Subprime Mortgage Definition

A subprime mortgage is a mortgage made to individuals with poor credit ratings. Individuals not qualifying for a conventional mortgage may turn to a subprime mortgage to purchase a home. Additionally, some "creative financing" mortgages do not qualify for conventional mortgage status and thus default to the subprime market even though the borrower might have a sound credit rating.

Subprime mortgages carry a higher interest rate than conventional mortgages, are deemed riskier for the lender, and are often burdened with higher fees. Subprime mortgages are frequently considered to be a type of predatory lending as many of them are made to individuals with little hope of being able to financially bear the mortgage burden.