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Can You Use Crypto to Qualify for a Mortgage? A Guide in 2024

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In today's fast-moving world of finance, cryptocurrencies are opening new doors in real estate, especially when it comes to getting a mortgage.

According to a Redfin report, 12% of first-time buyers tapped into their cryptocurrency holdings to assist with their down payment savings.

This guide tackles a big question: Can you use your crypto to help buy a house? We'll look at the rules, what banks think, and how to use your digital money in the home-buying process.

Let's dive into how crypto can play a part in landing your dream home.

Can You Use Crypto to Qualify for a Mortgage?

According to guidelines from major entities like Fannie Mae and Freddie Mac, income received in the form of cryptocurrencies is not eligible to qualify for a loan.

Similarly, assets held in cryptocurrencies cannot be considered for the necessary financial reserves required for mortgage approval.

This stance is echoed by the FHA and VA, which do not formally recognize cryptocurrency as a regulated currency, thereby not accepting it directly for down payments or closing costs.

However, there is a silver lining; if cryptocurrency is converted into U.S. dollars and deposited into a U.S. or state-regulated financial institution, it can then be considered for down payment, closing costs, and financial reserves, provided there is adequate documentation to verify the transaction.

Documentation proving the conversion of crypto into U.S. dollars and the transfer of these funds into a regulated financial institution is crucial.

Lenders will likely request evidence of the original cryptocurrency transaction, the exchange into dollars, and the deposit into the borrower's bank account.

It's also important to note that while cryptocurrency itself may not directly qualify as an asset or income, the liquidated value held in compliance with financial regulations can play a pivotal role in the mortgage application process.

Thus, while the direct use of crypto for mortgage qualification faces limitations, strategic conversion, and documentation can make crypto assets a viable part of your home-buying journey.

Percentage of First Time Homebuyers Using Crypto for Down Payment
Data from

Required Documentation for Using Crypto in Mortgage Transactions

When using cryptocurrency for mortgage transactions, lenders require specific documentation. This ensures that the digital assets are converted and held according to regulatory standards.

These documents are crucial for the verification and acceptance of your crypto assets in the loan process. Source: Fannie Mae

  • Documented evidence of cryptocurrency converted to U.S. dollars.

  • Verification of funds held in a U.S. or state-regulated financial institution.

  • Confirmation that funds are verified in U.S. dollars before loan closing.

  • Documentation proving the origin of the funds from the borrower's cryptocurrency account.

Conventional Mortgage Crypto Guidelines

If you're considering using cryptocurrency assets to qualify for a mortgage through Fannie Mae or Freddie Mac, there are specific guidelines and restrictions you need to be aware of.

Both entities allow cryptocurrencies to be considered in the mortgage process if they have been converted into U.S. dollars and are verifiably deposited into a U.S. or state-regulated financial institution. This conversion must be documented thoroughly.

The borrower must provide evidence that the virtual currency has been exchanged into U.S. dollars, and the funds must be verified in U.S. dollars before the loan closing.

This approach essentially treats the liquidated cryptocurrency like any other asset that the borrower would use towards their down payment, closing costs, or financial reserves.

Any large deposit into a borrower's account that comes from cryptocurrency must be sufficiently documented to prove its origin. This includes providing evidence of the transfer from the cryptocurrency account to a U.S. dollar account.

For Fannie Mae and Freddie Mac, it's not just about showing that the funds are now in dollars; it's also about tracing the funds back to their source to ensure legality and compliance with financial regulations.

This rigorous documentation process is meant to mitigate the risk associated with the volatility and potential for fraud that cryptocurrencies can present.

So while Fannie Mae and Freddie Mac do not directly recognize cryptocurrencies as valid for income or asset qualification, they do offer a structured way for potential homebuyers to leverage their crypto holdings.

By converting your digital assets into U.S. dollars and following strict documentation guidelines, you can still use your investment towards purchasing a home.

FHA or VA Loan Crypto Guidelines

For individuals interested in utilizing their cryptocurrency holdings to assist in the mortgage process through FHA (Federal Housing Administration) or VA (Veterans Affairs) loans, it's crucial to understand the specific guidelines that govern these transactions.

