If you’re one of the lucky people who own four to six Bitcoin — or 111 to 166 ETH — that’s enough to buy an average-priced house in the US or Australia.
But who wants to cash out their Bitcoin today when pundits like Samson Mow and Plan B are tipping it will be worth 10 times more in the future? The dream of a Bitcoin-backed mortgage is that you get a house today and still get to benefit from Bitcoin’s appreciation tomorrow.
If everything goes to plan, you just pay the interest each year, and in a few years’ time, hopefully pay off the mortgage with a smaller fraction of your Bitcoin holdings. The loans are quicker and easier to get than a standard mortgage too. All you need is Bitcoin worth approximately 50% more than the loan amount and you’re good to go.
There are some big drawbacks however, with interest rates sometimes twice as high as ordinary mortgages. Holders face margin calls if the price of Bitcoin plummets and their loan-to-value (LTV) ratio drops too far.
Depending on the particular product or protocol, once the threshold is crossed, Bitcoin collateral may automatically liquidate, either in full or just enough to bring the LTV back up. Some providers offer a grace period to provide additional collateral.
Cliff takes out two Bitcoin mortgages to enjoy his wealth
Sixty-year-old construction supply company director Cliff has had a successful run leveraging his Bitcoin to buy property. He tipped 40%-50% of his wealth into Bitcoin across 18 months during the pandemic, after falling down the hard money rabbit hole on YouTube. With Bitcoin up almost 1,000% since, his portfolio is now worth what Australians call a “shitload.”
Also read: Baby boomers worth $79T are finally getting on board with Bitcoin
Cliff tells Magazine he wants to hang on to his Bitcoin because “what else are you going to put your money into that gives you a better rate of return?” But he also wants “to be able to take advantage of it and have access to cash flow without selling it.”
About a year ago, he borrowed enough from Australian crypto lender Block Earner to buy two properties and take a nice honeymoon, borrowing against the value of his entire Bitcoin portfolio.
Having just won a long court battle with the Australian Securities and Investments Commission, the local equivalent of the SEC, Block Earner is set to write the first of its four-year-long Bitcoin-backed “mortgages” this year, with the wider launch expected in early 2026. But Cliff was able to borrow the money to buy property under similar conditions, via a 12-month loan that can either be paid out or rolled over once the interest is paid.
The idea was to “buy a couple of properties where you can go to, and enjoy some nice places, and Airbnb them out as well,” he says. “It’s really just to create a quality of life.”
Cliff wasn’t worried about Block Earner blowing up like the majority of crypto lenders did in 2022, including Celsius Network, Voyager Digital, BlockFi, Genesis Global and Vauld — mostly because he says he hadn’t heard about these incidents.
Block Earner requires 150% Bitcoin as collateral, and if the price of Bitcoin falls too far, users have 30 days to stump up more cash or Bitcoin, or a proportion of their Bitcoin will be sold. Cliff says he went under the LTV ratio on two occasions.
“Bitcoin went over that but then came back down within the 30 days, I think a couple of times. And then I did sell a couple of Bitcoin at one point, sort of spur of the moment, I probably wish I didn’t… but that’s brought my loan to value ratio down to the point where I’m not even close any more.”
Bitcoin mortgages in US, Australia and in DeFi
Even if you break out in a cold sweat at the thought of borrowing against your Bitcoin to buy a house, it can sometimes be one of the few available options for crypto owners. That’s because traditional banks will ignore crypto portfolios worth millions and instead assess suitability for a mortgage based instead on your savings, stocks and other assets.
“We have a lot of customers — and a lot of staff for that matter — who have gone through the process of trying to get a mortgage and in that assets test part of the process, crypto is completely ignored or recorded as a zero dollar value,” explains Block Earner’s chief commercial officer, James Coombs.
Things are slowly changing on that front. In Australia, an unnamed major bank has partnered with Monochrome to treat shares of its Bitcoin ETF as marginable collateral for high-value properties worth 5 million Australian dollars ($3.26 million) or more. In the US, mortgage agencies Fannie Mae and Freddie Mac now consider Bitcoin as part of a borrower’s reserves, which are the funds the borrower could use to pay the mortgage if they lose their jobs. However, Bitcoin isn’t treated as collateral for the loan itself.
There are a variety of centralized lenders, including SALT, LEDN, Figure, Nexo and others, who will allow you to borrow enough money to buy a house against crypto collateral. They offer a variety of different products, interest rates and terms, so it pays to carefully consider the options. Centralized lenders often have more user-friendly terms, but there’s always the risk they could go bust.
