Key Points Overview

• Bitcoin mortgage loans allow holders to use BTC as collateral to borrow dollars or stablecoins, thereby maintaining an exposure to the Bitcoin price, and usually avoid taxable events that would arise from selling.
• The loan-to-value ratio ( LTV ) is usually between about 30% and 70%; if the price of Bitcoin drops significantly, borrowers may face a notice to add more collateral or be forced to liquidate their positions.
• Since the wave of loan institution failures in 2022, this market has matured, with the emergence of investment-grade securitization products, and large banks have also joined in. However, the public interest rates are still generally between 5.8% and 14%.

Many people who have held Bitcoin for a long time are aware of this issue: you may need cash to pay a down payment for a house, to run a business, or to pay taxes, but selling BTC means giving up the potential for future price increases. In many countries, it also means having to pay capital gains tax. Bitcoin mortgage loans provide an alternative: you use Bitcoin as collateral to borrow dollars or stablecoins.

This concept is as old as lending itself. For a long time, people have used houses, stock portfolios, and gold as collateral for loans. The new change lies in the collateral itself – an asset that is traded 24 hours a day and whose price can fluctuate by double digits within a week.

This market collapsed in 2022, during which lending institutions including Celsius and BlockFi went bankrupt one after another. According to data from Galaxy Research, the market has since recovered in a more cautious manner, and the scale of centralized lending has more than tripled since the bottom of 2023.

This article will introduce what Bitcoin mortgage loans are, how they work, which providers offer them, and the risks that borrowers should be aware of before applying.

What is Bitcoin mortgage lending?

Bitcoin mortgage loans are a type of secured loan that uses BTC as collateral. You deposit your Bitcoin with the lending institution or lock it in a smart contract; in exchange, you receive a loan amount equivalent to a portion of the value of that Bitcoin, which can be paid in fiat currency such as US dollars or stablecoins like USDC.

During the loan period, your Bitcoins will be locked. You will only be able to retrieve them after you have repaid the principal and interest.

Lenders place more emphasis on collateral than on your income history, which is why many of these loans require little to no traditional credit checks at all. They can be roughly divided into two categories:

• Centralized (CeFi) loans: Provided by companies such as Ledn, Strike, Unchained, Nexo, and Coinbase. You will need to complete identity verification, and your BTC will be held by the company or its custodian.
• Decentralized (DeFi) lending: Provided by protocols such as Aave and Morpho. Collateral is held by smart contracts, while the native BTC typically needs to be "encapsulated" first into a token on another blockchain.

Do you know?

Wrapped Bitcoin is a type of token deployed on other blockchains (such as Ethereum), backed by 1:1 custody of real BTC. It allows Bitcoin to be used in DeFi applications.

How does Bitcoin mortgage lending work?

The key indicator is the loan-to-value ratio ( LTV ), which is the proportion of the loan amount relative to the value of the collateral. In the industry, this ratio ( LTV ) typically ranges between 30% and 70%, with many lenders starting from 50%. Based on a loan-to-value ratio of 50%, Bitcoin valued at $100,000 can be loaned out for $50,000.

This buffer space is very important because Bitcoin is highly volatile. If the price of BTC falls, the price of your LTV will rise. Lenders usually set thresholds:

• Margin Call Notice: If LTV rises above a certain set level, you will be required to provide additional collateral or repay part of the loan.
• Forced liquidation: If LTV continues to rise, the lender will sell some or all of your bitcoins to cover the debt. In DeFi, this step is usually automatically executed by the smart contract.

Loan terms vary from product to product. Some products have a fixed term of 12 months with monthly interest payments. Other products, such as the loan Coinbase, do not have monthly payments or a specified repayment deadline; instead, interest continues to accrue on the remaining balance.

Do you know?

"Re-pledge for use" (rehypothecation) refers to the practice where lenders lend your collateral to others again in order to earn additional profits. When multiple lending institutions went bankrupt in 2022, this was a significant reason why customers lost their deposits.

What makes Bitcoin mortgage loans special?

Its greatest attraction lies in the fact that you can obtain cash while retaining Bitcoin. In many jurisdictions, borrowing itself is not a taxable event, but selling assets is. However, it is still necessary to check the local regulations for specifics.

