A more important limitation for defi loans is that nothing other than blockchain assets can be used as collateral. You can't use the loan to buy anything real without having enough money to buy it already.
A mortgage lets you buy and live in a house even if you don't have enough money to buy the house.
That is a bit too simplified. You can add yield bearing tokens as collateral. That basically means that as long as the yeild is more than the cost of the loan the loan wil pay back it self.
Hmm, that's sort of interesting but it seems like it presumes you own the income stream to begin with, and that it's already been turned into a cryptocurrency token. What are some examples?
Not totally true. You could, for example, use as collateral tokens that represent staked Ethereum (rocket pool ETH for example) so you are effectively using the ETH to generate staking yield, and also using it as collateral simultaneously.
The ability to wrap ownership in a smart contract can extend to pretty much any use case, as long as the lending protocol supports using the wrapped token as collateral.
