Describe what a "subprime loan" is.

A "subprime loan" is specifically designed for borrowers who have low credit scores and, consequently, higher risk profiles. These loans carry higher interest rates compared to prime loans because lenders are taking on greater risk by lending to individuals who may have a history of financial difficulties or have not established a strong credit history. The goal of subprime loans is to make financing available to those who may not qualify for standard loans due to their credit situation, allowing them an opportunity to purchase a home or refinance existing debt.

The other options highlight characteristics that do not align with the definition of a subprime loan. For example, loans for first-time homebuyers may encompass various loan types, including prime loans, depending on the borrower's creditworthiness. Similarly, requiring a significant down payment is not unique to subprime loans and isn't an inherent characteristic of them. Lastly, government-backed loans are generally intended for borrowers from a broad range of income levels, and not specifically for high-income individuals, which further distinguishes them from the subprime category.