Alt-A (Alternative A) Mortgage

Alt-A (Alternative A) mortgages are a type of mortgage loan that falls between prime and subprime mortgages. They are typically offered to borrowers with good credit scores who do not qualify for prime mortgages due to their income or other factors. Alt-A mortgages are often used by borrowers who are self-employed, have a high debt-to-income ratio, or have a limited credit history.

History of Alt-A Mortgages

Alt-A mortgages first appeared in the early 2000s as a way to provide more options for borrowers who did not qualify for prime mortgages. They were initially offered by smaller lenders, but eventually became more widely available as the housing market boomed. By 2006, Alt-A mortgages accounted for nearly 20% of all mortgages in the United States.

The popularity of Alt-A mortgages was due in part to their relatively low interest rates and relaxed lending standards. However, these loans were also riskier than prime mortgages, as they often had higher loan-to-value ratios and lower credit scores. This increased risk eventually led to the subprime mortgage crisis of 2008, which had a devastating effect on the housing market.

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Summary

Alt-A mortgages are a type of mortgage loan that falls between prime and subprime mortgages. They are typically offered to borrowers with good credit scores who do not qualify for prime mortgages due to their income or other factors. Alt-A mortgages were popular in the early 2000s due to their relatively low interest rates and relaxed lending standards, but they were also riskier than prime mortgages. For more information about Alt-A mortgages, visit the websites of the Consumer Financial Protection Bureau, the Federal Reserve, and the Department of Housing and Urban Development.

See Also

• Prime Mortgage
• Subprime Mortgage
• Adjustable Rate Mortgage (ARM)
• Fixed Rate Mortgage
• Interest-Only Mortgage
• Jumbo Mortgage
• FHA Loan
• VA Loan
• USDA Loan
• Reverse Mortgage

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