Bitcoin-backed loans can replace expensive traditional bridge loans when buying a home — avoiding capital gains tax while keeping your stack. Here's how to structure it safely.
Traditional bridge loans help homebuyers purchase a new home before selling their existing one. They're expensive (7-10%+ interest, 12-month terms) and require sufficient home equity. For Bitcoin holders, a Bitcoin-backed loan can serve the same function — often more flexibly and with fewer restrictions.
Here's how to use Bitcoin to bridge a home purchase without selling your stack.
A bridge loan solves the timing gap: you've found the home you want to buy, but your cash is tied up in your existing home (or in Bitcoin). You need liquidity now.
Traditional bridge loan characteristics:
For homeowners without existing home equity, or who want to access capital without selling assets, traditional bridge loans don't apply.
Bitcoin-backed loans provide cash without selling Bitcoin, similar to how a bridge loan provides cash without selling your home. The mechanics:
This works particularly well when:
Scenario: You have 3 BTC ($270,000 at $90k BTC) and want to purchase a $400,000 home with 20% down ($80,000). You don't want to sell Bitcoin.
Bitcoin bridge loan approach:
What you avoided: Selling 0.89 BTC at $90,000 and paying capital gains taxes on the gains. If you'd held that BTC for 2+ years, long-term capital gains tax + state tax could easily represent $15,000-25,000 in taxes on a $50,000+ gain.
The Bitcoin loan interest cost ($54,000 × 10% = $5,400/year) is likely less than the capital gains tax you avoided — and you kept your Bitcoin.
These are two different products:
Bitcoin mortgage: Uses Bitcoin as collateral for the primary mortgage itself (buying a home with Bitcoin-backed financing). Providers: Milo, Ledn.
Bitcoin bridge loan: Short-term liquidity to bridge a gap, with intention to obtain standard financing or repay quickly. Any Bitcoin-backed lender can provide this — it's just a regular Bitcoin loan used for real estate timing purposes.
The distinction matters: Milo and Ledn offer specific mortgage products with longer terms and specialized structures. Using Ledn's consumer loan product as bridge capital is different from their formal mortgage product.
Unchained Capital: Minimum $10,000 loan, 12-month term, collaborative custody. Good for larger bridge amounts. Rates ~12-14%.
Ledn: Minimum $1,000, 12-month terms, up to 50% LTV. Good for $50,000-$200,000 bridge amounts. Rates ~9-14%.
Coinbase: Low minimum, simpler process, 8% flat. Limited to $1M total and must hold Bitcoin on Coinbase.
Debifi: European-focused, collaborative custody, rates ~10-14%. Best for European buyers.
Bitcoin price during the bridge period: If Bitcoin falls 40-50% during your 6-12 month bridge, your loan may trigger a margin call. If you can't post additional collateral or repay early, the lender liquidates your Bitcoin at the bottom.
Risk mitigation: Use conservative LTV (30-35% max). Maintain a cash reserve to respond to margin calls. Keep the bridge term as short as possible — 6 months rather than 12.
Real estate timing risk: If your home sale is delayed or falls through, you'll carry the Bitcoin loan longer than intended, increasing interest costs and price exposure risk.
One strategic use of Bitcoin bridge capital: making a cash offer on a home rather than a financed offer.
In competitive markets, sellers often prefer cash offers (faster closing, no financing contingency). Sellers may accept lower cash offers over higher financed offers. A Bitcoin holder who can access $200,000-500,000 in days via a Bitcoin-backed loan can make cash offers that are not otherwise available to them.
After closing, the buyer can immediately refinance with a conventional mortgage, repay the Bitcoin loan, and get their Bitcoin back — essentially converting a cash purchase to a mortgaged purchase after the fact.
Lenders like Milo specifically facilitate this through their "crypto mortgage" product: Bitcoin backs the transaction at closing, then the buyer transitions to a standard mortgage.
Yes. Bitcoin loan proceeds are cash — you can use them for any purpose including a down payment. Lenders don't restrict how you use the borrowed funds.
For Bitcoin holders, yes — you avoid capital gains tax from selling Bitcoin, may get competitive rates, and don't need existing home equity as collateral. Traditional bridge loans require home equity and can be faster to arrange (lenders are familiar with the product).
30-35% LTV. Real estate transactions often have timing uncertainty — if your Bitcoin loan runs longer than expected, you want buffer against Bitcoin price swings. Conservative LTV gives more time to manage unexpected events.
Contact your lender immediately. Most Bitcoin lenders prefer extending terms over forcing liquidation. However, if Bitcoin's price has fallen and you're near margin call thresholds, the situation becomes urgent. Always maintain a cash reserve for this scenario.
See our Bitcoin Mortgage Directory for all options. See also: Bitcoin Loan for Real Estate and Bitcoin as Down Payment Guide.
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