Who is a subprime mortgage lender?


A subprime mortgage lender is one who extends money to borrowers with low credit score, who can't get conventional financing. Subprime lenders are also called bad credit lenders. Most of them are independent entities, but some work for prime lenders.

There are lenders who will deal with prime and subprime home loans - the benefits for the consumer are great here, because the lender will try to underwrite them for a prime loan and only then will consider subprime financing.

Bad Credit Borrowers Are Not Always Subprime

Even though credit is the main factor to distinguish prime and subprime borrowers, there are other criteria, too. If your credit score is somewhere in the middle between prime and subprime and you can do full documentation and have a low LTV, you might very well get a prime loan. On the contrary, should you have an average score and are going reduced doc and need 100% financing, your rates might be in the subprime category.

Also, subprime home loan lenders might approve of a prime loan for a first home, but the same borrower may not get an investment property under prime terms.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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