Title Tip: Can You Really Buy a Home With Cryptocurrency?

Have you seen some of the internet stories that claim it’s possible to buy a home with cryptocurrency?

These interesting tips and suggestions are given by folks trying to sell and promote cryptocurrency.

The truth of the matter is that you currently cannot purchase real estate in Texas with any currency other than U.S. dollars. Rumors and various stories continue to swarm about the future of cryptocurrency and its buying power as this virtual currency industry continues to evolve.

I’m not an authority on cryptocurrency by a long stretch. But simply said, cryptocurrency is like a commodity. Folks buy and invest in it with the belief that the value will grow over time. Like investing in oil, beef, or soybeans, the value may go up or down. The price could soar. Or the cow may die, the crops could rot, and they’d be worth nothing. Just like those other commodities, you can’t buy a house with it. You must first sell it for U.S. currency which can then be used to purchase real estate in Texas.

Converting Crypto

Converting cryptocurrency, Bitcoin, virtual currency, digital money, etc. to U.S. dollars requires going through an exchange or broker. The process is similar to converting foreign currency but without an exchange rate set by economic structures. Exchange companies charge fees for conversion and the transactions are reported to the taxing authorities. These companies advertise that the process takes four to six business days.

Once the funds have been converted, the bank that receives the deposit may also have a hold period. Any funds in a hold period may not be accessed or withdrawn. The bank wants to ensure the funds are legitimate. The amount of time a bank can hold the funds can vary but can be several days or several weeks, depending on the amount.

I’ve seen a couple of transactions this year terminate because the buyer was converting their cryptocurrency for their down payment and the process became weeks long.

What The Feds Say About It

The government-run Fannie Mae program recently announced requirements for virtual and cryptocurrencies in real estate transactions. Their new policies went into effect immediately.
The Feds have established that purchase funds and earnest money may not be made with virtual currency. Rental income payments must be in U.S. dollars as well. Income paid as a virtual currency may not be considered when qualifying for a mortgage loan.

The Fannie Mae guidelines allow for virtual currency that has been exchanged into U.S. dollars to be accepted for down payments, closing costs, and financial reserves. But only if there is documented evidence that the exchange was into U.S. dollars, funds are held in a U.S.- or state-regulated bank, and funds are verified before the loan closing.

No-Go on The Crypto

For now, forget the sales pitches from the cryptocurrency companies. A title company in Texas will not accept pesos, rubles, or any other currency that is not issued by the U.S. government.

The only kind of home you can buy with your virtual currency is a virtual home. Real property must be purchased with real U.S. money.

The opinions expressed are of the individual author for informational purposes only and not for legal or financial advice. Contact an attorney or accountant for any particular issue or problem.