More than 1 in 10 first-time home buyers sold crypto to fund down payments — Here’s what to know before you do it

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Many Americans are using their instincts to fulfill the American dream – and the trend shows no signs of stopping.

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About 12% of first-time buyers indicated that selling cryptocurrency holdings contributed to creating a down payment for a home, according to Redfin. a survey conducted by

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in the fourth quarter of 2021. This is up from 8.8% of surveyed buyers in Q3 of 2020 and 4.6% of novice home buyers in Q3 of 2019.

For comparison, this roughly corresponds to the share of first-time buyers who relied on cash gifts from family for their down payments. Meanwhile, 52% of first-time home buyers said they increased their down payment by saving the money they earned through their paychecks.

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“Cryptocurrencies are a way for people in the middle class to win lottery tickets,” said Daryl Fairweather, chief economist at Redfin, in the report.

Redfin noted that cryptocurrencies could become a big driver of down-payment savings, as Millennials and Gen Xers dominate the housing market. Those buyers are also more likely to invest in cryptocurrencies like bitcoin BTCUSD than older investors,
Ethereum ETHUSD

and Dogecoin DOGEUSD,

But as home buyers who rely on their crypto income to fund their home purchases can find, the process is not always straightforward. One such buyer – software engineer Terence Leonard – told Businesshala last spring that investing in crypto made it possible to buy the home of his dreams.

“Without investing in crypto there would be no way that I could buy it when it hit the market,” Leonard, who lives in Washington, DC, told Businesshala.

However, as they discovered, converting crypto to a down payment was somewhat of a challenge. He simply could not transfer crypto investments or show his account balance on Coinbase Coin

To satisfy the lender and title company’s requirement for proof of funds. As a result, he needed to cash out his crypto investments in a bank account, just as one might do with money earned in the stock market.

Meanwhile, the mortgage industry is grappling with the need to update lenders’ software and processes for this increasingly popular property.

Lenders will typically request a paper trail for a crypto account demonstrating a 30- to 60-day transaction history. But, as mentioned in Veterans United Home Loan a blog postCryptocurrency accounts do not always provide monthly statements as do banks. As a result, many lenders expect borrowers to redeem their crypto investments early in the process.

“You can’t just pay your closing costs with Van Gogh – it’s the same with your bitcoins,” Chris Birk, education director at Veterans United, told Businesshala. “It has to be converted, it has to be seasoned, and there’s going to be documentation to satisfy the lender.”


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