Business Glossary

high-quality mortgage that meets the standards set by Fannie Mae and Freddie Mac and is eligible for purchase or securitization in the secondary mortgage market. Prime mortgage loans have low default risk and are made to borrowers with good credit records and a monthly income at least three to four times greater than their monthly housing expenses-mortgage payments plus taxes and other debt payments. Mortgages not classified as prime mortgages are generally called subprime loans