What Owning Bitcoin Means for Your Mortgage

BY Ori Zohar

If you’re looking to buy a home, there are a number of financial assets that can help you qualify for a mortgage including your current home, cash in checking and savings, retirement accounts, and other investments. But what if you hold assets that include Bitcoins? While the cryptocurrency was recently labelled as an asset by the IRS, many lenders remain wary about how to value and accept this new digital currency. Until more consistent rules are put in place, here are some ways you might be able to use Bitcoin during the mortgage process.

  1. To pay fees & closing costs: A Manhattan mortgage provider made history in late 2013 when it became the first firm to accept bitcoins for real estate fees. While an exciting milestone for the cryptocurrency, this trend has yet to catch on with many other lenders. And don’t expect to be able to make your mortgage payment in bitcoins, most experts agree that’s a long way off.
  2. As an asset on your mortgage application: Valuing bitcoin on a mortgage application is new territory for most lenders, so you may struggle to find one who will take this asset into consideration. However, there is anecdotal evidence that a handful of mortgage providers are becoming more bitcoin friendly. Like all assets used to qualify for a mortgage, you’ll need to verify the value of the bitcoins you hold and submit proper – often extensive – documentation to your mortgage provider.
  3. For proper documentation of transactions in a bank account: Even if you don’t plan on using your bitcoins to boost your assets when applying for a mortgage, your provider may still request documentation for any large transactions in and out of your bank account. If you cashed out a substantial amount of bitcoins to use for a down payment, a mortgage provider will want to confirm how that money entered your bank account. Similar to accounting for large cash gifts, providers want to be sure you haven’t borrowed money from somewhere else to boost your liquid assets, so be prepared with a record of your bitcoin-to-bank-account transaction history.

As the world figures out how to regulate, account for, and exchange bitcoins, the use of this new asset in mortgage transactions could become more common. But if you’re looking to use bitcoins as a major asset in your mortgage application today, it’s best to be patient and shop around before choosing the best mortgage for you.