Bitcoin Forum

Hey guys...I am in the mortgage banking industry.  I am currently working on a deal to incorporate bitcoin into the down payment funds for a new purchase home loan.

I haven't seen this done before.  Have any of you?   I have seen homes sell for 100% bitcoin, but that is the same as purchasing a home with cash.

We are in contact with Fannie Mae, and it looks like it can be done as long as the bitcoins are first converted into US dollars and then deposited into a US bank account.  If you know banking guidelines, then you know that most money has to be seasoned for 60 days before it can be used for down payment funds.  We may be able to get around this if you can clearly be able to source the ownership of the bitcoins and clearly document the sale of the bitcoins along with the deposit into your bank account (like with a coinbase transaction history).

Do any of you have experience with this, or would you like to hear how it works out?


Edit 2/19/2018:    With proper documentation (and sourcing), Bitcoin can now be used for down payment funds without having to sell the BTC and hold the USD in your bank account for 30-60 days.   

You are talking about mortgages and you say you are in the mortgage banking business. You should know it better than us. It won't work. Because not a single bank in the world would accept a highly volatile asset as mortgage payments. We are talking about 10 to 30 years at least. If bitcoin becomes too valuable, the dude who owes money won't afford to buy them probably goes bust. If bitcoin loses value, bank gets fucked.

Nope. Won't work.

I am a mortgage bank, I have also been in the industry 15 years.  I don't think you are understanding how the bitcoin would be used.   The bitcoin would be sold via coinbase, and then those USD would be used for down payment.  Generally with down payment funds all non-payroll deposits into your bank account would have to be sourced, which is when the bitcoin deposit would be noticed and disqualified from "usable down payment funds."

We as the bank would not be holding bitcoin at all...we would be using proceeds from the sale of bitcoin.

How is this any different than paying cash for a down payment?

This is not a bitcoin issue then. It is a money laundering issue.  ;D Coinbase/Tax guys are gonna question the customer to death and will make him mad with their questions. Bitcoin has a big reputation among cyber terrorists/drug dealers/tax evaders.

Whoever was trying to make a down payment for his mortgage via coianbase is going to hate to be alive and probably won't succeed.

Since you are talking about coinbase, i assume you live in USA right? If so, it will be just like i expected. Forget it.

It's not money laundering when you are using your own coins/money.   Coinbase doesn't question why you are selling your bitcoin.  Down payment will come from their personal bank account.  Some of the funds in that bank account will come from Coinbase, the majority of the funds will have already been in the account.  

If you have purchased a home in the last 2-3 years and obtained financing, you would know what I'm talking about when it comes to sourcing down payment funds.  We are talking about the down payment, not monthly mortgage payments. 

Your pessimism is unfounded.  Coinbase's situation with the IRS really has no relevance to down payments for mortgages.  I can see how people who can afford to buy a decent house might want to use Bitcoin for their mortgage and there's no real reason that it wouldn't work.

Will be following this thread.

Will keep it posted, as this progresses :)

I suggest you investigate Bitpay over Coinbase. They're possibly going to be less anal as they don't retail directly to the public, they just process, and they'll have lots of OTC buyers. They seem to moving towards B2B so they might be more receptive to larger sales.

Thanks.  our client already has funds in Coinbase...so moving it to Bitpay could muddy the waters just because the more transfers, the worse it looks to underwriting.   If it's as clean as showing the original bitcoin purchase in Coinbase, and then matching the deposit into their bank account with the sale of the same bitcoins from the same Coinbase account it paints a cleaner picture. 

That was really a good strategy but we know that bitcoin doesnt get as a sure profit every month so you better have other source of income and not a full time trader or else but thats a good one if your having a good profit in bitcoin you can to that and i guess you can pay in time.

Coinbase should be able to produce proof/account records for this matter, I could be wrong but we would have at CEX, provided the requestor identified themself enough. The purchases should be tied to fiat account action, or if the coins are old and from off exchange,  coin age (balance info) on the account should demonstrate previous ownership.

