff Accounting Bulletin No. 121, a banking rule from the Securities and Exchange Commission that required cryptocurrencies to be counted as liabilities rather than assets on balance sheets. This rule was repealed shortly after President Donald Trump took office.

Currently, loans secured through federal programs like FHA, VA, and USDA do not allow borrowers to use their crypto as collateral. In fact, some federal loans may restrict the use of dollar liquidations from crypto sales for down payments, according to 99Bitcoins editor Sam Cooling.

Personal finance expert Andrew Lokenauth advises potential homeowners using Bitcoin proceeds to “document everything and save the paperwork.”

Bitcoin advocates applauded Pulte’s openness to Bitcoin (BTC), noting that features such as a transparent paper trail are already built into the digital asset.

Mitchell Askew, an analyst at Bitcoin mining-as-a-service Blockware, argued that the asset’s liquidity and transparent custody, facilitated by its public blockchain, make it an “ideal collateral” for home loans.

CJ Konstantinos, founder of Bitcoin mortgage and bond company People’s Reserve, noted that Bitcoin could help mitigate risks in the mortgage-backed securities market overseen by the FHFA through its regulation of Fannie Mae and Freddie Mac. “This is a no brainer,” he stated.

Emerging Interest in Crypto-Backed Loans

There is a limited number of lenders allowing borrowers to use their crypto as collateral, primarily catering to investor-class home buyers and presenting risks some may be hesitant to accept.

Milo (formerly MiloCredit) approves loans for borrowers instantly, provided they have enough crypto to cover the entire loan value. Milo CEO Josip Rupena stated that many clients purchase second homes, vacation properties, or investment properties.

“Many have strong incomes, but traditional banks wouldn’t have qualified them for the full value of these homes,” Rupena explained.

Strike, another company offering Bitcoin-collateralized loans, acknowledges risks in current crypto loans. Volatility is a significant factor. If BTC’s price drops dramatically, the loan-to-value rate increases, potentially triggering margin calls or liquidations — forced sales at inopportune times.

One commenter noted, “The risk models for this will be insane. Traditional mortgages assume relatively stable income and assets. Now you’re dealing with borrowers whose net worth can swing 50% in a week. How do you stress-test a portfolio when your collateral includes everything from Bitcoin to random DeFi tokens?”

Nevertheless, crypto ownership is becoming increasingly common in the US, with lawmakers and regulators in Washington advancing rules and legal frameworks supportive of the industry.

Recent studies indicate that crypto is no longer exclusive to wealthy crypto enthusiasts but is increasingly viewed as a legitimate retail asset among ordinary investors. Approximately 20% of Americans, around 65 million people, are estimated to own crypto, according to the National Cryptocurrency Association’s “2025 State of Crypto” report.

Their investments are not exorbitant either; roughly 74% of crypto portfolios in the US are valued at less than $50,000.

Permitting crypto for down payments or as collateral could unlock homeownership opportunities for the growing number of investors if Bitcoin joins the array of securities they can use to secure a mortgage.

Image Credit: cointelegraph.com