Can you buy a house with the cryptocurrency Cardano (ADA)? Yes, but first you'll have to turn that crypto into cash. Here's how.
As cryptocurrency becomes more popular, you may be wondering if you can use crypto – including Cardano – to buy a house.
As of right now, most lenders won’t let you use cryptocurrency for a mortgage down payment. But you can sell the asset and use the cash toward your mortgage costs.
If you’re thinking about buying a home with Cardano, here’s what you need to know.
What is Cardano?
Can you buy a house with Cardano?
How to buy a house with Cardano
Pros and cons
What to consider before buying a house with Cardano
Frequently asked questions
Key takeaways
Cardano is a blockchain platform that safely records and executes cryptocurrency transactions. The principal currency of Cardano is called ADA, which holds value and can be used to transfer money or buy and sell goods.
Cardano is a newer blockchain technology and cryptocurrency. It was founded in 2015 – six years after Bitcoin’s debut.
What makes Cardano unique is that its structure is backed by pre-reviewed academic research, and it’s designed to be more scalable than other blockchain platforms.
Like other digital currencies, Cardano's value is impacted by supply, demand, and what’s happening in the broader market. At the moment, ADA is less valuable than other currencies, and the value saw a downward trend for much of early 2022, though it has begun to tick back up. As of this writing, ADA was worth less than a dollar; meanwhile, a Bitcoin was worth nearly $29,000, and Ethereum was worth close to $2,000.
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Buying property with Cardano isn’t unheard of – at least not in Portugal. A property developer there allows luxury condo buyers to use ADA, Bitcoin, Ethereum, and Dogecoin to purchase their homes.
But the trend hasn’t caught on in the U.S. yet. If you find a seller who is willing to accept Cardano – and you have enough crypto to purchase the home – you may be able to buy the property directly with ADA.
Buying a home with crypto isn’t as easy as transferring money from your digital wallet and getting the keys to your new place, though.
You’ll also need to make sure logistics are handled, like ensuring the title is transferred to you. Hiring a settlement agent could help you get the documents together that you need to complete the real estate transaction with a crypto offer.
However, most homebuyers need to take out a home loan with a mortgage lender. And most lenders won’t let you use crypto directly for your down payment and closing cost funds. But they will accept cash from the sale of your crypto assets, including Cardano.
Buying a home using Cardano is similar to buying a home with any other assets. The big difference is that you’ll need to sell your ADA far enough in advance of your closing to ensure the money is available in USD in your U.S. bank account.
You’ll also need to provide your lender with documentation of the sale, along with proof that you owned the ADA for at least 60 days before you sold it.
Here’s the 4-step process to using Cardano to buy a home:
Here’s a tip for a hassle-free closing when using Cardano funds: Lenders require documentation of any large deposits into your bank account, including those from crypto sales, if they occur within 60 days of your closing. But money that’s been in your account longer than 60 days is considered “seasoned,” and it doesn’t require proof of ownership or sale records.
If you decide to sell closer to your closing, you’ll want to ensure that you have the money available by the time you need to wire it to your settlement agent. A good rule of thumb is to begin the transfer at least two weeks before your closing date to accommodate any potential delays.
Lenders require that your down payment and closing cost funds be in USD and that the money be in a U.S. bank account. Once you’ve decided when to sell, complete the transaction and ensure that the funds are in the account from which you’ll wire the money ahead of your closing.
If you selling your Cardano holdings less than 60 days before your closing, make sure to document every step of the transaction. Even if the deposit is older than 60 days, but shows up on a bank statement, your lender may still request proof of the large deposit source. Your lender will request proof that you owned the ADA for at least 60 days before selling, in addition to records of the sale and the proceeds hitting your bank account.
The value of crypto is still volatile and a price drop or increase can affect your purchasing power when you’re ready to buy a home. There’s no way to predict crypto prices with certainty, but taking into account factors like Cardano’s market capitalization, company news, and investor sentiment could help you decide when it’s the right time to exchange your currency.
Remember, if the price of ADA drops significantly right before you sell, you may end up short on funds for your down payment and closing costs. When you sell is entirely your decision, but if you’re worried about not having the cash to close, you may want to sell at a time when you know you’ll earn enough to cover those upfront expenses.
If you’re thinking about cashing out with Cardano to buy a house, here are a few advantages and disadvantages to weigh first.
ProsConsUsing profit from a cryptocurrency investment can help you cover your down payment and closing costs You may have to pay capital gains tax when you sell cryptocurrency if the value has increased since you bought it.Purchasing real estate gives you a tangible asset and allows you to stabilize your housing paymentThe crypto you sell to buy a home is no longer invested, which means you could miss out on investment earnings if the value increasesThe process of selling crypto for your down payment and closing costs is similar to using other assets to purchase a homeVolatility in the crypto market can make it difficult to know when to sell to ensure you’ll have the money you need to buy your home
Before buying a home with cryptocurrency, it’s important to consider your financial goals and the tax implications. If you invested in crypto as part of a long-term wealth-building strategy, it could make sense to hold off on selling Cardano, especially since the token value has dropped significantly within the last six months.
Ultimately, you’ll have to decide whether holding or selling is the best choice for your financial plans and homeownership goals. Talking to your tax professional or accountant can help you make the best decision for your circumstances.
Also, keep in mind that selling crypto to buy a house could result in a tax bill because cryptocurrencies are an asset. If your cryptocurrency increases in value, you may be required to pay capital gains tax on the money you earned when you cash out. Speaking with a tax professional can help you figure out what your liability could be if you use crypto to buy a house.
Can you buy things with Cardano? Yes — Cardano can be used to make purchases and to transfer money back and forth between people. If you want to buy Cardano cryptocurrency, you can buy and sell it on exchanges like Coinbase, SoFi, and eToro.
If you want to buy a house using Cardano, you’ll need to find a seller that accepts crypto payments. Or, if you want to take out a mortgage and need cash to cover the down payment and closing costs, you will need to sell the Cardano first and convert it to USD. Then you can use the sale proceeds.
What can Cardano be used for? You can use Cardano to make purchases with merchants that accept digital currency. You can also send Cardano to others or hold on to Cardano as an investment opportunity. If the value of the cryptocurrency increases, you could turn a profit.
Buying a home with funds from a crypto investment was practically unheard of a few decades ago. Today, buying crypto has become more mainstream, and that could expand purchasing options for people who have money in digital assets.
If you’re ready to buy a home with Cardano, shopping around and getting preapproved* with lenders early in the process is important because it can help you figure out the requirements and get the right documents in order to buy your home.
The information in this article does not constitute financial planning advice. Please consult a financial planner regarding your specific situation. This article does not constitute tax advice. Please consult a tax advisor regarding your specific situation. *Pre-approval is based on a preliminary review of credit information provided to Fairway Independent Mortgage Corporation, which has not been reviewed by underwriting. If you have submitted verifying documentation, you have done so voluntarily. Final loan approval is subject to a full underwriting review of support documentation including, but not limited to, applicants’ creditworthiness, assets, income information, and a satisfactory appraisal.