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                                                                    EXHIBIT 10.1

                          ACCREDITED HOME LENDERS, INC.
                             1998 STOCK OPTION PLAN

     1.   Establishment, Purpose and Term of Plan.

          1.1  Establishment. The Accredited Home Lenders, Inc. 1998 Stock
Option Plan (the "Plan") is hereby established effective as of March 1, 1998
(the "Effective Date").

          1.2  Purpose. The purpose of the Plan is to advance the interests of
the Participating Company Group and its shareholders by providing an incentive
to attract, retain and reward persons performing services for the Participating
Company Group and to motivate such persons to contribute to the growth and
profitability of the Participating Company Group.

          1.3  Term of Plan. The Plan shall continue in effect until terminated
by the Board or until all of the shares of Stock available for issuance under
the Plan have been issued and all restrictions on such shares under the terms of
the Plan and the agreements evidencing Options granted under the Plan have
lapsed. However, all Options shall be granted, if at all, within ten (10) years
from the Effective Date.

     2.   Definitions and Construction.

          2.1  Definitions. Whenever used herein, the following terms shall have
their respective meanings set forth below:

               (a)  "Board" means the Board of Directors of the Company. If one
or more Committees have been appointed by the Board to administer the Plan,
"Board" shall also mean such Committee(s).

               (b)  "Code" means the Internal Revenue Code of 1986, as amended,
and any applicable regulations promulgated thereunder.

               (c)  "Committee" means the Compensation Committee or other
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the powers of
the Board granted herein, including, without limitation, the power to amend or
terminate the Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law.

               (d)  "Company" means Accredited Home Lenders, Inc., a California
corporation, or any successor corporation thereto.

               (e)  "Consultant" means any person, including an advisor, engaged
by a Participating Company to render services other than as an Employee or a
Director.

               (f)  "Director" means a member of the Board or of the board of
directors of any other Participating Company.

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                    (g)   "Employee" means any common-law employee (including
officers and Directors who are also common-law employees) of a Participating
Company; provided, however, that neither service as a Director nor payment of a
director's fee shall be sufficient to constitute employment for this purpose.

                    (h)   "Exchange Act" means the Securities Exchange Act of
1934, as amended.

                    (i)   "Fair Market Value" means, as of any date, the value
of a share of stock or other property as determined by the Board, in its sole
discretion.

                    (j)   "Incentive Stock Option" means an Option intended to
be (as set forth in the Option Agreement) and which qualifies as an incentive
stock option within the meaning of Section 422 (b) of the Code.

                    (k)   "Insider" means an officer or Director of the Company
or any other person whose transactions in the Stock are subject to Section 16 of
the Exchange Act.

                    (l)   "Nonstatutory Stock Option" means an Option not
intended to be (as set forth in the Option Agreement) or which does not qualify
as an Incentive Stock Option.

                    (m)   "Option" means a right to purchase Stock (subject to
adjustment as provided in Section 5.2) pursuant to the terms and conditions of
the Plan. An Option may be either an Incentive Stock Option or a Nonstatutory
Stock Option.

                    (n)   "Optionee" means a person who has been granted one or
more Options.

                    (o)   "Option Agreement" means a written agreement between
the Company and an Optionee setting forth the terms, conditions and restrictions
of the Option granted to the Optionee.

                    (p)   "Parent Corporation" means any present or future
"parent corporation" of the Company, as defined in Section 424(e) of the Code.

                    (q)   "Participating Company" means the Company or any
Parent Corporation or Subsidiary Corporation.

                    (r)   "Participating Company Group" means, at any point in
time, all corporations collectively which are then Participating Companies.

                    (s)   "Rule 16b-3" means Rule 16b-3 as promulgated under the
Exchange Act, as amended from time to time, or any successor rule or regulation.

                    (t)   "Stock" means the common stock, without par value, of
the Company, as adjusted from time to time in accordance with Section 5.2.

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                    (u)   "Subsidiary Corporation" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.

                    (v)   "Ten Percent Owner Optionee" means an Optionee who, at
the time an Option is granted to the Optionee, owns stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
a Participating Company within the meaning of Section 422(b)(6) of the Code.

               2.2  Construction. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural, and the plural shall include the singular.
Use of the term "or" is not intended to be exclusive, unless the context clearly
requires otherwise.

