Could Crypto Help You Get Your First Home? Why Experts Say You Should Be Skeptical
As they contend with today’s housing market, many first-time homebuyers may feel like traditional savings accounts and stock portfolios aren’t enough to quickly build a down payment. These homebuyers may be drawn to cryptocurrency — with its siren song of overnight millionaires and major returns — as a fast solution.
However, a number of experts in finance and real estate urge these buyers to refrain from pinning their hopes for homeownership on digital assets alone. Before you potentially move your down payment into Bitcoin or another form of crypto, it’s worth hearing why these experts think it’s a particularly risky move.
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Your Crypto Isn't a Down Payment Yet
Sain Rhodes, a Clever Offers real estate specialist, had some unfortunate news for buyers who were optimistic about using their Bitcoin coffers to make a down payment: $200,000 in Bitcoin doesn’t translate to a "Sold" sign in front of a property.
"The funding that buyers use to purchase a home needs to be documented and substantiated," Rhodes said. "Previous lenders have mandated that any cryptocurrency used as a down payment be liquidated and fully transferred to a bank and 'seasoned' for 60 days."
Simply stated, this standard hasn’t changed. Rhodes added that when the Federal Reserve Bank of New York studied digital assets in 2024, the bank concluded that "in market volatility, crypto assets can be much more volatile than traditional assets."
Rhodes warned that lenders will likely continue to regard cryptocurrency with caution, regardless of any changes in lending policies.
Timing Might Not Be on Your Side
For Matt Brown, a real estate agent and broker associate at William Raveis, one of the biggest red flags about using crypto to buy a home is timing.
"A buyer thinks they're rich on paper when their holdings have rallied, and they write an offer at this high price level," Brown said. "It's changed hands by the closing date 60 days later, and the cash they intended to bring at closing is gone."
Brown was direct: Real estate closings operate on a set schedule, but crypto does not.
"Any underwriting rule that matches that is buried," Brown said.
Rhodes explained that the time from appraisal to closing is typically about 30 to 35 days. If the value of your crypto declines by even 20% during that period, it can affect your available reserves or overall loan qualification right before closing. She’s seen clients deal with this firsthand.
"In the first quarter of 2025, I had a client who qualified for a loan with no issues, but during escrow, the value of their Bitcoin dropped by 18%," Rhodes said. "As a result, they had to bring an additional $14,000 in cash to closing because of reserve requirements."
Don't Forget the Tax Bill
Rhodes added that if a buyer has a tax bill they wouldn’t be able to offset, selling crypto for a down payment could trigger capital gains taxes.
"In fact, your buyer is most likely selling themselves short because the hit could be 15% to 37%, depending on the holding period and income," Rhodes said.
A Smart Strategy for Using Crypto
So, if you do have significant holdings in crypto, are you completely out of luck as a first-time homebuyer? Not if you have a smart strategy.
"I would recommend selling a portion, but not all, of the holdings, and I would recommend doing this some time between 90 and 120 days before applying for a mortgage," Rhodes said. "I would then put the proceeds into a high-yield savings account and use that as the down payment."
Additionally, Rhodes suggested not touching the rest of your holdings so they can continue to build long-term wealth. Don’t use them during the homebuying process.
"I would recommend applying for a traditional conforming mortgage, and not a crypto-backed mortgage," Rhodes said. "[This] reduces the risk of being subject to a margin call for a home that you would then be living in."
Rhodes also advised building a cash reserve equal to at least six months of housing payments. Keep that completely separate from your crypto holdings.
Meanwhile, Brown suggested contacting a mortgage lender who is knowledgeable about digital asset loans while also looping in your CPA for guidance on loan structures and the related tax implications.
The Bottom Line
Buying your first home can be a major life and financial milestone. If you want to use crypto in the process, you can, but you need to be smart and strategic about it.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal, or tax advice.
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