Can You Buy A House With Crypto?

Buying a Home with Crypto

Buying a house is a milestone that more people are committing to than ever before. In the last three years, The Atlantic’s report on real estate reveals that people are snapping up houses faster and at higher costs. In fact, the housing boom is so big that up to two-thirds of buyers submitted an offer even without an initial viewing. Aside from this almost 8% of buyers plan to close within the next six months. Presently, this demand has caused a property shortage that has many buyers looking for clever ways to get ahead. One option that has become increasingly appealing for aspiring homeowners is purchasing a property using cryptocurrency.

What is cryptocurrency?

Although cryptocurrency has become a buzzword within the last few years, it’s essential to know how this currency works. According to Maryville University’s blog post on stocks and crypto, cryptocurrency is a "relatively new medium of exchange". A form of virtual currency, cryptocurrencies are unregulated digital assets maintained on global decentralized networks. Cryptocurrency is traded on virtual exchanges and stored in wallets, all for little to no fee. Because crypto transactions are also powered by Blockchain technology, it is very private.

While known for being a speculative asset, crypto has also steadily become more recognized by governments and companies. Case in point, Yahoo’s online article about crypto-accepting companies names industry leaders like Whole Foods, Microsoft, and Starbucks. This diversity in companies now willing to accept crypto payments bodes well for the token’s legitimacy. Understandably, this has encouraged crypto adoption in real estate, too.

Couple going over finances

Can you buy houses with crypto?

That said, yes, you can certainly buy a house using cryptocurrency. So long as all parties involved are in agreement. This means that you’ve got to have a real estate broker, seller, title insurance, and escrow company who are all comfortable processing your purchase with crypto instead of fiat money. Aside from this, since using crypto to buy houses is still a pretty novel concept, the process and considerations behind it must be taken into account.

Accepted crypto is limited

There are an estimated 18,000 cryptocurrencies in existence as of March 2022. However, only a handful are considered worthy of your time. These include popular tokens like Bitcoin, Ethereum, Solana, and Dogecoin. This is because these are the ones drumming up the most positive value spikes. In terms of buying a house, though, in most cases, only Bitcoin and Ethereum are accepted. This can prove to be either a blessing or a curse for you. If you already have large stakes in those tokens, then this means you can use them to secure a more stable real estate asset. On the flip side, if your tokens are spread out, then you’re really not holding anything of value for sellers.

Qualifying for a mortgage may be tricky

Before you can even start shopping for a home, it’s best to qualify for a mortgage loan. To do this, an earlier article here by Michele Lerner on home spending explains that lenders are stringent when checking applications. This includes reviewing your credit, income, and assets. Most of the time lenders’ decisions are influenced by an applicant’s liquid assets. Generally, having liquid assets plus an excellent credit score can even help overcome a dubious debt-to-income ratio. However, since crypto is a speculative asset, this makes determining its actual value a bit harder. For lenders, having crypto doesn’t necessarily promise that your mortgage will be honored. On top of this, since crypto is recorded in numerical IDs instead of names, it can be even harder for mortgage lenders to validate.

Crypto is notoriously volatile

Unlike traditional assets, crypto has little to no safety nets for those who invest in it. In fact, just this January, Bitcoin’s value toppled significantly. In a 24-hour period, the leading token dropped below $40,000. For investors, this meant they had no choice but to either hold or sell immediately. For homebuyers using crypto, this may mean they’ll need to use more crypto than expected. Consequently, if you use crypto to make a purchase, you must account for how its dips may affect your budget.

Although using crypto to buy a house is something you can do, it’s more important to focus on whether it’s something you should do. While it’s exciting to use a hot asset like crypto, it will be in your favor to exercise caution. By taking the crypto-backed house-hunting slowly, you’re more likely to find the right home at the right price without any losses.

Ashley Cherry

Written exclusively for
by Ashley Cherry