Have to ask, where did this muddy up? It seems like the best way to buy big assets with Bitcoin is to convert to USD. This should have been straightforward if the source of the coins/income can be explained to the IRS, the coinbase account is verified enough (high account limit), and the bank accepts the wire (they are going to ask about it, since it's over 10k, but it's a legitimate asset sale). Seems like the IRS would be the bastard in this, interested in this.
Keep us posted ;)

Basically this all started when I was asking client of mine to let me know where his down payment was coming from, because as a mortgage bank there are a lot of compliance and guidelines we have to follow to verify down payment funds. This is mainly due to the gov't and their anti-money laundering rules they want to hammer everyone with.

He told me that he had half already in the bank and wanted to sell crypto currency for the other half.   It was pretty cool because it's the first scenario I have tried to get through underwriting using bitcoin, and to my knowledge no other lender has successfully used bitcoin along side a new home loan as part of the funds.

My underwriter actually ran it by Fannie Mae, and so far it seems like it should work.   IRS would have no involvement, as claiming gains on tax returns is the responsibility of the bitcoin owner not the bank.  We don't communicate with the IRS, except to verify that the client does not owe an outstanding tax liability. We also just have to verify that the tax returns used to qualify for the loan match what was actually reported to the IRS as income.

Update: escrow is open and or loan is going in to processing tomorrow.  So far so good with everything. Using USD proceeds from the sale of BTC from coinbase for a portion of the down payment. It's probably about 10% savings and around 10% bitcoin proceeds to make up the 20% down payment.

If there is any difference in advances what is the difference

Using bitcoin to purchase a home does not sound too safe a thing to do to me. I would advise caution to anyone trying to do such a transaction.

http://www.pcadvisor.co.uk/how-to/security/how-avoid-solicitor-conveyancing-email-scam-that-costs-house-buyers-3653388/

you sure about that?

Doesn't that just defeat the purpose of buying a house with Bitcoin? One would be basically buying the house and paying the mortgage using fiat.

So this a reality?
Without any issues then we can all do this.
Congratulations too bitcoin on becoming mature if this is in fact a reality as of now.

Reading this thread it is actually pretty neat to see this progressing, I saw the OP in its infancy and I didn't think that it would really end up going anywhere, but hearing that the escrow will be happening soon is pretty neat.
Would you mind going into a bit more detail as to how the whole scheme is supposed to work? I get the part about it using Bitpay/Coinbase, but I'd like to see how the rest of the system is structured. Sounds interesting otherwise, good luck with the project. A 10% down payment is pretty significant if it all goes through Bitcoin.

Maybe I’m missing something but I don’t see how this is different than any other hard asset begin sold first, converted into dollars, and then using those dollars to buy whatever you want, this seems like a standard transaction to me and I don’t see why anything other than the usual procedure will be needed in this case.

If bitcoin will be used as a direct payment of the mortgage loan then it is most likely impossible for banks to accept a volatile currency as down payment of funds and to buy anything you want this seems no different from a regular cash being paid in banks, i guess banks will only accept bitcoin as direct payment if it gets to valuable inthe future and matured from volatility which it will as institutional investors has decided to invest big amounts of cash in this digital currency but first segwit and the lightning network must be implemented first to make bitcoin mainstream. My only question is if bitcoin was already converted into fiat currency how is this different in paying in cash?

As an update for today...the loan has been conditionally approved and our appraisal has come in higher than purchase price. We are probably going to have to go with the path of least resistance and just use monies from the sale of bitcoin from back in March because then we can just use an April and May bank statement as the down payment funds without having to verify the bitcoin sales.

I did get the green light to be able to use bitcoin sales without any seasoning of the funds, but we would have to be able to clearly demonstrate that the coins have been sitting in the wallet for at least two months. So transferring bitcoin from cold storage into a hot wallet and then selling the coins wouldn't work at this point because the trail of money goes way over an underwriter's head at this point in time.

As a new update as of 6/28/2017 we are all cleared to fund and record the loan tomorrow making our client a new homeowner :).

