Bitcoin Maxis Can Finally Use Crypto Mortgages To Buy A House

The future of mortgage lending is already taking shape, and one of the most misunderstood developments is the rise of crypto-backed mortgages. For years, Bitcoin and Ethereum existed outside the boundaries of traditional lending, recognized by investors as real wealth, but dismissed by banks as an unusable asset for qualifying for a home loan. That’s finally changing.

Today, borrowers searching for crypto loans, bitcoin mortgages, or ways to borrow against bitcoin to buy a home are discovering that digital assets can play a meaningful role in qualifying for a home loan. But here’s the critical detail most articles miss: a crypto-backed mortgage does not mean the same thing across lenders.

Some lenders require you to lock up your Bitcoin as collateral and pay double-digit interest. Others force you to sell crypto, trigger capital gains, and “season” the cash before it counts. And then there’s a third approach, a "crypto asset depletion mortgage" is one that treats crypto like legitimate wealth without liquidation or collateralization. It's by far the most flexible and affordable crypto-backed mortgage model and that’s the model we’ve built at LendFriend Mortgage.

This article explains the different ways crypto mortgages are structured, why many crypto lending companies create unnecessary risk for their borrowers, and how the right structure lets you buy a house with bitcoin exposure intact, without surrendering control or paying punitive rates.

The Many Meanings of a Crypto-Backed Mortgage

When people search bitcoin mortgage or crypto mortgage, they often assume it means directly buying a house with Bitcoin. In practice, the term covers several very different lending models.

Collateralized Crypto Mortgages and Crypto Loans

The most common version, popularized by crypto lending companies like Unchained and Milo, is a collateralized crypto loan. In this structure, borrowers pledge Bitcoin or Ethereum as collateral, often at a 2-to-1 or higher ratio to the loan amount.

Once pledged, your crypto is locked up. You can’t trade it, move it, or access it. If prices drop below the minimum ratio, you will face margin calls requiring you to post more collateral or risk forced liquidation to pay down the loan. Meanwhile, interest rates often land in the 10-15% percent range, well above standard jumbo or non-QM pricing.

These products are frequently marketed as borrowing against bitcoin, but functionally they behave more like high-risk margin loans tied to long-term real estate debt.

Crypto Asset Depletion Mortgages

LendFriend approaches crypto mortgages differently. Instead of requiring collateral pledges or liquidation, we use a crypto asset depletion model—a methodology already accepted for stocks, bonds, and retirement accounts, adapted for digital assets.

This structure allows borrowers to borrow against their crypto economically, without transferring custody or triggering tax events.

We verify crypto holdings across exchanges, custodial platforms, and approved cold-storage solutions. Rather than forcing a sale, we apply a conservative volatility discount and convert your crypto holdings into a simulated income stream. The adjusted value is divided over a fixed period—typically five to seven years—to create stable qualifying income for underwriting.

That qualifying income is then used to approve real mortgage products—jumbo loans, non-QM loans, and other long-term financing options. Rates typically align with broader non-QM or jumbo markets, not the inflated pricing seen in collateralized crypto loans.

Most importantly, your crypto remains yours. No lockups. No margin calls. No forced liquidation.

Traditional Banks and Forced Liquidation

At the opposite end of the spectrum are conventional lenders. Most banks still do not recognize crypto assets at all unless you sell them, move the proceeds into a bank account, and wait months for the funds to season. Why? Because U.S. mortgage system is built around predictability, W-2 income, tax returns, and hard cold cash. Crypto doesn’t fit neatly into that framework, which makes underwriters uncomfortable.

For early adopters with large unrealized gains, this approach is financially destructive. Selling Bitcoin to qualify for a mortgage can trigger signficant capital gains taxes and permanently remove exposure to future upside.

For those hoping that mainstream lenders will change their tune, don't hold your breaht. Even recent guidance has focused only on recognizing crypto as reserves, not as qualifying strength. That distinction matters. Reserves help after approval; they don’t help you get approved in the first place.

LendFriend clients who Borrowed Against Their Bitcoin to Buy a Home

Here's 2 real world examples of clients that we recently worked with to buy a home using a crypto mortgage.

Example #1: We recently worked with a client holding approximately $6 million in Bitcoin. Traditional lenders declined the application due to limited W-2 income and no other qualifying assets (according to them). Collateralized lenders offered financing, but only at double-digit rates with full custody requirements.

Using LendFriend’s crypto asset depletion approach, the borrower qualified for a $1.35 million mortgage on a $2 million home—without selling a single coin. The client avoided capital gains taxes, retained full control of their assets, and secured long-term financing that made sense.

Example #2: We also recently helped a buyer in Austin, Texas purchase a $1 million home using a $750,000 crypto-backed mortgage. The borrower was not employed at the time of purchase and did not use W-2 income, business income, or bank statements to qualify. The loan was approved entirely based on Bitcoin holdings using our crypto asset depletion model, allowing the borrower to buy the home without selling or pledging crypto as collateral.

