Alt-A

Alternative-A. A category of lender that sits between A-lenders (the big banks and monolines for prime files) and B-lenders (subprime, private). Alt-A lenders are more flexible than A-lenders on income documentation, credit history, and file complexity, with rate premiums typically 0.5 to 1.5% above A-lender pricing.

When alt-A is the right fit: self-employed files with messy T1s that the A-lenders can't read, recent business start-ups without a 2-year track record, prior credit blemishes that aren't deal-breakers, files with alt-form income (commission, contract, retired). Most alt-A solutions are short-term (1 to 2 years) intended to bridge into A-lender financing once the file cleans up: enough time to build a second tax year, repair credit, or season the business income.

The mistake to avoid is treating alt-A as a permanent home. The right strategy is usually: alt-A now, A-lender refinance at the next renewal once the file qualifies. Trevor's full walk-through: Self-Employed Mortgages in Canada: The Bank's Blind Spot.