Who typically qualifies for a subprime mortgage?

• A. Borrowers with high income
• B. Borrowers with excellent credit scores
• C. Borrowers with poor credit scores
• D. First-time homebuyers

Answer: (C)

Subprime mortgages are specifically designed for borrowers who have poor credit scores, often below 640. These borrowers may have a history of late payments, bankruptcies, or insufficient credit history, which makes them a higher risk for lenders. Subprime mortgages allow these individuals a chance to qualify for loans that they might not be able to obtain under standard lending criteria, enabling them to purchase homes despite their credit challenges.

Individuals with high incomes and excellent credit scores typically qualify for prime mortgages, which come with lower interest rates and better terms. First-time homebuyers may fall into various categories depending on their financial profiles, but they are not exclusively associated with subprime lending unless they also have poor credit. The nature of subprime mortgages is to specifically cater to those who do not meet the traditional lending criteria, making it essential for those with poor credit scores.