Can You Really Buy A House Without Selling Your Crypto? | Vishal Garg

Vishal Garg frames the US mortgage market as a 15 trillion dollar system where a 400 basis point spread between mortgage yields and deposit funding costs exists, but roughly 300 of those basis points are consumed by inefficient people and processes. He estimates this costs US households approximately 450 billion dollars per year, or about 4,500 dollars per homeowning household annually. Banks spend around 15,000 dollars to manufacture a single mortgage due to post-financial-crisis regulatory overhead, which is why Wells Fargo, Chase, and Bank of America have largely exited origination.

Better, founded in 2014, has originated 110 billion dollars in mortgages and reduced its cost to originate to under 2,000 dollars on its platform business versus an industry average of roughly 12,000 dollars. Its direct-to-consumer channel costs around 6,000 dollars, with about 4,000 dollars of that being customer acquisition. Better sells originated loans at approximately a 2% premium, yielding around 8,000 to 8,500 dollars on a 400,000 dollar mortgage and roughly 2,000 dollars in profit per loan. The company and its partners are running at approximately 8 billion dollars in annualized origination, roughly doubling year over year. The platform and partnership business, which includes Credit Karma, Coinbase, Lending Club, and Finance of America, now accounts for over 50% of revenue.

The Bitcoin-backed mortgage product developed with Coinbase is the episode's central topic. It allows borrowers to pledge Bitcoin or USDC held in Coinbase custody in lieu of a down payment on a Fannie Mae eligible mortgage without selling the crypto. Competing crypto mortgage products require pledging 100% of the home value in crypto and include margin call features. Better's product requires only the down payment equivalent and carries no margin calls as long as payments are made on time. A couple in Michigan used the product to obtain a 6.5% fixed 30-year rate on a fully financed home. Garg argues that if the pledged Bitcoin appreciates more than 8% per year, the Bitcoin effectively pays for the house. He identifies accumulating a down payment, not servicing monthly payments, as the primary barrier to homeownership, and points to approximately 35 trillion dollars in household stocks, bonds, and digital assets as underutilized collateral.

Better is building toward accepting any tokenized asset as mortgage collateral, including stocks, bonds, currencies, and commodities. The company is starting with Bitcoin and USDC, is in conversations with large ETF providers and S&P 500 companies about expanding the list, and says Fannie Mae and Freddie Mac have validated the approach. Garg also argues that tokenizing mortgages makes more sense than tokenizing real estate because the mortgage market trades 180 billion dollars a day and the instruments are already standardized. A publicly traded ETF called MBB holds about 40 billion dollars in agency mortgages at a net yield of 4.1% while underlying rates are around 6%, with roughly 2.5% lost to intermediaries. Better partnered with Sky and Framework to access a 500 million dollar credit line backed by tokenized mortgages, though that facility is not yet live. Garg estimates that short duration capital from Sky could reduce cost of capital by 25 basis points and long duration tokenized capital by 100 basis points, potentially lowering mortgage rates by 50 to 100 basis points and improving affordability by roughly 1,000 dollars per month.

On AI, Garg says human mortgage underwriters earning an average of 210,000 dollars per year cannot realistically memorize 800 pages of guidelines across up to 45 investor rule sets, while AI applies those rules uniformly and without bias. Better has deployed AI loan officers, processors, and underwriters that reduce underwriting time from 21 or more days to minutes. Garg says the company could reach profitability without blockchain but not without AI, and that AI is simultaneously expanding revenue by operating around the clock and reducing costs by giving existing staff ten times the leverage.

Better's stated top priority is reaching adjusted breakeven by September, roughly three months from the time of recording. The stock trades at approximately two to two and a half times current run rate sales, and Garg believes the market views it primarily as a rate-decline call option rather than an AI platform story. He says he has been personally buying the stock. The long-term vision is for Better to function as the Stripe for loans, with the platform business eventually exceeding direct lending in scale, supported by a proprietary labeled dataset on every house, appraisal, and consumer in America that Garg says competitors left sitting in unstructured PDFs.