Fannie Mae Begins Accepting Cryptocurrency as Collateral for Mortgages: However, There Is a Condition That May Result in Significant Costs

A $100,000 Bitcoin position in cryptocurrency now enables a borrower to qualify for a GSE-backed mortgage, though only $40,000 to $50,000 of that amount is considered valid.

On June 25, 2025, FHFA Director William J. Pulte issued a directive mandating that Fannie Mae and Freddie Mac accept cryptocurrency as financial reserves without necessitating conversion to dollars, reversing Fannie Mae’s previous guideline B3-4.1-04 that had prohibited the use of digital assets in underwriting since 2022.

The headline is groundbreaking. However, the underlying mechanism reveals the actual trade-off involved.

Mortgage provider Better Home & Finance and Coinbase Global are the first to implement this change, unveiling a crypto mortgage product this week that permits borrowers to use their crypto holdings as collateral for a Fannie Mae-backed loan. The significance of this institutional adoption cannot be overstated, as it marks the $12 trillion U.S. residential mortgage market officially acknowledging Bitcoin reserves as assets related to collateral.

The analytical focus is on the cost of the volatility haircut for holders and whether the calculations remain viable for the typical BTC or ETH position size.

Key Takeaways:

• On June 25, 2025, the FHFA instructed Fannie Mae and Freddie Mac to accept cryptocurrency as mortgage reserves without mandatory liquidation.
• A volatility haircut of 50–60% is applied — $100,000 in BTC is counted as $40,000–$50,000 towards reserve requirements.
• Assets must be maintained on U.S.-regulated exchanges; self-custodied cold wallets are currently not accepted.
• Better Home & Finance and Coinbase are the first lender-exchange pair to introduce a Fannie-backed crypto mortgage product.

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The Haircut Mechanism: What FHFA’s Framework Actually Allows

The FHFA framework introduces a risk-based volatility haircut, which is a percentage reduction applied to the market value of crypto holdings before they are considered for reserve requirements.

Current guidance indicates that this haircut is set at 50–60%, meaning a borrower with $100,000 in BTC can claim between $40,000 and $50,000 in qualifying reserves. The downside is clear: a borrower needing $80,000 in reserves must possess $160,000–$200,000 in crypto to meet the threshold. This represents a significant overcollateralization requirement by conventional lending standards.

Fannie Mae will soon accept crypto-backed mortgages, according to WSJ. Better and Coinbase are launching a product that lets buyers use bitcoin or USDC as collateral for a separate loan to cover the down payment, instead of selling crypto. pic.twitter.com/IEAawR8xHK

— Wall St Engine (@wallstengine) March 26, 2026

The upside is equally tangible. Prior to June 25, those same crypto holders faced two choices: sell their position and incur a taxable event, or completely disqualify the asset. Now, a BTC position held for institutional-grade exposure can support a mortgage application while remaining on-chain. The retained market upside during the loan approval period is a significant advantage for anyone with substantial Bitcoin reserves.

Custody regulations are strict under the framework. Assets must be held on U.S.-regulated centralized exchanges; Coinbase, Kraken, and Gemini qualify, while self-custodied cold wallets do not.

According to the FHFA’s formalized requirements from July 3, 2025, lenders will confirm holdings through exchange API integrations, and assets must meet AML compliance standards.

Staked assets and DeFi-locked positions are not included in the current automated underwriting systems. This exclusion affects a considerable segment of the sophisticated crypto-holder demographic who have moved assets off exchanges, creating a friction point at present.

Pulte characterized the directive as enabling GSEs to evaluate the “full spectrum of asset information” for creditworthy borrowers, based on public statements made after the announcement. Senator Cynthia Lummis introduced the 21st Century Mortgage Act to codify this policy into law, explicitly forbidding forced liquidation of crypto assets.

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How BTC and ETH Holders Actually Use This: The Practical Workflow

For a borrower with BTC or ETH on a qualifying exchange, the crypto mortgage process begins with documentation: exchange-generated statements that verify asset balances, ownership, and a 60-day holding history in line with standard reserve seasoning requirements.

The GSE-backed loan finances the property; the crypto remains on the exchange as a verified reserve asset instead of being converted to cash. No liquidation occurs, avoiding taxable events and forced exits from positions.

The calculations are crucial here. A borrower acquiring a $500,000 home through a conventional GSE loan typically requires 2–6 months of mortgage payments in reserves, which amounts to approximately $15,000–$45,000, depending on the loan product. With a 50% haircut, meeting a $45,000 reserve requirement necessitates $90,000 in BTC or ETH held on a regulated exchange.

This threshold is attainable for the group of crypto-native wealth holders that the FHFA is specifically targeting, but it excludes borrowers with smaller holdings who would still require additional cash reserves.

Freddie Mac is operating under the same FHFA directive and must present board-approved proposals for review. Watch for finalized approved-asset lists to determine whether altcoins beyond BTC and ETH qualify, and whether haircut percentages vary based on asset volatility profiles. Regulatory momentum across major economies is accelerating GSE timelines in this area. The implementation is still in progress; this is the initial framework, and edge cases have yet to be stress-tested by market downturns.

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