This field has also become more mature. Lenders now advertise that they will not re-pledge the collateral, and some even offer “collaborative custody.” For example, Unchained stores the loan collateral in a multi-signature vault with two or three signatures: the borrower, Unchained, and an independent key agent each hold a key, so no single party can transfer these coins on their own.

Wall Street has also begun to pay attention. In February 2026, Ledn completed a Bitcoin-backed asset securitization transaction worth $188 million. S&P P Global assigned an initial “BBB-” rating to the $160 million of the preferred portion; SVB described it as the first Bitcoin mortgage portfolio to receive an investment-grade rating. Galaxy stated that in the second quarter of 2026, the total scale of crypto asset mortgages was $56.16 billion, a decrease of 16.8% from the previous quarter, due to borrowers reducing leverage; at the same time, the scale of loans currently held by centralized lending institutions has exceeded that of the DeFi protocol.

Do you know?

According to Coinbase, the scale of its Bitcoin mortgage loans has exceeded $1 billion.

Who is offering Bitcoin mortgage loans?

• 🏦 Ledn: A lending institution focused on Bitcoin, offering managed loans, with collateral that will not be lent out again.
• 🔐 Unchained: Provides commercial loans stored in multi-signature vaults, where the borrower holds one of the keys themselves.
• ⚡ Strike: Provides Bitcoin mortgage loans to individuals and businesses in some states of the United States.
• 🔵 Coinbase : Runs on-chain loans via the Morpho protocol, available in most states of the United States.
• 💳 Aven: In April 2026, a Bitcoin-backed Visa credit line will be launched, with a maximum limit of up to $1 million.
• 🌐 Nexo: Provides instant credit lines secured by BTC and over 100 other assets, mainly targeting users outside of the United States.
• 🧮 Aave: A DeFi lending agreement, where users can use the encapsulated BTC as collateral for borrowing.

What is the cost of Bitcoin mortgage loans?

Interest rates depend on the loan amount, LTV, and the provider, and they often change. As of October 2026, the lowest publicly available interest rate was approximately 5.8% for loans of Coinbase. The annualized interest rates ( APR) advertised by SALT ranged from 7.49% to 10.5%; for loans under $250,000, the interest rate was 11.49% APR, but it dropped to 9.25% for loans of $2 million and above. Strike charges 10.5% to 13% APR for monthly interest payments; if interest is paid at maturity, the rate is 1 percentage point higher. Unchained offers an interest rate of 12%, or 14.18% APR. The interest rate of DeFi fluctuates with supply and demand. Generally, the lower the LTV and the larger the loan amount, the more favorable the interest rate.

Also be aware of the loan disbursement fees, early repayment penalties, and forced liquidation costs. These fees can make the actual cost much higher than the apparent interest rate.

How to obtain a Bitcoin mortgage loan

• Selection of providers: comparison of hosting modes, whether to re-pledge collateral for further use, interest rates, and operational regions.
• Complete KYC: Centralized lenders will require identity verification.
• Choose LTV and the more conservative LTV to leave more room before triggering additional margin requirements.
• Deposit BTC into the lender's custodial account, multi-signature treasury, or smart contract.
• Collect fiat or stablecoin funds, then continue to follow LTV, and unlock your Bitcoin after repayment.

The Future of Bitcoin Mortgage Lending

Bitcoin lending is starting to become more and more like traditional finance. With the passage of the U.S. GENIUS Act, the regulatory environment has become clearer, and this administration also holds a friendly attitude towards the crypto industry, although the broader CLARITY Act was blocked in the Senate in September 2026. SVB indicates that several large financial institutions have launched Bitcoin mortgage services for specific customers in the first half of 2026.

In the future, more banks may participate, and there will be more securitization products that receive ratings like Ledn, as well as more consumer-oriented products such as credit cards and loans with longer terms. However, the core risk remains unchanged: if the price of Bitcoin drops significantly, borrowers with excessive leverage will be forced to liquidate their positions.

DeFi Borrowers also face additional risks. In April 2026, after the infrastructure related to the Kelp DAO project was attacked and attackers stole $291 million, users of the lending protocol Aave faced difficulties in withdrawing their funds, with a total of $6.2 billion flowing out at that time. Borrowing should be approached conservatively, and it is important to be clear about who actually holds your coins.

Disclaimer

This article is for informational purposes only and does not constitute financial advice.