Using Cryptocurrency for Home Purchases with Fannie Mae/Freddie Mac Loans

Buying a home with a conventional loan (backed by Fannie Mae or Freddie Mac) has always meant documenting your income, credit, and assets. Until now, if part of your wealth was in cryptocurrency (like Bitcoin or Ethereum), it couldn’t directly help you qualify for a mortgage – at least not unless you converted it to cash first. Recent developments, however, suggest that things are starting to change. U.S. regulators are pushing Fannie Mae and Freddie Mac to treat crypto holdings more like other assets when you apply for a home loan (reuters.com). Below, we’ll explain what’s currently allowed, what new changes are being proposed, and how this could benefit homebuyers and the housing market in general.

Current Rules: Crypto and Mortgage Qualifications (U.S.)

As things stand today, you generally cannot use cryptocurrency directly as funds for a down payment or as proof of your financial reserves in a Fannie Mae or Freddie Mac loan. Both Fannie and Freddie require that any crypto you want to use must be converted to U.S. dollars and held in a U.S. bank or financial institution before it counts toward your home purchase (selling-guide.fanniemae.com). In other words, if you have, say, $50,000 worth of Bitcoin and you want to use it for your home purchase, you’d need to sell the Bitcoin for U.S. dollars and put the money in a bank account. Only after that can it be counted as part of your down payment, closing costs, or cash reserves (selling-guide.fanniemae.com).

This rule is in place partly because crypto is very volatile – its value can swing wildly day to day. So lenders have been cautious. In fact, Fannie Mae’s official guidelines explicitly state that “virtual currency... has been exchanged into U.S. dollars” is acceptable for down payment or reserves only if you provide documentation of the sale and the money is now in a U.S. bank (selling-guide.fanniemae.com). They even specify that crypto cannot be used for the initial escrow deposit (earnest money) on a home purchase contract (selling-guide.fanniemae.com). Essentially, until you cash it out, your Bitcoin or other coins have not been recognized as legitimate proof of funds in the mortgage process.

To draw a comparison, think about how other investments are treated. If you own stocks or bonds, lenders will count those as part of your assets without making you sell them first – but they only count a portion (usually around 80% of their current value) to account for market swings (thetruthaboutmortgage.com). With crypto, lenders up to now have taken an even stricter stance: they require a full conversion to cash, likely because crypto is newer and even more unpredictable than stocks (thetruthaboutmortgage.comreuters.com). This cautious approach has meant that many crypto–savvy buyers had to liquidate (sell off) some of their digital assets to show cash in the bank when they wanted to qualify for a mortgage.

New Proposal: Crypto as an Asset for Mortgage Qualification

Big news arrived in late June 2025: The Federal Housing Finance Agency (FHFA) – which oversees Fannie Mae and Freddie Mac – ordered these mortgage giants to start considering cryptocurrency holdings as assets in their loan risk assessments (reuters.com). FHFA’s Director, William Pulte, issued a directive telling Fannie and Freddie to “prepare their businesses to count cryptocurrency as an asset for [single-family] mortgages” (reuters.com). This move is meant to “enable Fannie and Freddie to assess the full financial picture of a borrower” by including assets like crypto investments when you apply for a home loan (reuters.com). In plain terms, your Bitcoin, Ethereum, or other crypto could soon help you qualify for a mortgage – potentially without you having to sell it first.

According to the FHFA order, Fannie Mae and Freddie Mac’s new crypto consideration should not require borrowers to convert their crypto to U.S. dollars during the loan approval process (apnews.com). This is a huge change from the current rule. Instead of forcing you to cash out your holdings, the idea is that the mere fact that you own significant crypto assets (and can prove it) would count in your favor when a bank is deciding if you’re a good loan candidate. However, there are some sensible limits being proposed. Only certain types of crypto assets would count – specifically, those that can be verified and held on U.S.-regulated exchanges (apnews.com). This means if you hold crypto in an exchange or platform that’s under U.S. regulation and compliant with U.S. laws, it could be counted. Crypto sitting in an offshore or unregulated exchange, or coins that can’t be traced/verified, likely wouldn’t count. The regulator is basically saying: “We’ll treat crypto like an asset, but only if it’s the kind we can trust (regulated, transparent) and we might apply some extra caution because crypto can be riskier.”

