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A Paper Loan

Mortgage Library: Ask a Mortgage Related Question: Answers: A Paper Loan


I would like to know what exactly is an "A Paper" Loan. I would like to know in detail what does this type of loan requires, are there any stipulations or hidden adjustments. Is this a good loan to take?

S. D.
Elk Grove


Hello S.,

An "A paper loan" is just as it sounds; a loan with the highest credit grade possible. It normally is going to have the best interest rate, lowest cost, and least amount of non-desirable features when compared to B (often referred to as "Alt-A") and C (or "subprime"). Banks give loans with an A paper grade all of this due to a number of factors. The primary being the low risk of an A paper borrower in defaulting on the loan.

These are not absolutes but an A Paper loan usually falls under these guidelines....

1.) The borrower has a 680 mid-FICO score or higher
2.) The borrower has verifiable income and the loan's Debt-To-Income ratio is less than 35%
3.) The loan's Loan-To-Value ratio is less than 80%
4.) An A Paper borrower normally has at least two months mortgage payments in "liquid reserves". This can be in a checking, savings, investment, or even retirement accounts at any financial institution
5.) The borrower's credit report can not have any (non-medical) outstanding collections. Even if their credit score is above 680.

As I mentioned these are NOT absolutes and there are often exceptions to each guideline. Although it's not often that there is an exception to many of these guidelines on the same loan.

Hopefully I have answered your question adequately. If I can ever be of any help in the future please do not hesitate to contact me.


Greg Cowart
Senior Loan Consultant
Sterling Mortgage
(916) 367-7582

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