Can I Use Bitcoin When Proving My Assets with a Mortgage Underwriter?


Since Bitcoin came into existence a decade ago, most of the interest in block-chain technology was limited to computer geeks and criminals. But in the past year, the value of Bitcoin shot up; it went from $1000 in January 2017 to almost $19,000 in December. It has fallen back to earth somewhat since then, but still is worth approximately $11,000 per coin as of March 2018.

Due to the rapid rise in value, Bitcoin has become a more desired investment for many people and financial institutions. It also is causing speculation that Bitcoin could be accepted the same as dollars eventually for many common transactions, including purchasing a home or paying the mortgage. Some think that you also may be able to prove assets when applying for a mortgage by showing your Bitcoin account. Is this realistic?

Well, the truth is mixed about how much Bitcoin can be used in real estate transactions and proving assets and income. Bitcoin HAS been used in the US to buy homes in Texas, Manhattan and California. In fact, in 2014, a buyer used 2739 Bitcoins to purchase a home in Lake Tahoe. In 2017, there was a single family home in Austin bought with Bitcoin. The buyer had Bitcoin but the seller converted it to dollars during the real estate transaction (this is common with real estate transactions with Bitcoin today; one party may bring Bitcoin, but the other wants to deal in dollars).

So, as far as whether you can buy a home with Bitcoin, the answer is yes, if you can find a seller who is willing to work with you. You also can buy a home with gold if you find a seller willing to take it.

Another question is whether you should really buy a home with Bitcoin today. Many experts would say no. First of all, Bitcoin is not printed or controlled by a government authority. Thus, the value will fluctuate wildly. This makes it very difficult for the buyer and seller to set the price in advance. Imagine if you had set up a real estate purchase when the value of Bitcoin was $18,000, and then in early 2018, the value of the cryptocurrency plunged to $9000! That real estate deal just crashed and burned.

Another problem with buying homes with Bitcoin is that they are basically cash transactions. Say you accidently send a person 10 Bitcoins. Those Bitcoins are probably gone for good. You cannot dispute the transaction as you can with a bank or credit card company. It’s not much different than losing an envelope of $10,000 on the street.

Lenders Often Will Not Accept

Another problem with Bitcoin in real estate deals is you cannot use it to pay a mortgage. It also is difficult to find a mortgage lender who will consider Bitcoin as an asset, but there is some anecdotal evidence recently that this is changing. But US mortgage lenders only take payment in US dollars. This could change, but there is no current incentive for them to take Bitcoin. The value of the digital currency is simply too volatile and cost of conversion to dollars is yet another expense for doing a mortgage. You could find a third party that may help you to pay the mortgage with Bitcoin, but those companies are just converting Bitcoins to dollars for you.

Another Problem

There is another issue using Bitcoin to buy a home. The IRS has yet to recognize it as a currency. Virtual currency per IRS regulations is treated as property just as gold, stock or bonds. If you sell your Bitcoins to buy a home, the sale is subject to capital gains taxes. If the Bitcoins were held longer than 12 months, a tax rate of 15% applies. If they were held less than a year, the rate could be 20%. So, using cryptocurrency to buy a home could cost you a lot.

Until Bitcoin is more widely accepted as currency, it probably will not be a very good way to pay for real estate. Interestingly, there are a few mortgage lenders who have accepted Bitcoin as an asset they will consider for doing a home loan. It is still difficult to find them. If you are able to find one, you will need to verify what the value of the Bitcoins are and submit extensive documentation to the lender. You also could sell the Bitcoins and convert them into cash, however, if you choose to do so.

The good news on the Bitcoin front is that it only has begun moving into the financial mainstream in the past three or four years. As time goes by, it is likely that larger financial institutions will accept it, including mortgage lenders.


With over two decades in the mortgage sectors, Mr. Dornan brings a lot of experience to the table. Bryan Dornan has founded several lending companies and written several hundred articles related to home financing, real estate and more.

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