Final loan documents were signed at the end of last week

We have successfully used bitcoin as down payment funds.   They had to be converted to USD first (as bitcoin could not be sent directly to escrow).  Escrow companies are not in the business of holding bitcoin, nor will they convert currency...just as you could not send Yen or Yuan, or any other foreign currency as down payment funds to purchase a home in the United States.

But if you have purchased a home within the last few years, you understand the nightmare that comes along with verifying all of your down payment funds.

If anyone is looking for some guidance or can use some assistance getting pre-approved or ultimately approved to purchase a new home, please feel free to PM me.

I don't understand why you say you've been successful. It's a failure to me because those bitcoins had to be exchanged to fiat for the loan to be accepted.

While I do think that it is wonderful that you're trying to get the community involved and all that, I really wouldn't be doing something like this unless you're somewhere working with some sort of expert to be able to find out if you're going to not be getting business due to not accepting Bitcoin. Because if you think about it in the terms of 'people are still going to need mortgages no matter what' you can come to think that you're going to be wasting time with all of this and not really helping anyone in the long run. Though if there are only people with Bitcoin that are going to be using mortgages and bitcoin then so be it.

Thanks :) My business primarily comes from local realtors and all referrals. I have been in the industry for a long time so I have a book of business. This one off was more of an experiment to see if we could get investors to allow bitcoin into a sellable mortgage.

It works, so if I can help a few extra people then cool, if not...that's ok too :)

I think this is quite complicated. Similar to the same incident earlier bitpay helped a person when the bitcoin price was around the value of about $1200. In that the advancing was done when the price was around $800 and the documentation took place when price was around $1200. This price difference gave the user a big profit margin that he own a Lambo after his documentation. Here I would wish to know what's the profit made through this long process.

We are years away from escrow allowing bitcoin to be sent directly to them for an earnest money deposit or a down payment. Do you own a home, or have you gone through the loan process before to purchase a new home within the past few years in the United States?  If you have, then you would realize that selling bitcoins and then being able to use it right away for a down payment is a big success.

For BTC to be sent directly into escrow, escrow would have to be willing to wallet and hold the bitcoins and eat the volatility because funds are held in escrow for 30 days or sometimes longer.

Ok, What if you can prove that the bitcoins you received, came from mining? It was not transferred from one address to another or through some doggy sites? Why do you have to make use of third parties like Coinbase? Do they do the dirty work to filter the money launderers from the legit users for you? You just need to read this forum and other platforms and you will receive several complaints from legit users, who lost their accounts at Coinbase for very silly reasons.

Why do you want to force people to make use of one payment processor or exchange? Did you cut a deal with them, if you use them? 

That would be a HUGE milestone and even though it won't make an impact on the price or the like, but would be a historical milestone for both bitcoin and the banking industry too, incorporating a digital-only currency into a mortgage payment system.

That would work too. At the point it becomes discretionary to the specific underwriting department who is underwriting the loan. Don't get me wrong but you are totally missing the point if you think I'm trying to pigeon hole people into coinbase. That is the complete opposite of what I'm trying to do.

Lending guidelines in the United States require all down payment funds to be seasoned for a minimum of 60 days. But if you could clearly document the original purchase of the bitcoins and then paper trail all the transfers and the sale at the end (I know this is against the ideology of a lot of bitcoin users), you should be able to use the funds from the proceeds of the sale of the bitcoins without seasoning the funds for 60 days.  I'm trying to show people an additional way to potentially use their BTC if they've been stockpiling them for awhile.

Our loan funded and title recorded the new deed on Thursday 6/29/2017.   Our client now has the keys to his new home and is in the process of putting doing some home improvements before moving in with his family.

Now I know people would think this would have been far more successful if Bitcoin was used and wired directly into escrow, but escrow companies are not yet set up to be able to store and/or sell crypto-currency. 

When buying in the United States, you can't wire in Euros, Pesos, Yen, or any other foreign currency....it all has to be converted to USD first, but this was definitely a major step in the right direction.

Of course if the Bitcoins are first converted into fiat this is possible. Why wouldn't it be?

