Prosper HELOC and Home Equity Review

View Rates

Prosper offers HELOCs and fixed-rate home equity loans

• Loan amounts for HELOCs range from $200,000 to $400,000.
• Home equity loans up to $249,999.
• Fast, personalized quotes without affecting your credit score.
• No prepayment penalties.

About Prosper

Prosper launched in the United States in 2005, marking its place as the nation’s first peer-to-peer lending marketplace. The company allows homeowners to access their home equity through standard home equity lines of credit (HELOCs) or fixed-rate home equity loans, providing cash for various uses.

Learn more about the difference between a HELOC and a home equity line of credit.

The platform is ideal for homeowners who are comfortable navigating online lending and are in search of quick, personalized rate quotes. If you have a credit score of at least 660 for a home equity line of credit or 620 for a home equity loan, Prosper could be a solid fit for your needs. 

Overall, Prosper’s unique peer-to-peer model and range of options are appealing, but keep an eye on state availability and fees.

Our take on Prosper’s home equity loan

Our take on Prosper’s home equity loan
Best for	No best-for designation
Editorial rating	Not rated
Check your rate without affecting your credit

Prosper introduced its home equity loan product in October 2022. Due to its newness, we haven’t yet assigned the product an editorial rating, and it hasn’t earned a best-for designation. This makes it uncharted territory compared to more established lenders.

Still, Prosper has its merits. Especially if you’re accustomed to digital platforms and the peer-to-peer lending model, you may find its online application process and flexible loan terms appealing. 

For applicants who don’t quite meet the stringent credit requirements of traditional banks, Prosper serves as an alternative. However, keep in mind Prosper’s home equity products are not available in every state and could come with additional fees.

For those interested in options that have garnered best-for designations or high editorial ratings, you’ll want to explore our list of the best home equity loans.

Prosper home equity loan at a glance

In this section, you’ll get a quick snapshot of the terms and details of Prosper’s standard home equity loan. We’ll delve into these aspects in more detail in the sections that follow.

Terms	Details
Fixed rates (APR)	Start at 9.531% APR
Variable rates (APR)	N/A
Rate discounts	Not specified
Loan amounts	Up to $249,999
Maximum loan-to-value	80% – 95% of primary home value 80% – 90% of second home’s value 85% of investment property  In Texas, no more than 80% of value of home may be borrowed
Repayment period	5 – 30 years
Repayment assistance	Not stated
Fees	Origination fee of up to $1,495 in some states
Unique features	Online application, funds accessible within days

How does a Prosper home equity loan work?

Prosper’s home equity loan operates on a peer-to-peer lending model. This means individual investors fund your home equity loan, not a traditional financial institution. You submit your application, and if approved, it goes into a marketplace where investors can opt to fund it. 

This model can offer more flexible terms and rates, although it’s essential to note that not all states have access to Prosper’s services.

Loan-to-value and property type

Property type affects not only eligibility but the required loan-to-value ratio, dictating how much you can borrow. For primary residences, you can borrow up to 80% and 95% of the home’s value. You can borrow a max of 80% to 90% for second homes and 85% for investment properties. In Texas, however, the maximum is 80% for any property type.

How to manage your loan

Prosper leans on digital management. The application process, account dashboard, and most of the customer service happen online. However, phone support is available if you prefer human interaction.

Our take on Prosper’s HELOC

Our take on Prosper’s HELOC
Best for	No best-for designation
Editorial rating	3.9 out of 5
Check your rate without affecting your credit

While its home equity loan is a newer offering, Prosper has been offering HELOCs for some time. Despite not earning a best-for designation, Prosper’s HELOC still gets a respectable 3.9 out of 5 rating. The peer-to-peer lender offers a streamlined online experience and a range of rate options, making it a viable choice for some borrowers.

But other companies exceed Prosper’s offerings in several areas. 

• If quick funding is crucial for you, Hitch leads the way. 
• For those with lower credit scores, Point’s requirements are more lenient. 
• And Spring EQ provides more flexibility by allowing you to apply for a HELOC and home equity loan in the same application.

Prosper’s HELOC could be right for you if you prioritize online management and reside in one of the 31 eligible states (listed below). But keep in mind, based on our analysis, other top-rated HELOC lenders may better suit specific financial needs.

Prosper HELOC at a glance

Let’s dig into the details of Prosper’s HELOC offerings. You’ll find all these terms discussed in depth later on.

Terms	Details
Rates (APR)	Variable: 8.25% – 21%
Rate discounts	Available in certain states
Maximum loan-to-value	80% – 95% of primary home value 80% – 90% of second home’s value In Texas, no more than 80% of value of home may be borrowed
Loan amounts	$200,000 – $400,000
Draw period	10 years
Repayment period	Up to 20 years
Repayment assistance	Not specified
Fees	$50 per year from 2nd year; up to $1,495 origination fee in some states
Unique features	Peer-to-peer lender, no impact on credit for quotes, no prepayment penalties

How does a Prosper HELOC work?

Prosper’s HELOC functions as a revolving line of credit, using your property as collateral. With Prosper’s peer-to-peer lending model, individual or institutional investors fund your loan. During the 10-year draw period, you can access funds up to your credit limit.

