Which type of loan is appropriate for borrowers who cannot document some or all of their income?

The correct choice is Alt-A loans, which are specifically designed for borrowers who may not meet the full documentation requirements typically associated with conventional loans, such as proving all of their income. These loans often cater to self-employed individuals or those with irregular income streams who may find it challenging to meet stringent documentation standards.

Alt-A loans offer more flexible underwriting standards compared to conforming loans, allowing borrowers to qualify based on factors other than full income documentation. This can include assets, creditworthiness, and other compensating factors, making them suitable for individuals who cannot fully document their earnings.

In contrast, FHA loans generally require some form of income documentation as part of the underwriting process, making them less suitable for borrowers with income that cannot be fully verified. Nonconforming loans may not have specific requirements related to income documentation, but they are often riskier and not tailored to this unique set of borrowers. Reverse mortgages, on the other hand, are designed for seniors and allow them to borrow against their home equity, but they do not fit the scenario of those unable to document income.