Why Asset Depletion Beats Crypto Collateral Loans

Asset depletion structures solve the core problems inherent in collateralized crypto mortgages. Instead of tying your loan to volatile collateral mechanics, asset depletion treats crypto the same way sophisticated lenders already treat stocks and retirement accounts.

Pros of Asset Depletion Crypto Mortgages

You avoid capital gains taxes because no liquidation occurs. Your crypto remains fully accessible and under your control, rather than locked with a lender. There are no margin calls tied to short-term price movements, so market volatility doesn’t threaten your home. Rates are aligned with traditional jumbo and non-QM mortgage markets, not speculative lending products, which keeps long-term borrowing costs reasonable.

Cons and Tradeoffs to Understand

Asset depletion does apply conservative discounts to crypto values to account for volatility, which can reduce how much income is credited for qualification. These loans also require higher overall asset balances than a typical W-2 loan, and they are not designed for borrowers with minimal crypto holdings. Finally, asset depletion focuses on long-term stability, meaning it may not be the right fit for borrowers looking for short-term leverage or aggressive speculation.

For long-term investors who value control, tax efficiency, and predictable housing costs, these tradeoffs are usually well worth it.

Buying a House With Bitcoin: Who Crypto-Backed Mortgages Are Really For

Crypto-backed mortgages are especially powerful for buyers in markets like Texas and California, where traditional underwriting often fails to reflect how modern wealth is actually built.

In Texas, we frequently work with self-employed founders, tech professionals, and entrepreneurs who hold significant Bitcoin or Ethereum but show modest taxable income on paper. These borrowers may be early-stage founders between exits, operators reinvesting cash flow back into their businesses, or individuals who deliberately keep income low for tax efficiency. A crypto-backed mortgage allows them to buy primary homes, second homes, or investment properties without contorting their finances to fit outdated W‑2-based underwriting models.

California presents a different but equally compelling use case. Many early Bitcoin adopters and long-term holders face enormous unrealized gains. Liquidating crypto to qualify for a mortgage can trigger substantial capital gains taxes and permanently reduce future upside. Using crypto asset depletion instead allows these buyers to diversify into real estate, secure long-term housing, and preserve exposure to digital assets— all without creating a tax event.

More broadly, crypto-backed mortgages are best suited for borrowers with meaningful digital asset holdings who want to buy a home without selling their crypto. This includes early adopters with large unrealized gains, investors purchasing primary residences, second homes, or rentals, and tax-conscious buyers who value flexibility and long-term wealth preservation. For these borrowers, the goal isn’t novelty—it’s using crypto as real financial strength in a way that aligns with how mortgages are supposed to work.

Frequently Asked Questions About Crypto Mortgages

Do I have to sell my Bitcoin to qualify?
No. Crypto mortgages allow you to qualify using your Bitcoin or other digital assets without selling them. Crypto is treated as legitimate wealth and translate it into qualifying income using a conservative, underwriter-approved formula. That means you can keep full exposure to potential upside while still buying a home today, without triggering capital gains taxes or disrupting your investment strategy.

Can I buy an investment property with crypto?
Yes. LendFriend’s crypto-backed mortgage programs can be used for primary residences, second homes, and investment properties. Whether you’re buying a rental, a vacation home, or your primary residence, we structure the loan around your crypto holdings and overall financial profile, not just your employment status or tax returns.

Where can my crypto be stored to qualify?
Your crypto must be held with a major, verifiable custodial or exchange-based institution that allows for third-party verification of balances and transaction history. This typically includes large U.S. or international exchanges and regulated custodial platforms. At this time, cold storage wallets are not eligible for qualification because they cannot be independently verified to underwriting standards.

What happens if crypto prices drop after closing?
With a crypto collateral or pledge-based loan, a price drop can trigger margin calls or forced loan paydowns. If the value of your Bitcoin falls below required thresholds, the lender may require you to post additional collateral or liquidate part of your holdings to reduce the loan balance, introducing real risk long after you’ve moved into the home.

With LendFriend’s crypto asset depletion mortgage, none of that applies. Once your loan closes, your mortgage is not tied to ongoing crypto price movements. There are no margin calls, no requalification requirements, and no forced liquidations. Your loan terms, rate, and payment are fixed based on the approved structure, giving you long-term stability regardless of short-term market volatility.

The Bottom Line

The phrase crypto-backed mortgage covers everything from expensive collateralized loans to forced liquidation by traditional banks. The structure matters more than the label.

LendFriend’s approach, using crypto asset depletion instead of collateralization, offers a smarter way to borrow against bitcoin, buy a house with crypto exposure intact, and secure long-term financing that actually works. Schedule a call with me today or get in touch with me by completing this quick form and I'll help you leverage your crypto wallet to buy a home today.