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                                                                    EXHIBIT 10.6

                          Accredited Home Lenders, Inc.
                        SENIOR MANAGEMENT INCENTIVE PLAN
                               Effective for 2002

Statement of Intention:

     It is the intention of Accredited Home Lenders, Inc. (Accredited) to
     provide a cash distribution to our Senior Management as a reward for their
     individual performance and contribution to the achievement of established
     corporate goals.

     The Senior Management Incentive Plan (the "Incentive Plan") will:

         A.   Create a reward and recognition program that is timely and
              consistent with business plan objectives.

         B.   Reward individual performance.

         All distributions made under the Senior Management Incentive Plan are
              a form of profit sharing. As such, they are dependent upon
              Accredited achieving certain levels of profitability, which will
              enable the company to make these distributions.

         Executive Management (the Chairman, President and Executive Vice
              President of Accredited) will make recommendations to the
              Compensation Committee of Board of Directors regarding total
              dollars to be made available for the Incentive Plan Pool. The
              Incentive Plan Pool will be stated as both a dollar pool and as a
              percentage of Incentive Plan participants' eligible salary.

         The decision of Executive Management and the Compensation Committee
              will be final in respect to these amounts so allocated. Nothing in
              the Plan is intended to make a commitment of pay-out, only the
              possibility of pay-out, should certain levels of corporate
              achievement be reached and individual performance support a given
              level of individual pay-out.

Participation:

     To be eligible, an individual must meet the following criteria:

     .   Employed as a Direct Report of the Chairman, President or Executive
         Vice President, and any individual who reports to a Direct Report
         (excluding Divisional Managers).
     .   The Chairman, President or Executive Vice President must approve any
         additional participants.
     .   Participants must be hired or promoted to a position in which they
         would be eligible to participate in the Incentive Plan by September 1st
         in order to participate in current calendar year award.

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Criteria:

     Executive Management will present to the Compensation Committee the
     corporate business plan goals and recommend Senior Management Incentive
     Pool percentages based upon various levels of corporate goal achievement.

Senior Management Incentive Payment Procedure

          A.   The total Senior Management Incentive Plan Cash payout will be
               approved by the Compensation Committee once the financial data
               are available to measure results against corporate goals for the
               Plan year.

          B.   The amount of the individual award will be based upon general
               performance appraisal criteria and individual contribution to
               achieving overall corporate goals and objectives.

          C.   Participant must be employed prior to September 1/st/ of the Plan
               year, and be employed at the time of payout in order to receive
               an award.

          D.   The amount of payout is calculated by the participant's
               year-to-date earnings at the end of the Plan year. This will
               automatically prorate the award for any individuals who become
               employed after January 1/st/.

          E.   The payout will be made as soon as accurate financial data and
               measurements are available for the Plan year, but in no case
               later than March 15/th/ of the following year.

          F.   The award will be part of the employee's taxable income during
               the calendar year in which the payout is made.

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Accredited Home Lenders, Inc.

         SENIOR MANAGEMENT INCENTIVE PLAN
         EFFECTIVE JANUARY 1, 2002

   The Incentive Plan is administered by the Human Resources Department in
   coordination with Executive Management. Final authority in all matters
   pertaining to the development of the Plan, its approval or modification and
   the granting of awards rests with Executive Management and the Compensation
   Committee of the Board of Directors. Participation in the Incentive Plan does
   not, in any way, imply a contractual relationship for employment or for
   receipt of an incentive award by any employee. Accredited reserves the right
   to alter, amend or abolish this Incentive Plan at any time.

   I have read and understand the Incentive Plan. I understand this plan
   supersedes all previous plans.

         __________________________________                    _______________
         (Signature)                                               (Date)



         __________________________________
         (Print Name)

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                             Accredited Home Lenders

                                      2002

                        Senior Management Incentive Plan

 The 2002 Operating Plan provides a substantial increase in production and
 profitability over 2001. A Senior Management Incentive Plan, which emphasizes
 this growth in income, has been approved for 2002. Individual bonuses will be
 based on individual performance and achievement of certain objectives as well
 as Accredited's overall performance. Bonuses will be based on a percentage of
 salary earned during 2002.

 We will have progressively higher net after tax income targets, which in turn
 result in increasing maximum bonus amounts, expressed as a percentage of base
 salary earned during the year. The targets are as follows:

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        Net Income After Tax           Maximum Bonus Percentage
                                  -------------------------------------
               Targets                     Senior Managers
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$ 12.2 million                                  25%
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$ 15.2 million                                  35%
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$ 20.3 million-a)                               50%
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$ 22.3 million                                  70%
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(a-Operating Plan Level

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