Alt-A Loan

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An Alt-A loan is a mortgage loan made to borrowers who may have credit scores high enough to merit a prime rating, but whose particular circumstances mean they fail to qualify as prime, although usually they reach a level above subprime. Such situations may include the recently divorced or self-employed, or may reflect the terms of the loan or type of property being purchased. As a result, the loan might attract an interest rate that is a little higher than for a prime borrower but lower than for a subprime borrower. "Alt" is short for the alternative or nonstandard documentation that may be involved in the loan evaluation process, and also indicates an alternative to a prime "A" rating.