Alternative Documentation


DEFINITION of 'Alternative Documentation'

A documentation process designed to expedite loan approval where the lender accepts from the borrower documents such as W-2s, paycheck stubs and bank statements as verification of income made on the loan application. Confirming a borrower's information in this manner is considerably quicker than the traditional method of verifying such information with third parties.

BREAKING DOWN 'Alternative Documentation'

Alternative documentation is a "full documentation" loan. In other words, income, assets, employment, etc, are documented as opposed to a "stated income stated asset" (SISA) loan. There is generally no increase in the interest rate associated with alternative documentation as there typically is with "stated" loans.

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  1. When do I need a letter of credit?

    A letter of credit, sometimes referred to as a documentary credit, acts as a promissory note from a financial institution, ... Read Full Answer >>
  2. Can I take my 401(k) to buy a house?

    Once you reach 59.5, you can use the funds in your 401(k) retirement savings account to buy a house or any other expense ... Read Full Answer >>
  3. Can I use my 401(k) as a collateral for a loan?

    Although federal Internal Revenue Service, or IRS, regulations prohibit using a 401(k) account as collateral for a loan, ... Read Full Answer >>
  4. Why do commercial banks borrow from the Federal Reserve?

    Commercial banks borrow from the Federal Reserve primarily to meet reserve requirements when their cash on hand is low before ... Read Full Answer >>
  5. How does a bank determine what my discretionary income is when making a loan decision?

    Discretionary income is the money left over from your gross income each month after taking out taxes and paying for necessities. ... Read Full Answer >>
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