Indeed, because of crypto’s notorious price swings, the directive suggests using “additional risk mitigants” – essentially extra precautions – when counting crypto in the mix (thetruthaboutmortgage.com). In practice, this might mirror how stocks are handled with a buffer. For example, if normally stocks require a 20% value cushion (only 80% of stock value counts toward your funds), crypto might require a bigger cushion, perhaps only 60-70% of its value being counted, due to higher volatility (thetruthaboutmortgage.com). The exact details aren’t settled yet – Fannie Mae and Freddie Mac were told to come up with a proposal on how to include crypto, and to do so “as soon as reasonably practical” (apnews.comapnews.com). But the direction is clear: the goal is to treat cryptocurrency wealth similarly to stocks, bonds, or other assets in the mortgage process, while accounting for its risks.

It’s worth noting that this push is part of a broader trend of embracing crypto in the U.S. financial system. The current U.S. administration has expressed a vision of making the United States “the crypto capital of the world” (reuters.com), and this mortgage directive aligns with that vision. By bringing crypto into the fold of conventional home financing, regulators are acknowledging that cryptocurrencies have become a mainstream investment for many Americans – enough that they should count when assessing someone’s finances. Just a couple of years ago, this idea was far-fetched. Now the nation’s biggest mortgage players are actively working on it.

How Could This Benefit Homebuyers?

For homebuyers (especially those who have invested in crypto), these changes are exciting news. Here are some key ways this could benefit or impact buyers:

• No Need to Sell Your Crypto to Qualify: Perhaps the biggest benefit is that you might not have to liquidate your crypto holdings to get approved for a home loan (apnews.com.) Under current rules, if you needed your crypto’s value to count, you had to sell it for cash. This could be painful if you’re forced to sell at a time when prices are low, not to mention it could trigger taxable gains. With the new approach, you could potentially keep your Bitcoin or other crypto invested while still getting credit for it in your mortgage application. As Realtor.com’s chief economist puts it, people who “might otherwise have to sell cryptocurrency to qualify” could instead keep their assets and still get the loan – removing a possible deal-breaker that kept some from buying homes (apnews.com). This expands the pool of eligible buyers, bringing in folks who have wealth in crypto but were previously shut out unless they cashed out.

• Counting Crypto as Part of Your Financial Strength: Lenders look at your overall financial picture – not just income and credit, but also what savings and investments you have (often called “reserves”). If crypto counts as part of your reserves, your balance sheet immediately looks stronger. For example, a buyer with $100K in a 401(k) and $50K in crypto might soon be viewed similarly to one with $150K in traditional investments (with some adjustment for crypto’s volatility). This could help borderline applicants get approved. It might also help secure better loan terms in some cases – for instance, if a lender sees you have ample assets, they might be more flexible with a lower credit score or a slightly higher debt-to-income ratio, because your assets (including crypto) suggest you have a cushion to weather financial troubles. In short, crypto investments could boost your credibility as a borrower in the eyes of underwriters.

• Flexibility in Funding Your Purchase: Some buyers might even leverage crypto for their down payment. While mortgages themselves will still be in dollars, knowing that your crypto can be counted might allow you to borrow against it or plan a sale at an optimal time. There are crypto-backed loan services out there (where you borrow dollars against your crypto), and if Fannie/Freddie recognize crypto as an asset, banks might become more comfortable with down payment funds sourced from such mechanisms (currently, this is tricky, but it could evolve). At the very least, it gives a buyer more options on how to come up with the needed cash without being forced to sell all their holdings immediately.

• Recognizing Modern Wealth: Many younger buyers and tech-savvy individuals have a good chunk of their net worth in cryptocurrencies. By recognizing crypto, the mortgage market is catching up with modern reality. This can particularly benefit first-time buyers who might have been investing in crypto instead of a traditional savings account. If you’re someone who accumulated savings in Bitcoin over the past years, this change means the system will acknowledge that as real wealth when you apply for a loan, which could be empowering and encouraging. It’s a nod to the fact that wealth isn’t just in bank accounts and stock portfolios anymore – it might also be in digital wallets.