     3.  Administration.

               3.1  Administration by the Board. The Plan shall be administered
by the Board, including any duly appointed Committee of the Board. All questions
of interpretation of the Plan or of any Option shall be determined by the Board,
and such determinations shall be final and binding upon all persons having an
interest in the Plan or such Option. Any officer of a Participating Company
shall have the authority to act on behalf of the Company with respect to any
matter, right, obligation, or election which is the responsibility of or which
is allocated to the Company herein, provided the officer has apparent authority
with respect to such matter, right, obligation, or election.

               3.2  Powers of the Board. In addition to any other powers set
forth in the Plan and subject to the provisions of the Plan, the Board shall
have the full and final power and authority, in its sole discretion:

                    (a)  to determine the persons to whom, and the time or times
at which, Options shall be granted and the number of shares of Stock to be
subject to each Option;

                    (b)  to designate Options as Incentive Stock Options or
Nonstatutory Stock Options;

                    (c)  to determine the Fair Market Value of shares of stock
or other property;

                    (d)  to determine the terms and conditions of each Option
(which need not be identical), including, without limitation, the exercise price
of the Option, the method of payment for shares purchased upon the exercise of
the Option, the method for satisfaction of any tax withholding obligation
arising in connection with the Option, including by the withholding or delivery
of shares of stock, the timing and terms of the exercisability and vesting of
the Option, the time of the expiration of the Option, the effect of the
Optionee's termination of employment or service, and all other terms and
conditions of the Option not inconsistent with the terms of the Plan;

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                    (e)  to approve one or more forms of Option Agreement;

                    (f)  to amend, modify, extend, or renew, or grant a new
Option in substitution for, any Option or to waive any restrictions or
conditions applicable to any Option or the exercise thereof;

                    (g)  to accelerate, continue, extend or defer the
exercisability or vesting of any Option, including with respect to the period
following an Optionee's termination of employment or service with the
Participating Company Group;

                    (h)  to prescribe, amend or rescind rules, guidelines and
policies relating to the Plan, or to adopt supplements to, or alternative
versions of, the Plan, including, without limitation, as the Board deems
necessary or desirable to comply with the laws of, or to accommodate the tax
policy or custom of, foreign jurisdictions whose citizens may be granted
Options; and

                    (i)  to correct any defect, supply any omission or reconcile
any inconsistency in the Plan or any Option Agreement and to make all other
determinations and take such other actions with respect to the Plan and any
Option as the Board may deem advisable, to the extent consistent with the Plan
and applicable law.

               3.3  Administration with Respect to Insiders. With respect to
participation by Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to Section 12 of the Exchange
Act, the Plan shall be administered in compliance with the requirements, if any,
of Rule 16b-3.

     4.  Eligibility and Option Limitations.

               4.1  Eligible Persons. Options may be granted only to Employees,
Consultants, and Directors. For purposes of the foregoing sentence, "Employees",
"Consultants" and "Directors" shall include prospective Employees, prospective
Consultants and prospective Directors to whom Options are granted in connection
with written offers of employment or other service relationship with the
Participating Company Group. Eligible persons may be granted more than one (1)
Option.

               4.2  Option Grant Restrictions. Any person who is not an Employee
on the effective date of the grant of an Option to such person may be granted
only a Nonstatutory Stock Option. An Incentive Stock Option granted to a
prospective Employee upon the condition that such person become an Employee
shall be deemed granted effective on the date such person commences Service with
a Participating Company, with an exercise price determined as of such date in
accordance with Section 6.1.

               4.3  Fair Market Value Limitation. To the extent that options
designated as Incentive Stock Options (granted under all stock option plans of
the Participating Company Group, including the Plan) become exercisable by an
Optionee for the first time during any calendar year for stock having a Fair
Market Value greater than One Hundred Thousand Dollars ($100,000), the portion
of such options which exceeds such amount shall be treated as

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Nonstatutory Stock Options. For purposes of this Section 4.3, options designated
as Incentive Stock Options shall be taken into account in the order in which
they were granted, and the Fair Market Value of stock shall be determined as of
the time the option with respect to such stock is granted. If the Code is
amended to provide for a different limitation from that set forth in this
Section 4.3, such different limitation shall be deemed incorporated herein
effective as of the date and with respect to such Options as required or
permitted by such amendment to the Code. If an Option is treated as an Incentive
Stock Option in part and as a Nonstatutory Stock Option in part by reason of the
limitation set forth in this Section 4.3, the Optionee may designate which
portion of such Option the Optionee is exercising. In the absence of such
designation, the Optionee shall be deemed to have exercised the Incentive Stock
Option portion of the Option first. Separate certificates representing each such
portion shall be issued upon the exercise of the Option.