This has got to be the stupidest thread I have seen in months. They sold their BTC for cash then used the cash to get the loan, period. BTC NOT incorporated into loan approval or used as down payment, you the OP offer NO service to this community the average broker who doesn't know what BTC would.

Your thread makes ZERO sense in what you are trying to say was accomplished, end of story you did nothing thousands of brokers not do everyday for everyone else.

Goodbye

Do you own a home? Have you gotten a home loan in the United States in the past two years? I'm assuming you haven't otherwise you would understand the process of verifying earnest money deposits for the initial deposits, and you would also understand the process of having to verify all transaction histories for the most recent two months of account statements for ANY account associated with the down payment OR the initial deposit.   If bitcoin was converted into cash within the last 60 days it would be disqualified from useable down payment funds.

You think I've done nothing, fine. Lol. You obviously have ZERO knowledge of the lending environment that we are in right now. If you don't believe me apply to buy a home, sell bitcoin and immediately  try to use it as a down payment right away and watch your offer fall right out of escrow

So they only got the loan because they owned bitcoin and not cash LOL

Youre clearly misguided or naïve, no point in arguing with a fool.

I'm actually in a very similar situation. I have a assets of bitcoin spread across many wallets and I want to use bitcoin (even converted to cash) as a down payment on a house purchase.... this is proving to be quite difficult to the underwriters. They want proof that I actually own the assets. Converting it to USD beforehand doesn't work because they want to know where the money came from which brings me right back to where I am now. They want actual statements but I can't get statements to my knowledge. If I move the coins to say coinbase, it's still going to show that I just moved the coins there.

I've given them trade, purchase, and sell history from the exchanges; but that is not enough according to them; as nothing is actually tied to my personal information (email/name is not enough according to the underwriter).

I suggested that I'd give them all the addresses I'd be using with signed messages that they could verify... but the underwriter is having a hard time understanding how this whole concept works. They're proposing that family members simply gift me the money and I pay them back after closing; but no one in my family has this kind of capital.

I'm probably going to sell the bitcoin into USD and wait for 2 months for the cash to be seasoned. If you guys have suggestions on how I can prove to the underwriters that I actually own the bitcoin, it'd be appreciated.

There needs to be a service wherbey you transfer those BTC over to the new service (call it ABCbitloans) and they lend you (in US dollars) x % against the underlying asset (bitcoin).

They hold your BTC, you use the cash (which they provide you with receipt/statement), and those funds can be transferred to wherever you like.

Bitloans then just either sells the BTC to recover loan less difference, or holds if they so wish.

Coinbase should be able to produce proof/account records for this matter, I could be wrong but we would have at CEX, provided the requestor identified themself enough. The purchases should be tied to fiat account action, or if the coins are old and from off exchange,  coin age (balance info) on the account should demonstrate previous ownership.

Hi Everyone, this is just a new 2018 update.

I know this thread has gotten a little old, but it has gotten a lot of interest.   Recently Fannie Mae and Freddie Mac have updated their guidelines to be a little more bitcoin friendly.

I currently have another 2 clients pre-approved that are working towards using Bitcoin for their down payment.   The Main difference now is that we do not have to have the USD sitting in the account for a month after the sale of the BTC.


If we can clearly papertrail the purchase of the Bitcoin, the sale of the Bitcoin (or Bitcoins), and match the corresponding deposit into your bank, the proceeds of the Bitcoin can now be used without having to season the funds.


If you have bought a home recently, or are currently trying to go through the process, you know exactly what I am talking about.   Please feel free to send me a PM.

Sorry I haven't been as active on this forum lately, but I will be frequently checking my PMs, as I have been able to help a few people already :)

Was just able to get another client pre-approved in California to purchase a home with 100% of the down payment coming from Bitcoin.   He should be commenting here on how the process has gone so far.

It is definitely getting easier as time goes on :)

Things may vary state to state depending on which investors are lending in certain areas, so please don't hesitate to ask any questions.   