Decentralized lenders like Aave and Morpho, meanwhile, are governed by unflinching smart contracts, which increases the risk of automatic liquidation during events like the flash crash of Oct. 10. Bitcoin-only lender Mezo provides funds in its native stablecoin MUSD, but this fluctuates in value and has dipped as low as 98.4 cents in the past month despite its Bitcoin backing.
Bitcoin mortgages in the US and Australia
In the US, Milo has been offering Bitcoin-backed mortgages since 2022 and Ethereum-backed mortgages since 2023, enabling clients to buy $80 million in property to date. It offers up to 100% financing for loans up to $5 million with no down payment required. Across its other products, it says it has originated $250 million in mortgages.
In Australia, Block Earner announced its Bitcoin-backed mortgage product in June, covering loans up to $3.26 million. It “anticipates having homes purchased using the Bitcoin-backed home loan product this calendar year.”
It has built up a waiting list of around 500 million Australian dollars ($326 million) in property value, roughly equating to around $65 million loans, with an average mortgage size of $1.04 million. This is greater than the funding it has available, which has pushed the wider launch into “early 2026.”
In practice, its Bitcoin-backed mortgage is effectively a Bitcoin-backed deposit at a higher comparison interest rate of 11.9%, combined with a standard mortgage for the rest of the loan through its “preferred mortgage partner” around the normal variable rate.
“So the borrower can borrow up to 60% of the value of the home, but by far and away the most common on the wait list is about 22%,” Coombs explains. “It’s for people who want to put down the 20% but don’t have the cash.”
In both the US and Australia, borrowers with less than a 20% deposit for a home loan have to take out costly additional insurance, called private mortgage insurance in the US and lender’s mortgage insurance in Australia. It covers the lender in case the borrower defaults.
One potential concern for would-be customers is that ASIC has appealed to the High Court, seeking to overturn Block Earner’s Federal Court victory that meant it did not require an Australian Financial Services License for its Earner product.
Block Earner says there are no risks to mortgage holders because the court case is about a discontinued product, and “no products Block Earner currently offers are relevant to the case,” and says it is an authorized representative of Mortgage Direct, which holds an Australian Credit License.
Dr. Aaron Lane, senior lecturer in law at Royal Melbourne Institute of Technology University, tells Magazine it is unlikely the outcome of the case would affect mortgage holders, as the crypto Earner product offered yield, whereas the Bitcoin in this case is being used as collateral for a loan, which is covered by the credit license.
“I think because we are talking about quite a different product, it’s unlikely,” he said of ramifications for mortgage holders. “Regardless of the High Court’s outcome — it’s not going to have any bearing on this particular product as far as I can see.”
Alternatives to Bitcoin mortgages for crypto folk
Mortgage broker Chris Dodson, director of Mortgages Plus, says he welcomes “any type of innovation that’s coming into the broking or the home lending space,” but points out Block Earner’s interest rates and fees are a lot higher than usual.
“That’s really aggressive. It seems those fees are double your main street bank or even your second or third tier lenders,” says Dodson. The mortgage broker notes that similar products are available to borrowers seeking to scrape a deposit together without risking their Bitcoin.
OwnHome Deposit Boost Loan helps with the 20% deposit, and partners with a standard mortgage provider for the remainder of the loan.
“You can put down a loan with 2% of the deposit, and they will back the other 18% with the interest rate of about 12% to 13%. So [it’s] similar,” he says.
Your Bitcoin at risk, not your property
Coombs points out that borrowing for a deposit using Bitcoin collateral comes with no risk to your title.
“There is no contagion risk to your property,” explains Coombs. “So with Block Earner, the only part of the loan that is secured using Bitcoin is the deposit component. So what you’re at risk of is losing the Bitcoin and not the property.”
For Cliff, that’s a gamble he’s willing to take.
“The amount I borrowed off them is more than what they [Bitcoin] cost me,” he says. “If the stuff hits the fan… I wouldn’t be worse off than I was when I first started.
But in the best-case scenario, Cliff hopes to pay off his properties as the value of his Bitcoin increases. In December 2019, the average home in Australia cost 84 Bitcoin. Today it costs just 6 Bitcoin.
“If the LTV comes right down and I only have to sell 10% or 20% of my Bitcoin to clear it up. I may decide to do that one day. We’re not at that point now, but who knows in the next cycle or two?”
Andrew Fenton
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