If you think an A-paper loan sounds like a good bet, you’re right. An A-paper loan, also called an A-credit loan or prime loan, is a mortgage made to a borrower who meets a lender’s highest or near-highest credit standards. A-paper borrowers generally have strong credit histories, reliable income, manageable debt levels, and a demonstrated record of making payments on time. Because these borrowers present a relatively low risk of default, they typically qualify for more favorable loan terms, such as lower interest rates and fees, than borrowers with weaker credit profiles.
The term comes from a traditional system of informally grading mortgage borrowers and loans according to credit quality. Loans to the strongest borrowers were classified as “A-paper,” while loans involving greater credit risk might historically have been described as Alt-A, B-paper, C-paper, or subprime. There is no single universal credit score or underwriting standard that makes a mortgage an A-paper loan, since requirements vary among lenders and loan programs. Today, the terms prime mortgage and prime borrower are more commonly used, but “A-paper” may still appear in discussions of mortgage lending and the secondary mortgage market.
