Exclusive: Milo CEO explains how crypto-backed mortgages work

Josip Rupena, CEO of the first crypto-backed mortgage lender, said his company offers a new path to homeownership in today’s challenging market.

His company, Milo, allows borrowers to use Bitcoin and Ethereum, two of the most widely used cryptocurrencies, as collateral for their home purchase.

Our borrowers are "a lot of first-time homebuyers...these are individuals that have been sitting on the sidelines for a long time that are in peak homebuying years now. And they happened to buy Bitcoin 10 years ago, and fortunately, it's appreciated," Josip Rupena, CEO of Milo, told Homes.com in an exclusive interview.

Bitcoin is a form of cryptocurrency — a digital currency that exists only online and is not issued by any government or bank. While cryptocurrencies operate outside traditional financial systems, governments around the world regulate them to varying degrees. Bitcoin transactions and ownership are tracked using a public digital ledger called the blockchain. This blockchain is decentralized, meaning it’s maintained by a global network of computers rather than a single entity. Ethereum is one of thousands of digital platforms and currencies.

Rupena, a former Morgan Stanley banker, founded Milo in 2019 and the company has raised $24 million in venture capital to fund its growth. The licensed mortgage has originated over $350 million in loans across all its mortgage products, pioneering crypto-backed mortgages in the U.S.

Milo holds 11 state licenses and partners with custodians like Coinbase and BitGo, which securely store borrowers’ crypto in segregated accounts until the mortgage is repaid.

With a traditional mortgage, you put money down, borrow the rest and your house is collateral. 

With Milo's mortgage, you pledge an equal amount of Bitcoin or Ethereum as collateral. For example, if the home costs $1 million, the borrower must provide $1 million in crypto. Milo pays the seller in cash and holds the loan, placing a lien on the property. If you default, Milo can access your crypto or foreclose on the home. Monthly payments are interest-only for the first 10 years, then they become amortized. 

For its part, Milo follows all standard mortgage regulations, including credit checks, review of bank statements, property appraisals and insurance verification.

“Our intention is not to necessarily just give someone a bunch of money to buy a home just because they say they have Bitcoin. We want to make sure that they’re in a position to be able to make payments and that they’re a solid borrower,” Rupena said.

Building on this approach, Rupena noted that Milo has helped first-time homebuyers across the U.S. secure crypto-backed mortgages, with total loan originations reaching around $100 million. This comes at a time when first-time homebuyers are facing one of the toughest housing markets, marked by high prices, limited inventory and stricter lending standards. Data from the National Association of Realtors shows that the median age of first-time homebuyers has reached 40, high compared to the late 20s typical in the 1980s.

Some buyers are turning to alternative financing options, such as Milo. However, Milo’s interest rates, ranging from 8% to 9%, are notably higher than those of traditional mortgages. For comparison, the average rate for a 30-year fixed-rate home loan continues to hover above 6%, according to mortgage giant Freddie Mac.

Rupena attributes the higher rates in part to the fact that Milo does not benefit from government-backed securitizations provided by Fannie Mae and Freddie Mac.

Even so, many clients are willing to accept the higher rates in exchange for Milo’s unique approach. “By not selling their Bitcoin, clients avoid triggering taxes and can keep their assets for potential future gains. Most importantly, for most of them, they're going to be able to qualify... because we're going to underwrite them as well by having Bitcoin,” Rupena said.

“And that's different than a traditional mortgage, where you're only looking at individuals' traditional W2 employment income to qualify them. We're really looking at the Bitcoin to qualify them. We're financing a hundred percent of it and really solving the real pain point for them, which is to not sell their Bitcoin," the executive added.

Unlike traditional assets, cryptocurrency operates on a public blockchain, where transactions are transparent but tied to anonymous addresses. Milo traces the Bitcoin back to its origin and uses test transactions and specialized tools to ensure the pledged crypto is legitimate and truly owned by the borrower.

Rupena said many clients believe their Bitcoin will appreciate and want to avoid the opportunity cost and capital gains taxes that would come from selling the digital asset. Milo’s product is designed for those who want to keep their crypto and still buy a home, even if it means paying a higher interest rate.

Corey Frayer, director of investor protection for the Consumer Federation of America, told Homes.com that borrowers should ask themselves what would happen if the value of their crypto collateral falls, and what protections they have if the lender decides to act.

“It’s important to understand under what circumstances the lender can sell or take possession of your crypto, whether your collateral is valued at fair market value or discounted, and if you earn any interest on those assets while they’re held — similar to how escrow funds might be used for taxes and insurance,” Frayer said.

He also advised borrowers to clarify what happens if their Bitcoin rises in value and they become over-collateralized, as well as whether they have the right to pay off the loan early without incurring penalties on their 30-year mortgage.

These questions are especially important given the ongoing volatility in the cryptocurrency market. Bitcoin, for example, has recently come under pressure, trading below $90,000 and erasing its gains for 2025 amid rising economic headwinds that have rocked investor sentiment. This persistent uncertainty underscores the risks for borrowers who use crypto as collateral, making safeguards all the more critical.

Rupena said if the value of the crypto collateral drops significantly, by as much as 65%, borrowers may need to post more collateral or reduce their loan balance. If they are unable to do so, Milo may sell some of the Bitcoin to maintain the required coverage.

To further protect the lender, Milo also places a lien on the home being purchased, just as with a traditional mortgage. This means that if the borrower defaults, Milo has the legal right to take possession of the property through foreclosure. The home itself serves as a tangible safety net, ensuring there is always an asset backing the loan, even in the face of crypto market volatility.

“In the run-up to the 2008 housing crisis, we saw a lot of new mortgage products that put borrowers at higher risk but were still very profitable for the lenders," Frayer said. "You need to evaluate these exotic mortgages in the same way you would a subprime loan in 2007.”