How Crypto Investors Access Their Equity and Get a Mortgage

By: James Flippin · April 29, 2022 · Reading Time: 3 minutes

Digital Down Payments

Since the advent of cryptocurrency, most banks and lending institutions have been largely uninterested in so-called digital wealth. Cash and other forms of collateral may be viewed by some as less flashy and modern than digital tokens, but they come in handy when using a mortgage to buy a property.

Now, it’s becoming increasingly possible to utilize crypto when investing in real estate. Last year Fannie Mae (FNMA) started to allow borrowers to use crypto for down payments. In Miami, a tech and crypto hotspot, developers are accepting digital coins as deposits on condos.

Previous Options

Crypto skeptics often note the sector’s high level of volatility. Bitcoin (BTC) notably soared 305% in 2020 before falling over 40% from its high point. For this reason and others, the highly-regulated mortgage industry and cryptocurrency weren’t much of a match up to this point.

Would-be borrowers who wanted to make use of the equity locked up in their digital assets had few options. Companies like BlockFi and Unchained Capital offer collateralized loans, which in a roundabout way allows investors to leverage crypto into real estate. Many crypto investors say the drawback of selling coins and then using that cash is twofold: you face a hefty capital gains tax, and you’re leaving upside on the table.

The Miami Newcomer

In 2019, Milo launched in Miami as a business offering home loans to non-US citizens. One of its latest products is very similar to a traditional mortgage in terms of its repayment structure. The twist is borrowers can pledge their digital assets as collateral. This means they can retain the coins without paying capital gains taxes, and the coins can continue to appreciate in value.

Milo’s crypto-backed loans are soaring in popularity, with 8,000 people already on the waiting list, eyeing properties in New York, California, and Texas. Analysts say the crypto offering could eventually become the company’s chief product. In a red hot housing market, investors are looking to get creative, and the ability to make use of crypto is certainly in that vein.

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