What defines a "subprime mortgage"?

A subprime mortgage is specifically characterized as a type of mortgage offered to borrowers who have lower credit ratings. These borrowers typically struggle to secure loans from traditional lenders who prefer borrowers with higher credit scores. As a result, subprime mortgages come with higher interest rates to compensate for the increased risk that lenders take on when lending to borrowers deemed less creditworthy. This heightened interest rate reflects the potential for higher default rates associated with borrowers in the subprime category.

The other options provided do not fit the criteria for a subprime mortgage. Mortgages offered to borrowers with excellent credit ratings represent prime loans, which are fundamentally different from subprime due to their lower interest rates and more favorable terms. Investments properties don't exclusively differentiate a mortgage as subprime, as those can fall into a variety of categories depending on the borrower's creditworthiness. Lastly, while there are programs designed for first-time homebuyers, these mortgages can vary widely and are not inherently classified as subprime unless they target borrowers with lower credit scores.