Subprime Mortgage By Jae-Suk Han Subprime mortgage is a type of mortgage that is normally made out to borrowers with lower credit ratings. Subprime borrowers generally have a weaker credit profile than that of a prime borrower. They have either missed payments on a debt or have been late with payments. As a result of the weaker credit profile, subprime borrowers have a higher possibility of failing to pay than prime borrowers. For this reason, a conventional mortgage is not offered to them because the lender views the borrower as having a large risk of not paying back the loan. Lenders charge a higher interest rate to compensate for potential losses from customers who may run into default or trouble. Therefore, lending institutions often charge interest on subprime mortgages at a rate that is higher than a conventional mortgage in order to compensate themselves for carrying more risk. It is often useful for people with low credit scores to wait for a period of time and build up their scores before applying for mortgages to ensure that they are eligible for a conventional mortgage.