By the end of 2022, 12.8 percent of the U.S. population will own at least one type of cryptocurrency, and it’s expected that number will only continue to rise. Naturally, crypto investors are thinking of ways to legally purchase a home or secure a mortgage using Bitcoin, Ethereum, and other digital currencies.

The price of crypto is also extremely volatile, making it a risky investment opportunity for even the most adventurous buyers. However, buying a house with crypto isn’t as difficult as you might think. In fact, the one thing that poses the biggest challenge is finding someone willing to do an exchange that large. 

If you have more questions about the process of using crypto to buy a home, read on for answers to three of the most pressing ones.

It’s possible to buy a house using cryptocurrency. But Dan Held, director of growth at U.S.-based cryptocurrency exchange and bank Kraken, says that most owners of crypto aren’t currently selling.

“Most owners of crypto don’t have stable incomes, which is what mortgage underwriters care about,” Held explains. “They want to see a certain debt-to-income ratio, and with low- to-no income, most wealthy crypto owners can’t get a mortgage.”

Held also pointed out that several companies have noticed this and have been building “Bitcoin mortgages” to offer buyers, which are innovative financial instruments to service this market.

There are a few options for using cryptocurrency to buy a home. “Crypto owners can post it in a one-to-one fashion to qualify for a mortgage. For example, one million dollars worth of Bitcoin can get mortgage of one million dollars,” says Held. Crypto can also be used for a down payment on a house. “Crypto owners can borrow dollars using crypto as collateral. For example, borrowing $200,000 for a down payment using $400,000 worth of Bitcoin as collateral,” Held adds.

Crypto owners can also convert their cryptocurrency into cash and then use that money to purchase a home. However, one of the main disadvantages to using this method is the capital gains tax. “You will owe long- or short-term capital gains taxes on your crypto if you get margin-called,” Held says.

Another option is transferring your cryptocurrency directly to the seller, but it may be difficult finding a seller willing to accept cryptocurrency as payment. 

Using crypto to purchase a home has several benefits and drawbacks. “If you have a boatload of crypto and no income, no one’s going to qualify you for a mortgage,” Held notes. “[A Bitcoin mortgage] is a way for those wealthy crypto holders with no other income to qualify, because the mortgage company will hold both their crypto and the title.” In these cases, Held adds, a down payment might not be necessary since the Bitcoin and the property act as collateral for the loan. 

A Bitcoin mortgage could also allow you to get a mortgage and hold your digital coins. On the other hand, “If the price of Bitcoin drops dramatically, it is possible that you get margin-called, which would force-sell your Bitcoin and make you lose the house. Some companies might offer relaxed margin-call programs since the asset is joint collateralized,” Held explains.

Cash is king in real estate, which is bad news for many first-time home buyers trying to break into this super-competitive market. An all-cash offer — even when it’s lower than asking price —  is often more desirable to a seller because it cuts the lender out of the equation for a much faster closing.

Ryan David, the owner and lead investor at We Buy Houses in Pennsylvania, understands that investors with cash can be viewed as “unscrupulous” by some. Every industry has its scam artists, David says, but underhanded or low-ball offers for homes is not what his company is in the business of making. In fact, he says it’s credibility that’s really king.

“Credibility is so precious [in the real estate industry] that a cash offer is actually usually a very fair offer,” says David, who notes that any offer his company makes is based on careful market research and analysis of comparable property in the area.

David and his business partner also run a free local real estate club that meets monthly. They invite investors, real estate agents, and homebuyers to discuss the local real estate market and get answers to their questions about buying real estate. He makes it his business to help educate others about the homebuying process. Here’s what David advises you to do to make your home offer more competitive.

Earnest money is the cash a buyer provides when they make an offer on a home to show that they are, well, earnest about the purchase. Sometimes called a good faith deposit, it serves to protect the seller from losing money in case the buyer backs out of the deal and they must re-list the home.

Your earnest money should be around one to three percent of the purchase price, but David advises to put more down, if possible, to sweeten the deal. He suggests tacking on 10 percent more to whatever your deposit would have been; for example, if you were going to offer $5,000, offer $5,500.

“You’re only going to end up paying that money at closing anyway,” David says. “If you do it upfront, sometimes it can look like you’re more serious, and that can carry weight with [the seller].”

