What is a mortgage with an interest rate higher than prime mortgages called, often due to a higher risk borrower?

A mortgage with an interest rate that exceeds that of prime mortgages is referred to as a subprime loan. This type of mortgage is designed for borrowers who are considered higher risk due to factors such as poor credit history, limited credit, or other financial challenges. Because these borrowers pose a greater risk to lenders, they are often charged higher interest rates compared to those with prime credit, making subprime loans less favorable for borrowers but necessary for those who might not qualify for standard prime loans.

In the context of mortgage classifications, a prime loan typically refers to a mortgage offered to borrowers with strong credit profiles, and these loans come with the most favorable interest rates. Conventional loans encompass both prime and subprime categories but do not specifically denote the elevated risk that characterizes subprime loans. While the term high-risk mortgage could describe a subprime loan, it is not a widely accepted term within the industry standards, making subprime loan the most accurate and recognized label for this category of borrowing.