Make your traditional mortgage down payment with crypto

RealOpen allows you to fund your down payment and closing costs with crypto–even when you get a traditional mortgage.

While using crypto to present as a cash buyer is awesome (and "I bought my brownstone with Bitcoin" sounds cool), it doesn’t always make sense to fund an entire purchase with your crypto. So when financing a home purchase with a traditional mortgage, can you use crypto to make your down payment via RealOpen?

Absolutely. Let’s discuss.

Why not be a cash buyer?

If you have droves of digital assets and you’d prefer to avoid the wonderful world of mortgage financing, head on over to our commentary on buying real estate with crypto as a cash buyer. And congrats on your crypto success!

Unfortunately that cash scenario isn’t always feasible. As a rule-of-thumb, a typical home buyer is looking to spend 2- to 3-times their annual salary on a primary residence…yet the average American saves less than 5% of their annual salary. That’s some ugly math, translating to a long wait for a cash real estate purchase. The mortgage apparatus exists because leverage is often a necessity when buying real estate. 

In addition, financing a real estate purchase often makes sense so that cash assets can be utilized elsewhere (e.g., in other profitable investments.) And for us crypto fanatics, using crypto to buy a home means trading a crypto position for a more traditional real estate position. (Of course, at the time of this writing, the crypto market is up while real estate is soft—suggesting it’s an opportune time to make such a position trade.)

Finance with a traditional mortgage and make the down payment with crypto

A home purchase with a typical traditional mortgage requires a down payment of anywhere from 5% to 20% of the purchase price. Add another 2% to 5% for closing costs and prepaid items (depending on your area), and you’ll be coming to closing with 7% to 25% in fiat funds—let’s call this your cash-to-close. You can absolutely fund your cash-to-close with your crypto assets via RealOpen.

On closing day (or just before, if you’re the prepared type), you’ll send a crypto transfer to RealOpen. We will convert your crypto to fiat funds at preferred pricing (i.e., better than you’ll find on a public exchange), and then wire the fiat funds to escrow to fund your purchase. It’s the same mechanism you’d experience when paying for the entire purchase with crypto assets: immediately following your transfer we’ll trade your crypto for fiat off-market via our prime OTC desk, in a single fill, with no slippage and no withdrawal limits.

Read the full explanation here: Buying real estate with crypto: shouldn’t this be easy?

Caveats and Gotchas

Keep in mind that while RealOpen is happy to facilitate this transfer, your lender might have their own lender-ish concerns and/or restrictions (depending on how your loan is qualified.) Most lenders will require you to show sufficient (typically non-crypto) assets to cover the cash-to-close and any asset reserves required to qualify for the loan. It’s no issue if you have sufficient cash to cover these requirements, but you’ll need to talk with your loan officer if you need the crypto assets to be included in your qualifying calculations. 

Crypto for closing

Working with RealOpen to fund large purchases with crypto saves you huge amounts of money (often 5% to 10% of the purchase price for traditional crypto) and sidesteps obnoxious and restrictive exchange withdrawal limits—whether you’re buying with Bitcoin, Ethereum, Tether, or whatever your preferred flavor. And that absolutely applies to the down payment scenario.

Ready to get started? Create your RealOpen account, or reach out to us with any questions here: Contact RealOpen

Johnny Schiro is RealOpen’s SVP of Business Development as well as the Broker/Owner of Icon Real Estate - an independent real estate brokerage in Houston, Texas.