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What is alternative documentation in a mortgage?
Alternative documentation (alt doc) is the use of eligible documents other than W-2s and tax returns to evaluate a borrower's income and ability to qualify for a mortgage. Common alt-doc methods include bank statements, profit and loss statements, 1099 forms, a written verification of employment and asset utilization.
Alt doc exists because many borrowers, especially the self-employed, earn more than their tax returns show. Each method answers the same question, how much does this borrower reliably earn, using a different source.
Alternative documentation is not "no documentation." Income, assets and ability to repay are still verified; the evidence is different. Which methods are available depends on the program and the borrower's situation.