It’s not always necessary or even advisable to put 20 percent down on a home, especially when that much of a down payment would leave you strapped for cash should you need to make any repairs. But this is a fiercely competitive seller’s market, so coming in with a lower down payment might not bode well for you when there are all-cash offers on the table.

There is a solution, though, for buyers who qualify: VA loans. Homebuyers who are active military service members, veterans, or their survivors have a fighting chance against all-cash offers if they can score this type of loan, which is guaranteed by the Department of Veteran Affairs. This loan program requires no money down on a home and doesn’t require mortgage insurance, yet its secure backing can go a long way in assuring a seller that a home sale transaction will indeed happen.

This tip has its fair share of controversy, as fair housing advocates frown upon buyer’s “love letters” to sellers. Many people, including members of the National Association of Realtors, feel that it opens up buyers to discrimination if they mention religious affiliation, family status, sexual orientation, or any other personal information that falls under the protection of the Fair Housing Act. In fact, the state of Oregon attempted to outlaw such letters, but there is currently a block on that ban. 

However, if you are inspired to put pen to paper and tell the seller why you’re best suited to be the next owner, David suggests focusing on a neutral topic that doesn’t pertain to money or any of your own personal details. For example, if the seller has a beautiful yard and you happen to have a green thumb, tell them how you’ll make it your mission to maintain that magnificent landscape. While a strong offer is paramount for many homeowners, knowing that their cherished home is in good hands for years to come could put your offer out front.

Patience is a virtue when it comes to buying a home. It’s hard to set your sights on a home only to have it snatched away by another buyer. Perhaps one of these tips will help you close the deal on a new home soon.

Have you ever heard the expression “house poor” and wondered, “What exactly does that mean?” 

When someone uses this phrase, it usually suggests that they’re spending a large chunk of their monthly income on their mortgage and accompanying housing costs — things like homeowner’s insurance, property taxes, and HOA dues. While they’re building equity with homeownership, their budget is stretched thin and they may have a hard time budgeting for other expenses while they keep up with their monthly mortgage payments. 

Generally, financial experts suggest that you spend less than one-third of your monthly take-home pay on your rent or mortgage, says Danetha Doe, Clever Real Estate‘s economist and spokesperson, as well as the creator of personal finance site Money & Mimosas.

“Some signs that you are house poor include not being able to cover the expenses of necessities such as utilities, groceries, and transportation,” Doe says. “Other signs are if you are unable to contribute to your savings or investment goals each month.”

If you are currently in this situation, you can try to refinance your mortgage for a lower interest rate, Doe suggests, which will lower your monthly payment and free up some room in your budget. 

Here are some more smart strategies that will help you avoid becoming “house poor,” according to financial experts.

The best antidote to being house poor is to plan ahead as much as possible, says Lauren Bringle, accredited financial counselor at Self Financial. Remember, a down payment isn’t the only cost associated with homebuying, Bringle says. “There are closing costs, repairs, maintenance, utilities, property taxes, and more to account for,” she says. “Build as much cushion into your savings as possible so you’re financially resilient.” For your budget-planning: Closing costs are typically 2 to 5 percent of your loan, and they can be rolled into your mortgage. 

Factors like excellent credit and a low debt-to-income ratio may help you qualify for a higher loan amount (and more favorable terms). But just because you can qualify for a higher mortgage loan, doesn’t mean you have to accept the full amount, cautions Bringle. “If you can buy less house, or find a home that’s a better value that still meets your needs, don’t feel obligated to accept the full amount, which would just mean a higher mortgage payment,” Bringle suggests. “Instead, pay for the amount of house you need, and take out the right loan to cover that amount.”

It’s a sign of the crazy homebuying times: Some buyers have been waiving property inspections to sweeten their offer. But unless you’ve got lots of cash to fix potentially costly repairs (A leaky roof! Cracks in the foundation! An aging HVAC system!), Realtors and financial experts advise you to get a home inspection. In a best-case scenario, the seller will get the problems fixed before you move in or give you a price reduction. But if not, at least you know the ballpark of how much repair expenses will be and you can determine whether they fit comfortably in your budget.

Another pro tip: Get estimates and bids on potential home repairs before buying a fixer upper and add extra to the budget for unforeseen expenses, says personal finance and money-saving expert Andrea Woroch.