Unlike conventional loans offered by Fannie Mae or Freddie Mac, FHA and VA have their unique stance on cryptocurrencies, which directly impacts how potential homebuyers can use their digital assets.

Both the FHA and VA do not recognize cryptocurrency as an acceptable form of down payment or as a directly usable asset in the mortgage application process.

For the FHA and VA to consider these funds as part of the borrower's assets, the converted currency must be deposited in a bank account for at least 60 days before the mortgage application.

This period allows the funds to be considered "seasoned," meaning they are treated as regular, eligible borrower funds.

This seasoning period is reflected in a 60-day average balance, which lenders will review to determine the borrower's financial stability and ability to contribute to the down payment and closing costs.

It's essential to maintain clear and comprehensive documentation of the conversion from cryptocurrency to U.S. dollars, including transaction receipts, bank statements, and any correspondence with cryptocurrency exchanges.

This documentation will be critical in proving the origin of the funds and their eligibility under FHA and VA guidelines.

So, while direct use of cryptocurrency assets is not permitted under VA and FHA loan programs, converting these assets to U.S. dollars and properly seasoning them in a bank account offers a viable route for homebuyers.

Frequently Asked Questions

Here are answers to common questions based on what homebuyers frequently search for regarding using cryptocurrency in mortgage transactions.

Can I use cryptocurrency directly for a down payment on a house?

No, cryptocurrency itself cannot be directly used for a down payment. However, if it's converted to U.S. dollars and deposited into a regulated financial institution, it may be considered.

Is cryptocurrency considered an asset by mortgage lenders?

Cryptocurrency is not directly recognized as an eligible asset for mortgage applications. Converted cryptocurrency into U.S. dollars held in a bank can be considered.

How do Fannie Mae and Freddie Mac view cryptocurrency in mortgage applications?

Fannie Mae and Freddie Mac do not accept cryptocurrency directly as income or an asset. Converted crypto to U.S. dollars with proper documentation is necessary.

What documentation is required to use cryptocurrency for mortgage transactions?

Documentation includes evidence of conversion to U.S. dollars, verification of these funds in a regulated institution, and proof of the source of these funds.

Can FHA or VA loans accept cryptocurrency?

Both FHA and VA do not recognize cryptocurrency directly for down payments or as an asset but will consider converted cryptocurrency in U.S. dollars with appropriate seasoning and documentation.

How long do cryptocurrency funds need to be seasoned before they are considered valid for a mortgage?

Funds from converted cryptocurrency should typically be seasoned in a bank account for at least 60 days to be considered for mortgage applications.

Do lenders require proof of cryptocurrency conversion?

Yes, lenders require documented proof of the cryptocurrency conversion to U.S. dollars and the deposit into a regulated financial institution.

Can I use cryptocurrency earnings as proof of income for a mortgage?

Income received in cryptocurrency is not eligible. Earnings need to be converted to U.S. dollars and properly documented to be considered.

How do USDA loans view cryptocurrency?

USDA loans currently do not have a specific policy regarding cryptocurrency, meaning the acceptance of converted crypto funds may depend on the lender's guidelines.

Are there any special considerations for large deposits from cryptocurrency?

Yes, for large deposits originating from cryptocurrency, lenders will seek extensive documentation to ensure the legitimacy and source of the funds.

Bottom Line

Using crypto for a mortgage is about knowing the rules and having the right paperwork. You can't use crypto directly, but if you turn it into U.S. dollars first, you're on the right track.

Make sure to document everything properly. It's all about planning and converting your crypto smartly.

If you're aiming to buy a home in Florida and want to use your crypto, check out MakeFloridaYourHome, we can help guide you through it all.

With over 50 years of mortgage industry experience, we are here to help you achieve the American dream of owning a home. We strive to provide the best education before, during, and after you buy a home. Our advice is based on experience with Phil Ganz and Team closing over One billion dollars and helping countless families.

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