A classification of mortgages where the risk profile falls between prime and subprime. The borrowers behind these mortgages will typically have clean credit histories, but the mortgage itself will generally have some issues that increase its risk profile. These issues include higher loan-to-value and debt-to-income ratios or inadequate documentation of the borrower's income.


These types of loans are attractive to lenders because the rates are higher than rates on prime classified mortgages, but they are still backed by borrowers with stronger credit ratings than subprime borrowers. However, with the higher rates comes additional risk for lenders because there is a lack of documentation - including limited proof of the borrower's income.

  1. Subprime

    A classification of borrowers with a tarnished or limited credit ...
  2. Subprime Loan

    A type of loan that is offered at a rate above prime to individuals ...
  3. Credit Risk

    The risk of loss of principal or loss of a financial reward stemming ...
  4. Default Risk

    The event in which companies or individuals will be unable to ...
  5. No Income / No Asset Mortgage - ...

    A type of reduced documentation mortgage program in which no ...
  6. Loan-To-Value Ratio - LTV Ratio

    A lending risk assessment ratio that financial institutions and ...
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    When housing prices fall, consumers are more likely to default on their home loans, causing banks to lose money. Also, home ... Read Full Answer >>
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    Unlike subprime mortgages issued by some conventional commercial lenders, Federal Housing Administration (FHA) loans do not ... Read Full Answer >>
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