You Can Now Get a Bitcoin-Backed Mortgage Without a Credit Score

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Miami-based startup Milo Credit offers Bitcoin-backed mortgages to allow people to buy homes without selling their coins. In the United States, as in most countries, selling crypto for fiat is a taxable event. This means that any gain or loss since purchase is realized at the point of sale and therefore taxed, which is due to the relevant authority. If the crypto holder made any gains from the sale, the tax owed could be significant.

Crypto Mortgages

Bloomberg reports that a Florida man, Vincent Burniske, secured a “30-year fixed rate mortgage secured by a portion of his Bitcoin and Ethereum holdings.” Milo Credit’s mortgage claims to allow homeowners to “mine your crypto to invest in real estate.” Our strategy matches yours – keep HODLing.

According to their website, the rates are as low as 3.95%, with the crypto being held by Gemini and Coinbase. The crypto mortgage offer is $5 million, but requires at least 100% of the loan value in crypto to secure the loan. Unlike traditional mortgages which can go down as low as 3.5% of the loan value, this crypto mortgage requires you to hold the full value of the property you are buying in crypto. The crypto is then held in sub-accounts with Gemini and Coinbase to ensure all coins are held separately.

According to Milo’s website, the process is faster than a traditional mortgage application. You can also pay your mortgage payments using stablecoins, but not Bitcoin or Ethereum.

You don’t need a credit score.

Additionally, Milo Credit does not require a FICO credit score to acquire a mortgage. The value of the cryptocurrency is considered sufficient to guarantee solvency. That fine print is potentially huge for many people who struggle to get on the property ladder.

6ix9ine recently created a video highlighting how you can be rich without being considered eligible for a mortgage in today’s society. He later admitted that the money in the video was incidental money, but the message still rings true for many alternative investors and gig economy workers.

Self-employed people have to go through many steps before being approved for a mortgage. You must show a strong credit rating for most mortgages. However, this doesn’t just mean having a good credit rating; you can be rejected for not having a score. If you don’t have monthly charges or don’t use a credit card, your score may be blank, which can be as embarrassing as having an unpaid debt when applying for a loan.

Additionally, if your main source of funds is in the form of crypto payments, it can be nearly impossible to convince a traditional bank to accept you for a loan. A crypto-backed loan that does not require a credit check can open doors for young crypto investors and freelancers who, until now, have been forced to rent or live with their families.

Clearance

You may run into trouble with a traditional mortgage if the housing market crashes, causing you to have negative equity with your home. This is where you owe more than your home is worth. If you have a $100,000 mortgage on a house worth $120,000 and the housing market drops 20%, your house is worth $96,000, but you still owe $100,000. In some cases, the bank may ask for additional guarantees or, in extreme cases, seize your house. After the 2008 mortgage crisis, hundreds of thousands of homes were repossessed.

However, with a crypto mortgage, you can rely on the price of Bitcoin to secure the roof over your head. Milo will issue a margin call if the value of your crypto holdings falls below 65% of its original value. If this happens, then you have 48 hours to increase your guarantee.

They claim they don’t “automatically liquidate”, but they will manually liquidate your assets if the value drops to 30% of the original collateral. Conversely, if the value of your crypto increases, you can withdraw the excess on an annual basis or reduce your interest rate.

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