Home Equity

"Non-Prime" Home Equity Loan Facts and Statistics

What Is a Non-prime Loan?

Non-prime, or non-conforming, loans are loans made to borrowers who, for any reason, cannot qualify for a prime loan.  Reasons might include income, employment history, loan size, past credit problems or other factors.  Without non-prime lenders, many of these people would have no access to mainstream credit markets at all.  In 2002:

Non-prime home equity loan originations exceeded $200 billion.

• The average interest rate on a non-prime home equity loan was just 9.41%.
• The average loan-to-value ratio for a non-prime loan was 81%, compared to 76% for a conventional purchase mortgage.
• The average non-prime mortgage loan was $130,000.

Who Benefits from Non-prime Lending?

Millions of American homeowners from all 50 states and all walks of life use non-prime home equity loans to invest in building a better life – consolidating debts, financing education, making home improvements, and much more.

Over 5 million homeowners hold non-prime home equity loans.

• The average non-prime home equity borrower earns $54,165 a year.
• Between 30% and 50% of all Americans are classified as non-prime borrowers.
• The average non-prime borrower had a 616 FICO (Fair, Isaac & Co.) credit score last year, an increase from 607 in 2001.

Who Makes Non-prime Loans?

Some of America ’s most respected financial institutions offer non-prime loans.  These institutions take great care in the products they offer and the customers they serve.

Non-prime lenders deny 67% of all loan applications, compared to 37% for all lenders.

• The non-prime payment delinquency rate was just 6% in 2002.