Prosper HELOC and Home Equity Review

3.6 _/5

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Home Equity Loan & Line of Credit

• Fast personalized quotes without affecting your credit score
• Soft credit check for prequalification
• Up to 30-year repayment terms

• Not available in AK, CT, HI, ID, IA, MA, MO, ND, NV, NY, SC, SD, UT, VA, WV, or WY
• Additional requirements for large loans
• High minimum draw
• Takes an average of 26 days to get funds

Rates (APR)	Starting at 9.50%
Loan amounts	$25,000 – $500,000
Repayment terms	5 – 30 years
Min. credit score	660 for HELOC; 620 for home equity loan

Prosper offers an easy way to access your home equity with quick, personalized quotes that don’t affect your credit score. It provides both home equity lines of credit (HELOCs) and fixed-rate loans, with fast access to funds and up to 30-year repayment terms.

However, its products are not available in every state, and larger loans have additional requirements. Our team’s rigorous rating system determined that Prosper rates a subpar 3.5 out of 5. This review will help you understand why, decide whether Prosper’s home equity options suit you, and share alternatives to consider.

Prosper’s home equity loan

Prosper rolled out its home equity loan in October 2022, making it a newer player in the market. If you’re comfortable with digital platforms and like the peer-to-peer (P2P) lending model, Prosper’s easy online application and flexible loan terms might appeal to you. It’s also a solid alternative for those who may not meet the stricter credit requirements of traditional banks.

Please note that Prosper’s home equity products aren’t available in every state, and you might encounter additional fees. To explore more options, check out our list of the best home equity loans.

Read More

HELOC vs. Home Equity Loan

Prosper home equity loan at a glance

The table below provides a quick snapshot of Prosper’s standard home equity loan terms and details.

Terms	Details
Fixed rates (APR)	Starting at 9.531%
Loan amounts	Up to $249,999
Max LTV*	Primary home: 80% – 95%; Second home: 80% – 90%; Investment property: 85%
Repayment period	5 – 30 years
Fees	Origination fee of up to $1,495 in some states
Unique features	Online application, P2P model

How does a Prosper home equity loan work?

Prosper’s home equity loan is based on a peer-to-peer (P2P) lending model, where individual investors fund your loan instead of a traditional bank. Once you submit your application and it’s approved, it’s placed in a marketplace where investors can choose to fund it. This setup could lead to more flexible terms and better rates, but keep in mind that Prosper’s services aren’t available in all states.

The property you own affects how much you can borrow and the loan-to-value ratio (LTV) required. You can borrow between 80% and 95% of the home’s value for primary residences. For second homes, the limit ranges from 80% to 90%, and for investment properties, it’s up to 85%. In Texas, the maximum LTV is 80% for any property type.

Prosper’s HELOC

Prosper’s HELOC offers a fully online experience with various rate options. It could be a decent choice if you value digital management and live in one of the 31 states where Prosper operates.

However, depending on your specific financial needs, you might find that other top-rated HELOC lenders offer more competitive options. It’s worth comparing rates and terms to ensure you get the best fit for your situation.

Prosper HELOC at a glance

Let’s examine the details of Prosper’s HELOC.

Terms	Details
Variable rates (APR)	Starting at 8.25%
Max LTV*	Primary home: 80% – 95%; Second home: 80% – 90%
Loan amounts	$200,000 – $400,000
Draw period	10 years
Repayment period	Up to 20 years
Fees	$50 per year from 2nd year; up to $1,495 origination fee in some states
Unique features	Online application, P2P model

How does a Prosper HELOC work?

Prosper’s HELOC is a revolving line of credit secured by your property, funded through its peer-to-peer lending model, where individual or institutional investors provide the funds. During the 10-year draw period, you can access funds up to your approved credit limit. The rates are variable, with interest-only minimum payments required during the draw period.

You’ll manage your HELOC mostly through Prosper’s online platform or by phone. Your borrowing power and rate are influenced by your home equity, with different LTVs depending on the property type. For primary residences, you can borrow up to 95% of the property’s value and 90% for second homes, with a maximum of 80% in Texas, regardless of property type.

