If you bought Bitcoin five years ago, your investment would have nearly quadrupled in value since then. But using that massive payoff for a down payment on a home might be harder than you think.
Mortgage brokers say that securing a mortgage in Canada with proceeds from crypto investments remains challenging — lenders may allow its use on an exception-basis only, even as crypto becomes more mainstream.
And many crypto investors will have their loan applications denied by their bank outright, they say.
Ross Taylor, a mortgage broker in Toronto and the GTA, had a client experience this firsthand in 2022. According to Taylor, his client, a young and “sophisticated” crypto investor, had been initially approved for a $1.9 million mortgage by a Big Six bank.
Part of the client’s down payment for a nearly $4-million home was coming from several crypto wallets — where people store and access their coins. He sold the crypto and deposited the funds into his Canadian bank account.
But a week before closing, the lender backed out, Taylor told the Star.
“Nothing about his finances was problematic. The issue was verification,” he said, explaining that lenders often want to know exactly where the money for your down payment is coming from, requiring bank statements and other records.
“Lenders were still uncomfortable tracing complex crypto transactions, especially when multiple wallets and hundreds of monthly movements were involved,” Taylor added.
“No one at the bank appeared willing to take responsibility for confirming the full paper trail. Given crypto’s reputation at the time for being tied to money laundering, the bank chose the safest option and withdrew.”
According to the Canadian Securities Administrators, the country’s securities regulator, crypto assets — including cryptocurrencies such as Bitcoin — now rank among the most commonly held investment types for Canadians. Crypto is especially popular among younger investors, with roughly one third of those under 35 years old reporting owning it in 2024.
With Millennials and Gen Z struggling to break into the housing market, owning crypto that could skyrocket in value might mean the difference between being able to afford a down payment — or not. Real estate insiders say lenders are very slowly coming around to working with younger borrowers who want to turn their digital assets into physical wealth.
Dan Eisner, founder and CEO of True North Mortgage, said that while “a lot of lenders are prejudiced against cryptocurrency,” perceptions are changing, driven by stricter regulation on Canadian crypto exchanges and some pension funds buying up Bitcoin.
There are valid reasons why lenders are wary of digital currencies. Crypto has been exploited by criminal organizations, including the one led by drug kingpin Ryan Wedding. It enables them to move large sums of money quickly, often without being detected by law enforcement.
At the same time, money laundering through real estate has become a big issue in Canada, with a public inquiry finding that billions in dirty money have infiltrated residential and commercial markets.
Eventually, Taylor’s client was able to obtain a loan from a private lender. But the mortgage broker said he believes traditional lenders, including the big banks, are more open-minded today than they once were.
“If funds sit on a well regulated Canadian platform such as Wealthsimple, which issues proper statements and ties the account clearly to the client, lenders are significantly more receptive,” he said.
Approvals are also more likely to occur when the investor has already sold the crypto and deposited the proceeds into a Canadian bank account, backed by proof of purchase and sale, he added.
In a written statement, Nathalie Bergeron, spokesperson for the Canadian Bankers Association, said regulation of crypto assets in Canada should “promote innovation while also addressing key risks.”
“Mortgage lending decisions are operational decisions from our members and are based upon the individual risk assessment between the bank and its customer,” Bergeron wrote.
Recently, GTA-based mortgage broker Ron Butler said he worked with a couple who had seen significant gains from crypto. The husband was an airline pilot who started investing in crypto in 2020. He had been a client of one of the Big Six banks for more than a decade, said Butler.
He said that the pilot converted his crypto holdings into Canadian dollars 45 days before closing, and was able to produce documentation showing where the funds had come from.
Even then, Butler said the paperwork was highly scrutinized by the lender. “I had to personally reach out to the executive in charge of anti-money laundering to make sure it went through smoothly.”
In the end, the mortgage was approved.
Butler said his clients’ crypto holdings were “vital” to them being able to make a down payment.
“If they hadn’t had the crypto, they couldn’t have done it.”