Hi everyone -

I am the client referenced above and I can confirm that everything keithers has said is true. I tried reaching out to multiple lenders which all said it was not possible before finding keithers on this forum, so I was initially pretty skeptical going into it. However, he quickly showed me that he was serious about his claims; and in fact, the whole process has been much easier than the first time I went through the process years ago with a big bank.

Additionally, he is incredibly responsive and easy to work with. He has also proven to be very knowledgeable both in terms of bitcoin/crypto and mortgages/real estate. I would highly recommend giving him a shot.

Nick

Thanks Nick!  Hoping we can find you a home soon :)    Feel free to PM me if anyone has any questions.  Sorry for the delayed response back in December, I wasn't active on the forum, but I am back here and will be around to answer any questions or provide any help that I can to fellow Bitcoin users...

The first case in the world of buying an apartment for cryptocurrency was in Kiev. It is the capital of Ukraine. The deal was for Ethereum. She was served by lawyers from Ukraine and America. The seller was a Ukrainian millionaire and the buyer was a millionaire from America. You can take advantage of their experience. The name of the seller Mark Ginsburg.

Thanks, I'll look into it.  There have been several people who have sold their home for Bitcoin (and/or other cryptocurrencies), but most if not all of those transactions took place like an "all cash offer"  meaning that they buyer transferred the Bitcoin and then a title company recorded the buyer as the new owner of the property.   It is a little more complicated when trying to use Bitcoin as the down payment to obtain a loan because you need to get the investor to accept Bitcoin being a liquid asset.  We've managed to do it and expect it to become easier and easier as time goes on. 

The main challenge is that there are a lot of anti-money laundering guidelines that we have to be certain we are in compliance of.   

I don't know much with other countries and how system goes, but in ours, I have witnessed firsthand that bitcoin were converted to fiat money and bought properties. He has a few good properties at present and he obtained it thru bitcoin.
Given that ,I believe bitcoin, if converted to fiat money can be used to buy any and all properties. It will then be the risk taken by the crypto exchanger should prices fluctuate.

A mortgage traction like that happened in the Seattle area not long ago: https://www.seattletimes.com/business/real-estate/bitcoin-like-cryptocurrency-used-to-buy-home-in-tukwila-likely-a-first-for-seattle-area-market/.  Before the transaction closed, the crypto was converted to USD.

On another note, check out the ICO for RLCoin, an enterprise solution for loyalty: www.rlcoin.io.  The product has traction with 250 clients and partners in Europe and Asia.

I would be curious to know how it is in other countries. I've been fantasizing myself to buy at some point a home with the money originated by selling some cryptosurrencies and I guess that the possible complications are quite a mystery in most of the countries, as laws are missing to contemplate that you can get money selling bitcoins.

Unfortunately, everyone is a LONG way off from just being able to send in BTC (or any other crypto) directly to an escrow company as the down payment (if you are trying to obtain a loan).   The big jump that we were just able to make was the ability to sell the BTC and use it for down payment funds without having to leave the USD sitting in your bank for 2 monthly statements (which was generally required) for any conventional, FHA, or VA loan.  

I know that sounds like a tiny step, but anyone who has purchased a home in the USA in the past few years can vouch for the typical difficulty of going through the Underwriting process.   

I am trying to do this currently from Coin Base but they are not accepting the reports that are provided by Coin Base since they are CSVs.
I have also provided screen shoot from the account and they denied those as well.
How were you able to provide document ion for Coin Base?


Thanks

Can’t you just take a screen dump?

cryptocurrency can allow you to make a payment as ordinary money, if you make a deal with an individual. since in this case it can be written in the contract that you exchange values, the rate of which is fixed at the time of the transaction, and therefore can serve as an advance

Grave digging this old thread since a lot has changed over the past couple of years.  Bitcoin can now be used as assets for down payment or reserves as long as it is converted into USD.   Up until pretty recently, you would have had to sell the bitcoin (or other crypto), and then let the funds sit there in your bank account for at least 60 days before it could be used in correlation with a home loan.   

The USD does not have to be seasoned as long as the owner of crypto account (i.e. Coinbase, etc) can be verified.

I have gotten a lot of questions on this, so I thought I would just provide a brief update.