Crypto Now Accepted As Collateral For Mortgages

Crypto Now Accepted As Collateral For Mortgages

A start-up company based out of Miami called Milo Credit is the first bank to offer mortgages to buyers who are willing to offer their cryptocurrency as collateral. The business reflects a major shift as buyers who have amassed wealth through cryptocurrency may now purchase real estate without cashing out on their crypto investments.

In 2021, Fannie Mae began allowing buyers to utilize cryptocurrency to fund their downpayments. The program was widely popular, with Redfin reporting in January 2022 that 12% of first-time homebuyers were using proceeds from crypto for their downpayment. The downside, however, was that buyers were required to convert their crypto to dollars and wire those funds into escrow, meaning buyers were forced to liquidate their crypto in order to use the funds. This meant buyers often faced a significant tax hurdle due to being forced to pay capital gains tax on any gains associated with liquidating the crypto.

Milo Credit, however, has created a solution to that problem by allowing buyers to pledge their crypto as collateral for a mortgage. The program allows buyers to “pledge” their crypto to Milo in exchange for a mortgage for up to 100% of the purchase price. This allows buyers to continue to hold their crypto, avoid paying taxes on gains, and theoretically continue to enjoy the benefit of any increase in value of the cryptocurrency. If the crypto value falls to below 65% of the loan amount, the borrower is required to pledge additional crypto to make up for the difference. Milo is currently issuing 30-year loans with a limit of up to $5 million and with interest rates between 5.95%-6.95%.

The program, however, raises concerns due to tying volatility in the crypto market with security for loans associated with real estate. As we learned in 2008, issuance of loans without adequate security can lead to volatility in the real estate market and a decline in prices if borrowers are unable to satisfy their loan obligations. Similarly here, cryptocurrency presents volatility issues that don’t currently exist in the real estate market, and a sharp drop in crypto values could have a negative impact on the real estate market if the two markets are tied to one another. On the other hand, it is increasingly difficult to imagine a world in which cryptocurrency does not play a major role, and so it is likely that buyers and lenders alike will look to creative solutions to utilize cryptocurrency to acquire real estate.

If you would like to further discuss this issue, or how Esquire Real Estate Brokerage can help you in the Southern California real estate market, feel free to give us a call at 213-973-9439 or send us an email at

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