     5.   Shares Subject to Plan.

          5.1  Maximum Number of Shares Issuable. Subject to adjustment as
provided in Section 5.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be Two Hundred Forty-Four Thousand (244,000)
and shall consist of authorized but unissued shares of Stock. In the event that
any outstanding Option for any reason expires or is terminated or canceled or
shares of Stock acquired, subject to repurchase, upon the exercise of an Option
are repurchased by the Company, the shares of Stock allocable to the unexercised
portion of such Option, or such repurchased shares of Stock, shall again be
available for issuance under the Plan. Notwithstanding the foregoing, at any
such time as the offer and sale of securities pursuant to the Plan is subject to
compliance with Section 260.140.45 of Title 10 of the California Code of
Regulations ("Section 260.140.45"), the total number of shares of Stock issuable
upon the exercise of all outstanding Options (together with options outstanding
under any other stock option plan of the Company) and the total number of shares
provided for under any stock bonus or similar plan of the Company shall not
exceed thirty percent (30%) (or such other higher percentage limitation as may
be approved by the shareholders of the Company pursuant to Section 260.140.45)
of the then outstanding shares of the Company as calculated in accordance with
the conditions and exclusions of Section 260.140.45.

          5.2  Adjustments for Changes in Capital Structure. In the event of any
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number and class of shares subject
to the Plan and to any outstanding Options and in the exercise price of any
outstanding Options. If a majority of the shares which are of the same class as
the shares that are subject to outstanding Options are exchanged for, converted
into, or otherwise become (whether or not pursuant to a Transfer of Control (as
defined in Section 8.1) shares of another corporation (the "New Shares"), the
Board may unilaterally amend the outstanding Options to provide that such
Options are exercisable for New Shares. In the event of any such amendment, the
number of shares subject to and the exercise price of the outstanding Options
shall be adjusted in a fair and equitable manner as determined by the Board, in
its sole discretion. Notwithstanding the foregoing, any fractional share
resulting from an adjustment pursuant to this Section 5.2 shall be rounded up or
down to the nearest whole number, as determined by the Board, and in no event
may the exercise price of any Option be decreased to an amount less than the par
value, if any, of the stock subject to the Option.

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     6.   Terms and Conditions of Options.

          Options shall be evidenced by Option Agreements specifying the number
of shares of Stock covered thereby, in such form as the Board shall from time to
time establish, which Option Agreements may incorporate all or any of the terms
of the Plan by reference and shall comply with and be subject to the following
terms and conditions:

          6.1  Exercise Price. The exercise price for each Option shall be
established in the sole discretion of the Board; provided, however, that (a) the
exercise price per share for an Incentive Stock Option shall be not less than
the Fair Market Value of a share of Stock on the effective date of grant of the
Option, (b) the exercise price per share for a Nonstatutory Stock Option shall
be not less than eighty-five percent (85%) of the Fair Market Value of a share
of Stock on the effective date of grant of the Option, and (c) no Option granted
to a Ten Percent Owner Optionee shall have an exercise price per share less than
one hundred ten percent (110%) of the Fair Market Value of a share of Stock on
the effective date of grant of the Option. Notwithstanding the foregoing, an
Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be
granted with an exercise price lower than the minimum exercise price set forth
above if such Option is granted pursuant to an assumption or substitution for
another option in a manner qualifying under the provisions of Section 424(a) of
the Code.

          6.2  Exercise Period. Options shall be exercisable at such time or
times and subject to such terms, conditions, performance criteria, and
restrictions as shall be determined by the Board and set forth in the Option
Agreement evidencing such Option; provided, however, that (a) no Option shall be
exercisable after the expiration of ten (10) years after the effective date of
grant of such Option, (b) no Incentive Stock Option granted to a Ten Percent
Owner Optionee shall be exercisable after the expiration of five (5) years after
the effective date of grant of such Option, (c) no Option granted to a
prospective Employee or prospective Consultant may become exercisable prior to
the date on which such individual commences service with a Participating Company
and (d) with the exception of an Option granted to an officer, Director or
Consultant, no Option shall become exercisable at a rate less than twenty
percent (20%) per year over a period of five (5) years from the effective date
of grant of such Option, subject to the Optionee's continued Service. Subject to
the foregoing, unless otherwise specified by the Board in the grant of an
Option, any Option granted hereunder shall have a term of ten (10) years from
the effective date of grant of the Option.

