Can you pay a mortgage with Crypto Currency?

Golden bitcoin coin in fire flame, water splashes and lightning. Bitcoin Gold blockchain hard fork concept. Cryptocurrency symbol in storm illustration with peer to peer network background.

Cryptocurrency is exploding in popularity with dozens of coins showing a market cap in the billions of dollars. Growth has far exceeded that of stocks across the board whether you’re talking about common coins like Bitcoin, Ethereum, or Litecoin, or an altcoin or meme coin. Many HODLers have become rich on crypto as the market attracted whales and mass support in major markets. 

Or at least, they’re rich in digital currency. Crypto wallets have made inroads as a method of conducting transactions for common items, but buying a home with Bitcoin and other crypto is still in its fledgling state. There are tax implications and transactional challenges that can get in the way. 

The question is this: is it possible to pay a mortgage with Bitcoin or other cryptocurrencies?

Payment options might become available in Bitcoin

One mortgage lender in the US boldly stated they would accept Bitcoin for mortgage payments by the end of the year. That’s since been walked back, but it’s only a matter of time until that option is available. When it becomes an option, it won’t actually be Bitcoin that you’re paying your mortgage with. The transaction will be processed on an exchange and will be the equivalent to your monthly mortgage payment at the time of the transaction. 

Consider, though, the infamous pizza purchase in 2010 by Laszlo Hanyecz with 10,000 Bitcoin. At the time, its value was $0.08 per coin, but in today’s market, 10,000 Bitcoin would be valued at over a half-billion dollars. Keeping the cryptocurrency in the market where it can grow is almost always the best plan.

Be prepared to pay tax on capital gains

Not only can you get buyer’s remorse on the gains you won’t realize by selling Bitcoin for mortgage payments, but the increase in value from when it was purchased will become taxable when it’s withdrawn or traded. 

Legally, you need to disclose the profit you’ve made on crypto when you spend it. If you bought one Bitcoin when it was $9 and now withdraw portions of it at its current value around $54,000 to service your monthly $1,000 mortgage payment, you’ll need to claim the $991 difference as income. There are different tax rates between short-term and long-term gains as well, making it more complicated than you might expect to use crypto to pay a mortgage.   

Use Bitcoin as a leverageable asset

Instead of cashing out your volatile yet lucrative cryptocurrency to pay your monthly mortgage payment, it’s a more solid solution to use your fiat earnings to make payments for housing and other products and keep your crypto in a secure wallet. 

How do you do that if your earnings outside of crypto aren’t substantial enough to support a mortgage loan? At MBANC, you can get an asset utilization loan to secure the mortgage. Unlike traditional approvals that depend on income ratios to prove you can afford the payments, asset utilization looks at your net worth including digital assets to secure the loan. 

Want to know more about buying a home using non-traditional income streams? MBANC has your answers. Call or message us today to see how we can make your homeownership dream a reality.