Crypto-Backed Mortgage: What the Senate Warning Means

When seven U.S. senators sent a letter to the Federal Housing Finance Agency asking it to rescind approval of crypto-backed mortgages, it made headlines and left a lot of Bitcoin holders wondering whether using crypto to buy a home is a good idea at all. The letter, signed by Dick Durbin, Elizabeth Warren, Jeff Merkley, Chris Van Hollen, Richard Blumenthal, Bernie Sanders, and Mazie Hirono, took direct aim at one specific product: the Better and Coinbase mortgage that runs through Fannie Mae.

Here is the part that gets lost in the headlines. The senators were not warning against the entire idea of a crypto-backed mortgage. They were flagging risks that are built into one particular structure. And several of those risks are structural to the Better and Coinbase model, not to every crypto mortgage on the market. If you hold Bitcoin and want to buy a home, it is worth understanding exactly what the senators objected to, and where a different crypto-backed mortgage model handles those same concerns differently.

What the Senators Actually Flagged

The letter focused on the mechanics of the Better and Coinbase product, which routes a crypto-backed mortgage through Fannie Mae's conforming guidelines. Three concerns stood out.

First, the collateral requirement. To qualify, a borrower has to pledge crypto worth up to 2.5 times the dollar amount involved. As the senators put it, that requirement "inherently concedes that crypto is a risky asset." Pledging 250 percent collateral is a heavy lift for most homebuyers.

Second, the two-loan structure and its cost. The Better and Coinbase product gives the borrower a conforming first-lien mortgage written to Fannie Mae's rules, plus a separate privately financed loan that covers the cash down payment, secured by the pledged tokens and a second lien on the home. The senators noted this forces a borrower to pay interest on two loans, and that the combined rate "could run as much as 1.5 percent higher than the standard Fannie Mae mortgage."

Third, the process. The senators argued the product launched "without any pilot, opportunity for public input, or public research into default risk," and asked regulators to keep Fannie Mae and Freddie Mac from taking on crypto-related asset risk.

The Market Behind the Debate

The scrutiny is happening because the category is growing fast, not shrinking. Loan volume across all cryptocurrencies reached roughly $67 billion in the first quarter of 2026, a nearly 50 percent jump year over year, according to Galaxy Research. Lender Ledn estimates the consumer Bitcoin-backed loan market at around $3 billion today and argues it could scale toward $1 trillion over the next decade as long-term holders look for liquidity without selling their coins.

That growth is exactly why the structure of any given product matters so much. When a category matures this quickly, the differences between one lender's model and another's are what separate a sound decision from a risky one.

Where Milo's Crypto-Backed Mortgage Differs

Milo has offered crypto-backed mortgages to individual homebuyers since 2021, well before Fannie Mae entered the conversation. The model works differently from the Better and Coinbase product in ways that speak directly to the senators' concerns.

The biggest difference is qualification. Milo helps clients qualify for a mortgage using their crypto assets, rather than relying only on traditional criteria like W-2s and tax returns. That matters because many long-term crypto holders have real wealth but a nontraditional income picture, which makes a conforming loan hard to reach. Milo does not require a borrower to overcollateralize at 2.5 times the loan amount to fit inside Fannie Mae's guidelines, because it is not routing the loan through those guidelines in the first place.

Posting crypto as collateral is an option, not a requirement for every client. For borrowers who do pledge crypto, Milo can finance up to 100 percent of the purchase price. The advantage of pledging collateral is straightforward: you do not have to sell your Bitcoin to fund the purchase, so you avoid triggering capital gains taxes and you keep any future appreciation on the coins you hold.

Milo does use a two-loan structure, and any borrower should understand how their loans are priced before signing. The point is not that Milo avoids complexity that the Better and Coinbase product has. The point is that the qualification path and collateral treatment are built around crypto holders from the ground up, rather than fitting crypto into a conforming box.

One more honest note on risk. Any crypto-backed mortgage that uses pledged collateral involves collateral maintenance. With Milo, the buffer before a margin notice depends on how much collateral you post. More collateral means more room for Bitcoin's price to move before anything is triggered. That is a real trade-off to weigh, not a footnote, and a good lender will walk you through it clearly.

What to Look For in a Crypto-Backed Mortgage

If the Senate letter did one useful thing, it gave homebuyers a checklist. Before choosing a crypto-backed mortgage, ask:

How much collateral does the product require, and why? A 2.5x pledge is very different from a model where collateral is optional or scaled to your goals.

How are you qualifying? A product that counts your crypto assets is built for holders. A product that still requires conventional income underwriting may leave you where a traditional lender did.

What does the full loan structure cost? Two loans are common in this space. Ask for the blended rate, not just the headline number.

What happens if Bitcoin drops? Understand the collateral maintenance terms and how much price movement your collateral can absorb before a notice.

The Bottom Line

The senators raised fair questions about a specific product. The answer is not that crypto-backed mortgages are inherently unsafe. It is that structure is everything, and homebuyers should choose a model designed around how they actually hold and use their crypto.

If you are a Bitcoin holder who wants to buy a home without selling your stack, learn how Milo's crypto-backed mortgage works at milo.io. You can also read our breakdown of why Bitcoin lending hit $67 billion and what it means for homebuyers, or explore Milo's self-custody mortgage option if you prefer to keep your keys.

The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.