Welcome back to KPA Wealth. — Today’s post, we dive into a headline that’s making waves: the potential for cryptocurrency to play a role in mortgage approvals. With the FHFA directing Fannie Mae and Freddie Mac to evaluate crypto as a qualifying asset, it’s essential to understand what this means for you, your investments, and the housing market as a whole. Let’s explore the opportunities and the risks behind this evolving policy.

• Fannie Mae and Freddie Mac May Soon Consider Crypto in Mortgage Approvals: Here’s What That Really Means

• What’s Changing?

• Why This Development Matters

• Why This Is a Bad Idea

• Today’s Mortgage Rates

Fannie Mae and Freddie Mac May Soon Consider Crypto in Mortgage Approvals: Here’s What That Really Means

There has been a surge of excitement in crypto circles after news emerged that Fannie Mae and Freddie Mac may begin factoring cryptocurrency into their mortgage risk assessments. But before anyone assumes they can buy a home with Bitcoin tomorrow, it is important to understand what is actually changing and what remains the same.

What’s Changing?

Federal Housing Finance Agency (FHFA) Director William Pulte has directed Fannie Mae and Freddie Mac to take the following actions:

• Begin preparing proposals that evaluate cryptocurrency as an asset when assessing risk for single-family mortgage loans
• Allow borrowers to count crypto holdings toward their asset reserves without converting them into U.S. dollars
• Limit eligibility to cryptocurrency assets stored on U.S.-regulated centralized exchanges that comply with all applicable laws
• Include additional protections, such as higher asset buffers, to account for the volatility of digital assets

This directive is part of a broader effort aligned with former President Trump’s stated goal to position the United States as a global leader in digital assets.

Current Mortgage Policy: Crypto Must Be Liquidated

Under existing guidelines, crypto assets must be sold and converted to U.S. dollars to be considered in the mortgage application process. For example:

• If a borrower has $100,000 in Bitcoin and wants to use it for a down payment or closing costs, it must be sold and deposited into a U.S. regulated financial institution
• The funds must be verified as U.S. dollars before the loan is finalized
• Any large deposits must be traced back to the borrower’s crypto holdings

How Does Crypto Compare to Stocks?

Currently, stock and mutual fund assets can be counted toward reserves without being liquidated if their value exceeds the needed amount by 20 percent. If that buffer is not met, then the borrower must document the sale of the asset. This is nearly identical to how crypto is handled today, although crypto has generally faced stricter treatment.

Why This Development Matters

If implemented, these changes could have several effects:

• Enable cryptocurrency holders to qualify for mortgages without selling their assets
• Reduce financial friction for buyers with significant digital holdings
• Give banks more flexibility in assessing creditworthiness using modern investment portfolios

This is not a move toward lenient lending. Only crypto held on regulated U.S. exchanges will be considered, and risk mitigation will likely include stricter valuation discounts or larger reserve requirements.

Who Stands to Benefit?

• Cryptocurrency investors who prefer to maintain their holdings
• First-time homebuyers with modern investment profiles
• Banks and lenders seeking to serve a more diverse base of borrowers while maintaining risk controls

Industry Reactions

Many experts have praised the move as both forward-thinking and cautious.

• Daryl Fairweather, Redfin’s chief economist, said the change is acceptable as long as lenders appropriately adjust for crypto’s volatility
• Danielle Hale of noted that this approach could broaden the pool of eligible homebuyers who previously would have been required to liquidate their digital assets

Personal Commentary: Why This Is a Bad Idea

While it might sound progressive to treat crypto like stocks in mortgage evaluations, this is a fundamentally flawed approach. The volatility of crypto is far more extreme than traditional equities, with daily price swings that can wipe out tens of thousands of dollars in a matter of minutes. Unlike stocks, which are backed by companies with earnings and assets, many cryptocurrencies are speculative tokens with no intrinsic value (despite what some thing). Mortgage lending depends on stability, predictability, and sound risk management. Introducing crypto into the equation opens the door to financial instability, especially if housing markets face pressure. If crypto values plummet after a loan is approved, borrowers could suddenly find themselves without the reserves they were qualified on, exposing lenders and ultimately taxpayers since Fannie and Freddie are still under federal conservatorship to unnecessary risk. Until digital assets mature into a more stable and regulated financial tool, their inclusion in government-backed mortgages is premature and potentially dangerous.

If cryptocurrency is formally integrated into mortgage qualification criteria, it could have wide-reaching effects on the housing market. By expanding the pool of eligible buyers especially younger, tech-savvy individuals who hold significant crypto assets, demand for homes could increase, potentially driving up prices in already competitive markets. This added demand may place further strain on housing inventory, which remains historically low.

Conclusion

The FHFA’s directive is a significant step toward modernizing mortgage eligibility criteria. While the policy is not yet finalized, it signals a growing acceptance of digital assets in the mainstream financial ecosystem. For now, buyers should not expect any immediate changes but can look forward to a future where their crypto portfolio may help them qualify for a home loan—though perhaps not without consequences.

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Kyle Allgair
CEO of KPA Wealth
📞 (279) 977-8149 | ✉️ [email protected]
🌐 KPAhomeloans.com

Kyle Allgair is the CEO of KPA Wealth, and is continuously helping clients build wealth through real estate and strategic financial planning. Contact him for personalized advice on achieving your financial goals.