Rate debuts RateFi — crypto holdings enter mortgage underwriting

Rate has introduced RateFi, a lending product that permits certain verified crypto balances to be counted toward borrower qualification inside the lender’s existing non‑qualified mortgage framework.

Underwriters will accept a curated list of large‑cap tokens and major dollar‑pegged stablecoins only after they pass a proprietary valuation that weights market price, liquidity and token‑specific volatility.

Borrowers must hold assets with approved custodians or centralized exchanges and provide periodic statements demonstrating seasoning; funds intended for down payments or closing costs still require conversion to fiat at settlement.

RateFi integrates standard AML and KYC checks into the digital mortgage flow and is delivered through Rate’s existing origination platform rather than as an isolated product.

Rate frames the product as a way to avoid tax‑triggering sales while preserving traditional risk controls, arguing that documented seasoning and custodial attestations permit underwriters to treat verified crypto as a reserve metric instead of forcing immediate liquidation.

This initiative arrives amid regulatory and legislative signals over the past year that have opened a narrow window for conditional accommodation of digital assets in mortgage risk models.

Rate’s approach should be read alongside distinct market offerings that use a different risk architecture: for example, Milo — a niche lender that has grown into six‑figure origination volume and executed a $12 million single transaction — offers pledge‑backed mortgages where customers pledge crypto equal to full property value and the lender applies conservative credit adjustments rather than counting those holdings as qualifying reserves.

Milo’s design preserves token ownership for clients, tolerates larger market swings through overcollateralization and explicit downside buffers, and avoids forced property forfeiture by prioritizing payment continuity; it also supports larger loan sizes (reported up to $25 million), operates in multiple states, and permits institutional custody or self‑custody routes.

The two models illuminate a practical split in market strategy: RateFi attempts to fold verified digital balances into conventional borrower qualification (subject to custody and seasoning constraints), while pledge‑backed lenders sidestep qualification rules by securitizing assets as collateral and engineering margin/adjustment mechanics to manage volatility.

Operationally, RateFi heightens demand for compliant custodians, valuation services and attestation workflows, whereas pledge models emphasize collateral management, margin monitoring and foreclosure‑avoidance protocols.

Investor acceptance will be decisive: counting crypto as reserves requires investor comfort with token valuation and liquidity modeling inside credit pools, while collateralized approaches may find earlier traction with investors who prefer overcollateralized pockets that isolate token price risk from borrower credit profiles.

Adoption across originators and investors will hinge on which tradeoffs the market and regulators prefer — integration of crypto into underwriting versus segregation of crypto risk via collateral structures — and both approaches are likely to coexist while standards, custody options and stress‑testing practices mature.