Of course, it’s important to remember that any lender will still look at all the usual factors too – your income, job stability, credit history, and so on. Crypto assets would be one more piece of the puzzle that could tip the scales in your favor if used wisely. Borrowers will likely need to document their crypto holdings thoroughly (just as they would any other asset) and possibly stomach a conservative valuation of their coins (due to volatility discounts) (apnews.com). But on balance, for those who do hold significant crypto, this is a welcome development. It treats you a bit more fairly relative to people whose money is in more traditional places, and it could make the dream of homeownership easier to reach for some buyers who are crypto-rich but cash-poor.

Impact on the Housing Market

Broader market implications: Allowing cryptocurrency in the mortgage qualification process could have ripple effects on the U.S. housing market. Fannie Mae and Freddie Mac together guarantee about half of all U.S. home loans (apnews.com), so any change in their rules can influence a huge portion of the market. Here are a few potential impacts:

• Unlocking New Buyers: As mentioned, this change can bring more buyers into the market – specifically, those who have wealth tied up in crypto. Even if it’s a niche group right now [only about 1% of recent homebuyers used cryptocurrency proceeds for a down payment, according to a National Association of Realtors survey (apnews.com)], that percentage could grow. If crypto prices surge and people feel they can use that wealth to buy property without jumping through as many hoops, you could see an influx of crypto-funded home purchases. New demand from previously sidelined buyers can give a boost to home sales.

• Increased Market Liquidity and Homeownership Rates: By expanding the criteria for loan eligibility, banks and mortgage lenders might approve more loans for creditworthy individuals who were marginally falling short before. That means more people can qualify for mortgages and become homeowners. In a time when the housing market has been somewhat sluggish [(home sales in 2024 were at their lowest in nearly 30 years (apnews.com)], this could provide a small but meaningful stimulus. It won’t single-handedly turn a market around, but in combination with other factors (like interest rate changes or new housing supply), enabling crypto-holders to buy homes could help stabilize or uplift homebuying activity.

• Market Competition and Home Prices: If a significant number of new buyers enter the market thanks to crypto-friendly rules, that could add competition for homes, potentially putting upward pressure on home prices in some areas. Sellers might welcome the larger buyer pool. On the flip side, if crypto values were to drop sharply, some buyers might pause their home search (similar to how a stock market downturn can make people feel less wealthy). But since lenders are likely to require buffers (not counting 100% of crypto value), the hope is that any crypto market swings won’t destabilize the mortgage system or lead to borrowers overextending themselves (apnews.com).

• Innovation in Financial Services: This shift could push banks and fintech companies to develop better services for integrating crypto with home buying. We might see more banks willing to accept transfers directly from crypto accounts, or new products where you can pledge crypto as collateral. In the long run, real estate transactions might even directly incorporate blockchain or crypto payments, but that’s a far horizon. For now, the immediate impact is more about including crypto as part of the evaluation, not necessarily using crypto to pay for the house. Still, it marks a significant mindset change in a very traditional industry.

• Confidence and Mainstream Acceptance: On a less tangible note, the fact that federal regulators and major mortgage institutions are embracing crypto sends a signal of legitimacy to the broader market. It can increase general confidence in cryptocurrency as a form of wealth. When Bitcoin and friends are effectively being acknowledged by Fannie Mae and Freddie Mac, it reinforces the idea that crypto is here to stay. This could indirectly spur more investment into crypto, as people see it can be used for “real life” goals like buying a house – thereby intertwining the fate of the housing market a bit more with the crypto market.

In summary, the housing market could see a modest boost in demand and new buyers, particularly younger, tech-oriented individuals, as a result of these crypto-friendly changes. It’s a timely development too: with the market having cooled due to higher interest rates and prices, any new source of qualified buyers is likely to be welcomed by home sellers and the real estate industry. Economists note that as long as lenders account for crypto’s volatility (by valuing it cautiously), counting crypto assets is a positive move that treats them similarly to other investments (apnews.com). Done right, it can help more people become homeowners without introducing undue risk into the system.