Who’s eligible for a Prosper home equity loan or HELOC?

You’ll need a minimum credit score of 660 to qualify for a Prosper HELOC. A home equity loan requires a score of at least 620. You can use a primary or secondary home as collateral, but the property type will affect your rates.

HELOCs are unavailable for investment properties, but you can use an investment property as collateral for a home equity loan.

What are the costs and fees of a Prosper home equity loan or HELOC?

When you’re looking at a Prosper home equity loan or HELOC, the main cost to be aware of is the annual percentage rate (APR), which includes your interest rate and any extra fees. Prosper’s home equity loan comes with a fixed rate, and its HELOC has a variable rate. The HELOC rate is tied to the Wall Street Journal prime rate, so it might change over time.

Your specific rate will depend on your credit score, LTV, and whether the property is your primary or secondary home. Be aware of fees: Both loan types have origination fees of up to $1,495, and with a HELOC, you’ll pay a $50 annual fee after the first year.

How do you repay a home equity loan or HELOC from Prosper?

When it comes to repaying a home equity loan or HELOC from Prosper, here’s what you need to know about how each option works.

HELOC repayment

A Prosper HELOC has two phases: the draw period and the repayment period. During the draw period, which lasts up to 10 years, you can borrow money as needed up to your credit limit, with minimum monthly payments that cover only the interest.

After this period ends, the repayment phase begins, which can last 15 or 20 years, depending on your terms. During this time, you’ll make monthly payments covering both the principal and interest, and those payments will typically be higher than during the draw period.

For example, if you had a $200,000 HELOC balance at a rate of 8.25%, here’s what your payments might look like:

Phase	Payment type	Monthly payments
Draw period	Interest-only	$137
Repayment period	Principal + interest	$1,518

Home equity loan repayment

With a Prosper home equity loan, your repayment terms range from five to 30 years, with fixed monthly payments that include principal and interest. For instance, on a $200,000 loan with a fixed rate of 8.25%, you’d pay around $1,671 monthly over 20 years.

Prosper offers a rate discount on HELOCs in some states if you set up automatic payments, but this isn’t available for home equity loans. You can pay off either loan early without any prepayment penalties.

If your HELOC is over $250,000, Prosper will require an in-person appraisal to determine your property’s value. For both loan types, the amount you can borrow is influenced by your home’s value, with a maximum LTV of 95%.

By understanding these repayment terms, you can choose the best option for your financial needs and goals.

What does Prosper’s appraisal process look like?

Prosper’s appraisal process is flexible, depending on how much you’re borrowing. For loans under $250,000, Prosper usually doesn’t require an in-person appraisal—you can get by with an online evaluation instead. But if your HELOC or home equity loan is over $250,000, Prosper will need an in-person appraisal to establish your home’s value.

Here’s how it breaks down:

• For smaller loans: The online evaluation process is quick and convenient, often using data from recent sales, public records, and market trends to determine your property value.
• For larger loans: If your loan exceeds $250,000, a certified appraiser will visit your property, which typically takes about 7 to 10 business days.

In most cases, you’ll need to provide basic information about your property, such as proof of ownership and recent tax assessments. If an in-person appraisal is needed, you must coordinate with the appraiser for the visit.

Pros and cons of Prosper home equity products

Before applying for a home equity loan or HELOC with any company, weighing the pros and cons is crucial.

Pros

• Soft credit check for prequalification

  Get a personalized rate quote after just a few questions; it won’t lower your credit score.

• Extended repayment options

  Repayment terms for Prosper’s home equity loans can go up to 30 years, which may be longer than other lenders offer.

Cons

• Limited state availability

  HELOCs with Prosper are only available in certain states.

• Additional requirements for large loans

  For loan amounts of $250,000 or more, an in-person appraisal and title insurance are necessary.

• High minimum draw

  Prosper requires a minimum draw of $50,000.

• Longer access times for funds

  Funds can be accessed in 11 days according to Prosper, but the average is 26 days.

Read More

Best HELOCs & Best Home Equity Loans

Is Prosper a reputable lender?

To evaluate Prosper’s reputation, we examined customer reviews.

