Lenders accept bitcoin as down payment on home buys

In March 2020, the exotic mortgage world froze up as the COVID-19 pandemic crept across America.

Aggressive, creative, outside-the-box mortgages, like those that count bank statement deposits as income, were suddenly dust in the wind.

But government-sponsored mortgages like those from Fannie Mae, Freddie Mac, the Federal Housing Administration and the Veterans Affairs Department continued full steam ahead.

Mortgage origination volume hit an all-time high of $4.3 trillion in 2020, compared with $2.5 trillion in 2019, according to the Black Knight.

Yet exotic mortgages (aka nonqualified mortgages) plummeted to $37.3 billion in 2020, down from $52 billion in 2019, according to Inside Mortgage Finance.

Fast-forward to March 2021. This so-called nonqualified mortgage space has come roaring back and is more aggressive than ever. Can you say Mr. Toad’s Wild Ride?

As of last week, you can use bitcoins or any cryptocurrency (which, mysteriously, is unregulated and lacks a central authority) to buy anything from your starter home to your palatial palace — without any thought about how you propose to come up with the monthly house payment.

No income documentation for you. We are talking about a minimum down payment of 25% on loans as big as $3 million.

Just cough up your bitcoin or other recent cryptocurrency statement and call that good for your down payment, along with settlement charges and cash reserves. You will have to liquidate that Bitcoin into cash and wire it to escrow before closing, however.

In contrast, Fannie Mae does not recognize Bitcoin or any other digital currency unless it previously was converted into U.S. currency and deposited into an eligible asset account and previously seasoned for at least two months. Fannie also requires a paper trail showing that funds from the cryptocurrency account previously were owned by the borrower.

To get this nonqualified loan using bitcoins, however, you only need to have a middle FICO score of

700 or better when putting 25% down — or a middle score of 660 or better when putting 45% down.