What is an ALT A Loan?

An ALT A loan is a term used from lenders and mortgage brokers for loans that are not usually the A Paper best rate loan, nor are they the subprime loan with very high interest rates. ALT A loans are for people who make a great income, have a good credit score, however have a hard time proving their income. An example would be a self employed borrower who makes $250,000 a year, however for tax purposes, writes alot of that income off. This would be considered an ALT A loan.

Alt A Loan programs are designed for borrowers with good credit but difficult income or asset documentation or a need for sophisticated amortization or payment features.

Alt-A loans are the borrower classification between subprime and prime. Alt-A loans will usually have a higher interest rate that prime loans. Alt-A loans will also have the ability to borrow a lower percentage of the home value than prime loans.

Alt A mortgage is an alternative for home buyers with good credit profiles and yet for one reason or another cannot meet the qualification of prime (A paper) mortgage. Alt-A mortgages are not considered subprime loans because most alt-A borrowers have excellent credit scores.

Some Alt A loan borrowers are simply borrowers who do not qualify for a traditional A paper loan because they are just slightly deficient in a certain area. For instance their credit score may be just slightly too low, or they may not have enough asset documentation to qualify for the A paper loan.

Alt-A Loans typically carry a slight premium to the interest rate of traditional A paper loans sold to Fannie Mae or Freddie Mac loans. Investors often find they need to use Alt-A financing for additional rental property purchases or cash-out refinances.

Alt-A loans are not relatively new loan products. Alt-A loans have been around for almost 20 years. However, these loans were niche products that were not made readily available to most borrowers due to the level of risk.

Broker Outpost | Credit Dos Donts during the Loan Process | Apartment Loans | How long does the loan process take | Credit Dos Donts during the Loan Process | First Time Homebuyer Programs | Free Rapid Rescore - Expedited Credit Repair | Bad credit mortgage state