          6.3  Payment of Exercise Price.

               (a)  Forms of Payment Authorized. Except as otherwise provided
below, payment of the exercise price for the number of shares of Stock being
purchased pursuant to any Option shall be made (i) in cash, by check, or cash
equivalent, (ii) by tender to the Company, or attestation to the ownership, of
shares of Stock owned by the Optionee having a Fair Market Value (as determined
by the Company without regard to any restrictions on transferability applicable
to such stock by reason of federal or state securities laws or agreements with
an underwriter for the Company) not less than the exercise price, (iii) by the
assignment of the proceeds of a sale or loan with respect to some or all of the
shares being acquired upon the exercise of the Option (including, without
limitation, through an exercise complying with the

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provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System) (a "Cashless Exercise"), (iv) by the
Optionee's promissory note in a form approved by the Company, (v) by such other
consideration as may be approved by the Board from time to time to the extent
permitted by applicable law, or (vi) by any combination thereof. The Board may
at any time or from time to time, by adoption of or by amendment to the standard
forms of Option Agreement described in Section 7, or by other means, grant
Options which do not permit all of the foregoing forms of consideration to be
used in payment of the exercise price or which otherwise restrict one or more
forms of consideration.

                    (b)  Limitations on Forms of Consideration.

                         (i)   Tender of Stock. Notwithstanding the foregoing,
an Option may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock to the extent such tender, or attestation to the
ownership, of Stock would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock.
Unless otherwise provided by the Board, an Option may not be exercised by tender
to the Company, or attestation to the ownership, of shares of Stock unless such
shares either have been owned by the Optionee for more than six (6) months or
were not acquired, directly or indirectly, from the Company.

                         (ii)  Cashless Exercise. The Company reserves, at any
and all times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve or terminate any program or procedures for the
exercise of Options by means of a Cashless Exercise.

                         (iii) Payment by Promissory Note. No promissory note
shall be permitted if the exercise of an Option using a promissory note would be
a violation of any law. Any permitted promissory note shall be on such terms as
the Board shall determine at the time the Option is granted. The Board shall
have the authority to permit or require the Optionee to secure any promissory
note used to exercise an Option with the shares of Stock acquired upon the
exercise of the Option or with other collateral acceptable to the Company.
Unless otherwise provided by the Board, if the Company at any time is subject to
the regulations promulgated by the Board of Governors of the Federal Reserve
System or any other governmental entity affecting the extension of credit in
connection with the Company's securities, any promissory note shall comply with
such applicable regulations, and the Optionee shall pay the unpaid principal and
accrued interest, if any, to the extent necessary to comply with such applicable
regulations.

               6.4  Tax Withholding. The Company shall have the right, but not
the obligation, to deduct from the shares of Stock issuable upon the exercise of
an Option shares the Fair Market Value of which is equal to all or any part of
the federal, state, local and foreign taxes, if any, required by law to be
withheld by the Participating Company Group with respect to such Option.
Alternatively, in its sole discretion, the Company shall have the right to
require the Optionee, through payroll withholding or otherwise, to make adequate
provision for any such tax withholding obligations of the Participating Company
Group arising in connection with the Option. The Company shall have no
obligation to deliver shares of Stock or to release shares of

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Stock from an escrow established pursuant to the Option Agreement until the
Participating Company Group's tax withholding obligations have been satisfied.

     7.   Standard Forms of Option Agreement.

          7.1  Incentive Stock Options. Unless otherwise provided for by the
Board at the time an Option is granted, an Option designated as an "Incentive
Stock Option" shall comply with and be subject to the terms and conditions set
forth in the form of Incentive Stock Option Agreement adopted by the Board
concurrently with its adoption of the Plan and as amended from time to time.

          7.2  Nonstatutory Stock Options. Unless otherwise provided for by the
Board at the time an Option is granted, an Option designated as a "Nonstatutory
Stock Option" shall comply with and be subject to the terms and conditions set
forth in the form of Nonstatutory Stock Option Agreement adopted by the Board
concurrently with its adoption of the Plan and as amended from time to time.

          7.3  Authority to Vary Terms. The Board shall have the authority from
time to time to vary the terms of any of the standard forms of Option Agreement
described in this Section 7 either in connection with the grant or amendment of
an individual Option or in connection with the authorization of a new standard
form or forms; provided, however, that the terms and conditions of such revised
or amended standard form or forms of Option Agreement shall be in accordance
with the terms of the Plan.

