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Whats an Alt-A loan?

Posted on September 05 By MLP Lending Guide

An Alt-A loan, also called an alternative documentation loan, is a loan that holds borrowers with good credit to different approval standards than traditional loans. Those applying for an Alt-A loan need not provide income verification or documentation of assets. Instead, the approval for an Alt-A loan is based primarily on an individual's credit score. People who are great candidates for Alt-A loans include the recently divorced, entrepreneurs, the self-employed, and those who are paid on commission.

Alt-A loans are typically subject to manual underwriting, which may make the process take as long, if not longer, than securing a traditional loan. However, one of the benefits of manual underwriting is the increased flexibility provided to the borrower. Another point about Alt-A loans is that their interest rates are usually slightly higher than traditionally documented loan. This amount is usually less than one percentage point higher than a conventionally documented loan. That being said, many individuals applying for an Alt-A may not qualify for conventional loans because of their unique situations.

There are a number of subtle variations among different Alt-A loans, making it important for borrowers to get all the facts before making any commitments.

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11 Responses to "Whats an Alt-A loan?"
  1. direct lender loans 13, Aug, 2011

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  3. John 17, Mar, 2011

    Can an Alt-A loan be modified? I'm currently trying to get my mortgage company to lower my interest rate and their reply is they can't because it is an Alt-a loan.

      Reply»  
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  5. Paul Johnson 28, Oct, 2010

    This category of loans should never have been allowed in the first place.

      Reply»  
  6. lornetki sklep 29, Dec, 2009

    What blog script do you use on your site ?

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  7. Lawyer ATL 14, Dec, 2009

    ALT A loans are a large part of the current crisis. So are the brokers and lenders who let them coast through without proper investigation of the borrower's finances and ability to pay.

      Reply»  
  8. VA Real Estate Talk » How Many REO Properties Does the Government Own? 02, Oct, 2009

    [...] an actual decline in REO properties this year the other areas are holding steady. As expected Alt-A loans were the biggest pool of foreclosures that both companies currently [...]

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