Downpayment Source with Crypto?

Question

Hello!

Just wanted to reach out to the community and see if anyone had sourced some or all of their down payment funds from cryptocurrency (bitcoin, ether, ltc). As you may know there has been an explosion in prices recently and I would love to purchase another property using some of these funds. Has anyone had any luck with this? Would love to hear your story!

Andres Vanegas · Answer

Update: Closed a couple of days ago, most of the downpayment was funds from a BlockFi loan.

It's possible folks!

Justin Phillips · Answer

@Andres Vanegas If you've seen some of the gains that the overall Crypto market has in recent months, you'll definitely want to keep that tax bill in the back of your mind. That said, if it's converted to cash, I don't foresee any issues for qualification. If anything, just let the cash season in your savings account for a few months. All that said, probably best to find a lender you want to do business with, and consult with them. Every underwrite situation might have different quirks. Unfortunately, I don't have any NY lenders in my network, but I'm sure you can find a great option right here on BP. Best of luck!

Matt R. · Answer

One option might be is to take a loan out it to skip the tax hit. You can get upto 50% or so. Good luck!

Andres Vanegas · Answer

@Taylor L. - yep that is the plan! In my initial property purchases I have had to source where the down payment funds have come from. Since it would be coming from a crypto exchange (Gemini, Coinbase, Kraken) - services which may not be typical for a traditional bank, I was hoping to catch someone that had had some experience doing so and see if there were actual issues or not. I hope that makes sense.

Michael Flight · Answer

@Andres Vanegas have you looked into depositing some of your crypto with BlockFi or similar service and then borrowing against it?  That way you would not need to sell and take a gain and you would still have your crypto as it increases in value.

Matt R. · Answer

There are several doing the loans. Check a few perhaps. Nexo is one. No seasoning required. Good luck.

Matthew Brill · Answer

I would take the loan with Blockfi or similar. No tax hit and you can stay long your crypto (but will have an interest payment). As previously mentioned, when getting the crypto loan if you have it sit in your checking/savings account for 3 months+ then you won't have to source the money (the lender will ask for your 2 most recent bank account statements for underwriting).

Patrick McGuffey · Answer

@Andres Vanegas the credit union was better in pretty much every way. This was a conventional loan to house hack a duplex. Reserves are just the cash I have in backup. Idk why they required it or if that is normal

Andres Vanegas · Answer

@Michael Flight I think at the moment I’m less concerned with gains tax and have a greater concern around just being able to explain what’s going on to the fine folks at the bank! I may go the route of placing some of my BTC with Blockfolio for a loan though so I can play with the rest in DeFi. Clocks ticking and I’m almost ready to make a move.

Andres Vanegas · Answer

@Patrick McGuffey seems like it is really lender to lender with how they source downpayment? Off crypto topic- was the rate better or worse for quicken v. your credit union? Also you mention reserves, was this an investment mortgage?

Downpayment Source with Crypto?

Most Popular Reply