     8.   Transfer of Control.

          8.1  Definition. A "Transfer of Control" shall be deemed to have
occurred in the event any of the following occurs with respect to the Company:

               (a)  the direct or indirect sale or exchange by the shareholders
of the Company of all or substantially all of the stock of the Company where the
shareholders of the Company before such sale or exchange do not retain, directly
or indirectly, as a result of their ownership of shares of the Company's stock
prior to such event, beneficial ownership of at least a majority of the voting
stock of the Company after such sale or exchange;

               (b)  a merger or consolidation where the shareholders of the
Company before such merger or consolidation do not retain, directly or
indirectly, as a result of their ownership of shares of the Company's stock
prior to such event, beneficial ownership of at least a majority of the voting
stock of the Company after such merger or consolidation;

               (c)  the sale, exchange, or transfer of all or substantially all
of the assets of the Company (other than a sale, exchange, or transfer to one or
more Subsidiary Corporations of the Company);

               (d)  a liquidation or dissolution of the Company.

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               8.2  Effect of Transfer of Control on Options. In the event of a
Transfer of Control, the Board, in its sole discretion, may arrange with the
surviving, continuing, successor, or purchasing corporation or parent
corporation thereof, as the case may be (the "Acquiring Corporation"), for the
Acquiring Corporation to either assume the Company's rights and obligations
under outstanding Options or substitute substantially equivalent options for the
Acquiring Corporation's stock for outstanding Options. Any Options which are
neither assumed or substituted for by the Acquiring Corporation in connection
with the Transfer of Control nor exercised as of the date of the Transfer of
Control shall terminate and cease to be outstanding effective as of the date of
the Transfer of Control.

          9.   Provision of Information.

               At least annually, copies of the Company's balance sheet and
income statement for the just completed fiscal year shall be made available to
each Optionee and purchaser of shares of Stock upon the exercise of an Option.
The Company shall not be required to provide such information to persons whose
duties in connection with the Company assure them access to equivalent
information.

          10.  Nontransferability of Options.

               During the lifetime of the Optionee, an Option shall be
exercisable only by the Optionee or the Optionee's guardian or legal
representative. No Option shall be assignable or transferable by the Optionee,
except by will or by the laws of descent and distribution.

          11.  Indemnification.

               In addition to such other rights of indemnification as they may
have as members of the Board, members of the Board and any officers to whom
authority to act for the Board is delegated shall be indemnified by the Company
against all reasonable expenses, including attorneys' fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for negligence or misconduct in duties;
provided, however, that within sixty (60) days after the institution of such
action, suit or proceeding, such person shall offer to the Company, in writing,
the opportunity at its own expense to handle and defend the same.

          12.  Termination or Amendment of Plan.

               The Board may terminate or amend the Plan at any time. However,
subject to changes in applicable law, regulations or rules that would permit
otherwise, without the approval of the Company's shareholders, there shall be
(a) no increase in the maximum aggregate number of shares of Stock that may be
issued under the Plan (except by operation of the provisions of

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Section 5.2), (b) no change in the class of persons eligible to receive
Incentive Stock Options, and (c) no other amendment of the Plan that would
require approval of the Company's shareholders under any applicable law,
regulation or rule. In any event, no termination or amendment of the Plan may
adversely affect any then outstanding Option or any unexercised portion thereof,
without the consent of the Optionee, unless such termination or amendment is
required to enable an Option designated as an Incentive Stock Option to qualify
as an Incentive Stock Option or is necessary to comply with any applicable law,
regulation or rule.

          13.  Shareholder Approval.

               The Plan or any increase in the maximum number of shares of Stock
issuable thereunder as provided in Section 5.1 (the "Maximum Shares") shall be
approved by the shareholders of the Company within twelve (12) months of the
date of adoption thereof by the Board. Options granted prior to shareholder
approval of the Plan or in excess of the Maximum Shares previously approved by
the shareholders shall become exercisable no earlier than the date of
shareholder approval of the Plan or such increase in the Maximum Shares, as the
case may be.

               IN WITNESS WHEREOF, the undersigned Secretary of the Company
certifies that the foregoing Accredited Home Lenders, Inc. 1998 Stock Option
Plan was duly adopted by the Board on March 1, 1998.


                               /s/ Ray W. McKewon
                               ------------------------------------------
                               Ray W. McKewon, Secretary

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                                  PLAN HISTORY

March 1, 1998       Board adopts Plan, with an initial reserve of 244,000
                    shares.

March 1, 1998       Shareholders approve Plan, with an initial reserve of
                    244,000 shares.

January 29, 1999    Board approves 284,873 increase in reserve for a total
                    reserve of 528,873 shares.

January 29, 1999    Shareholders approve 284,873 increase in reserve for a total
                    reserve of 528,873 shares.

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