Source	Customer rating	Number of reviews
Trustpilot	4.6/5	12,920
Better Business Bureau (BBB)	1.04/5	155

Customer reviews for Prosper show a contrast between platforms. Its Trustpilot ratings suggest that many customers are satisfied with their experiences, particularly with the ease of the online application process and customer service.

However, its lower BBB rating could indicate specific customer concerns or unresolved complaints, often related to customer service issues, communication, or dissatisfaction with loan terms.

We must also mention a recent government action involving Prosper. On March 24, 2024, Prosper Marketplace Inc. entered into a consent order with the state of Minnesota. The company was fined $30,000 for engaging in unlicensed debt collection activities and violating Minnesota law. Prosper agreed to obtain the necessary licenses and to comply with all regulations moving forward.

While this issue has been resolved, we urge you to consider the positive reviews and this recent regulatory action when evaluating whether Prosper is the right fit for your home equity loan or HELOC needs.

Does Prosper have a customer service team?

Yes, Prosper has a customer service team. Here’s how you can reach out:

• Email: [email protected]
• Phone: 800-954-2172
  • Available 10 a.m. – 7 p.m. Eastern, 7 a.m. – 4 p.m. Pacific, Monday – Friday
• Mailing address: Prosper Funding LLC, 221 Main Street, Suite 300, San Francisco, CA 94105

How to apply for a Prosper home equity loan or HELOC

Prosper lets you check your rate without a hard pull on your credit, so you can prequalify before committing to a full application.

Here are the steps to apply for a Prosper home equity loan or HELOC:

1. Visit the website: Navigate to Prosper’s HELOC or home equity loan pages and select “get my rate.” This leads you to an application that’s the same for both products.

2. Enter property information: Input basic details about your home, starting with the address.

3. Answer more property questions: A series of additional questions about your property will follow.

4. Provide mortgage details: If you have a mortgage, you’ll answer related questions.
5. Fill in financial data: Provide pertinent financial information, including income information.
6. View your rate: After entering your contact information, you’ll be able to check the rate and credit limit you prequalify for. If you like what you see, you can customize your offer to choose the product you want, and complete the full application.
7. Submit required documents: Prepare the documents Prosper requests.
8. Wait for approval and funds: After a successful application, funds could be in your account in as little as 11 days.

Prosper alternatives

If Prosper doesn’t quite fit your needs, several other lenders offer competitive home equity loans and HELOCs with unique benefits:

Prosper home equity loans FAQ

How long does it take to get funds from Prosper?

Prosper states you can access funds in as little as 11 days, but the average time is around 26 days. Your personal timeline may differ, but expect a few weeks from application to fund disbursement.

Do you need to tell Prosper what the funds are used for?

Prosper doesn’t require you to specify what you’ll use the funds for during the application process. How you use the funds from a home equity loan or HELOC isn’t limited, but it’s wise to have a clear plan because your home acts as collateral for the loan.

Does Prosper have insurance requirements?

Prosper requires you to have homeowners insurance on the property you’re using as collateral for the loan. This is standard for most home equity lenders.

Can you back out of a HELOC contract?

Backing out during the application process is easier and shouldn’t incur penalties. Once you’re approved but before fund disbursement, you may still have options to cancel, but fees could apply. After receiving the funds, backing out becomes more complex. Always read the fine print, and consult with Prosper on its specific policies.

Can you close your HELOC account at any time?

If you decide to terminate the line of credit early, you can expect a prepayment penalty or closure fee. 

How we rated Prosper

We designed LendEDU’s editorial rating system to help readers find companies that offer the best home equity products. Our system awards higher ratings to companies with affordable solutions, positive customer reviews, and online transparency of benefits and terms.

We compared Prosper to several home equity lenders, using hundreds of data points from company websites, public disclosures, customer reviews, and direct communication with company representatives. We weighted, scored, and combined each factor to produce a final editorial rating. This rating is expressed on a scale from 1 to 5, with 5 being the highest possible score. Our take is represented in our rating recapped below.

Product	Our rating
Prosper home equity loan & HELOC	3.6/5