Cryptocurrency, once a niche investment asset, is becoming more mainstream with millions of people currently holding crypto assets in their portfolio. Newrez was the first major mortgage provider (of the top 25 lenders in the United States*) to accommodate this growing audience by accepting eligible crypto as proof of funds for certain types of mortgages.
Click to navigate:
1. What "Proof of Funds" Means in a Mortgage Transaction
2. What Does This Mean for Borrowers Holding Crypto?
3. A Few Things to Keep in Mind
What “Proof of Funds” Means in a Mortgage Transaction
Proof of funds means you can document that you have enough money available to purchase a home. That usually includes some combination of earnest money, which is a good-faith deposit given upfront to the seller, down payment, closing costs and required reserves after closing.
If a borrower’s crypto assets are properly and securely held, fall into a lenders list of acceptable crypto assets, do not create unexplained risk and can be verified and traced in accordance with lender requirements and program rules, a percentage can be accepted as proof of funds.
What Does This Mean for Borrowers Holding Crypto?
- Newrez will recognize eligible crypto assets when qualifying borrowers for select home loans, specifically our Smart Series mortgages.
- A percentage of a borrower’s eligible crypto assets is used by Newrez for asset verification and income estimates on select loan types.
- The borrower can use crypto as collateral to qualify for the loan without needing to liquidate their positions.
A Few Things to Keep in Mind
Although crypto can help you qualify as part of your overall assets, agency-backed underwriting standards require U.S. dollars to be used for down payments, closing costs or reserves. If borrowers choose to use crypto for those transactions, they will need to convert their digital assets into U.S. dollars, have them placed in a regulated financial institution and verified before closing. Cash to close will be adjusted for deposits, seller credits and other items. Lenders need to verify the source of funds you bring to closing.
Lenders may also have restrictions around the types of crypto that they will accept. Newrez will consider Bitcoin®, Ethereum®, U.S.-listed ETFs, and USD-backed stablecoins. Eligible crypto assets need to be held with U.S. regulated crypto exchanges, retail FinTech apps, SEC/FINRA-regulated brokerages, or nationally chartered banks under OCC oversight. Learn more about Newrez crypto requirements.
To learn more about how your crypto can help you qualify for a mortgage, reach out to a Newrez loan expert today.