Rates and terms

Prosper’s variable rates start at 8.25% and can go up to 21%. You must make minimum monthly payments during the draw period that areinterest-only.

How to manage your Prosper HELOC

You’ll manage your HELOC primarily through Prosper’s online platform or by phone. The lender doesn’t have a dedicated mobile app at the moment.

The critical role of home equity

Your home equity determines your borrowing power and influences your rate. The loan-to-value (LTV) ratios differ based on the property type, affecting how much you can borrow and at what rate. 

For primary homes, you can borrow a maximum of 80% to 95% of the property’s value. For a second home, it’s 80% to 90%, and for investment properties, it’s 85%. In Texas, the ratio is capped at 80% regardless of property type.

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

If you’re considering a HELOC with Prosper, eligibility leans toward homeowners with a minimum credit score of 660. Meanwhile, home equity loan applications need a score of 620. 

You can use either a primary or secondary home as collateral, although the type of home impacts your rates. Investment properties are off the table for a HELOC but eligible for a home equity loan. As for spouses, the application doesn’t explicitly require their inclusion, but joint applications could influence loan terms.

Compared to its home equity loan, Prosper’s HELOC has stricter requirements on credit score but offers broader state availability.

Requirement	Details
Properties	Primary and secondary homes are eligible, but whether the home is your primary residence will affect rates. Investment properties not eligible for HELOC.
State of residence	31 states (listed below)
Maximum loan-to-value	80% – 95% (primary); 80% – 90% (secondary). In Texas, the max is 80%.
Maximum debt-to-income	Not specified
Minimum credit score	660 for HELOC 620 for home equity loan
Minimum income	Not specified

As of October 2023, Prosper HELOCs and home equity loans are available in: Alabama, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Montana, Nebraska, New Hampshire, New Mexico, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, Washington, D.C., and Wisconsin.

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

When diving into a home equity loan or HELOC with Prosper, you’ll find several costs that add up. The APR (annual percentage rate) is the key figure—this is the cost you pay each year to borrow the money, plus fees. 

Rates and their impact

Product	APR
Home equity loan	Start at 9.531% fixed
HELOC	Start at 8.25% variable

The HELOC rate is based on an index rate plus a margin and fluctuates according to the Wall Street Journal Prime Rate. The rates influence your monthly repayments and the overall cost of the loan.

How rates are calculated

Prosper calculates your rates based on a variety of factors, including your credit score, LTV, and whether the property is a primary or secondary home.

Fees

Both loan types come with origination fees of up to $1,495, depending on the state. For the HELOC, you’ll pay a $50 annual fee after the first year. 

How Prosper compares to other lenders

Generally, Prosper’s home equity loan rates are competitive. Other home equity companies, including Hitch and Spring EQ, offer quicker funding times and a multi-product application, respectively, but may charge higher rates.

Key differences

Prosper’s home equity loan offers fixed rates, while its HELOC comes with variable rates. The HELOC also has a draw period during which you can access funds, unlike the lump sum provided in a home equity loan.

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

Understanding the repayment process is crucial when you’re deciding between a home equity loan and HELOC. Let’s dive deeper.

HELOC repayment

For Prosper’s HELOC, you’re looking at two distinct phases: the draw period and the repayment period. The draw period lasts 10 years, during which you can withdraw funds up to your credit limit. You’re required to make minimum monthly payments during this time.

The repayment period kicks in after that. Terms are either 15 or 20 years after the draw period ends, depending on the offer you receive from Prosper. Payments cover principal and interest and are often higher than during the draw period.

Here’s an example breakdown:

Stage	Payment components	Example (20-year repayment term, $200,000 HELOC)
Draw period	Interest-only	$137 per month (at 8.25% APR)
Repayment period	Principal + interest	$1,518 per month (at 8.25% APR)

Home equity loan repayment

Prosper’s home equity loans offer repayment terms from five to 30 years. The payments remain fixed, covering both principal and interest.

Here’s an example for clarity:

Repayment period	Monthly payment	Example ($200,000 loan)
20 years	Principal + Interest	$1,671 per month (at 8.25% APR)

Payment options and customization

For Prosper’s HELOC, a rate discount is available in certain states if you set up automatic payments. Home equity loans don’t offer this feature. But you can repay both loan types early without a prepayment penalty.

Role of home value in repayment terms

For HELOCs exceeding $250,000, Prosper requires an in-person appraisal. For home equity loans, property value affects how much you can borrow, up to a 95% loan-to-value ratio.

How does your home’s value affect your terms?

When you apply for a HELOC, your home serves as collateral. In other words, if you default, Prosper can take ownership of your home. The value of your home plays a significant role in determining eligibility and the terms you receive. 

If your home’s value increases, it won’t change the terms of an open HELOC but could influence your eligibility for refinancing to better terms.

The value of your home determines:

• How much you can borrow: Up to 95% LTV for primary homes and 90% for secondary homes.
• Eligibility: A higher home value could make you more attractive to the lender.

What does Prosper’s appraisal process look like?

To establish your home’s value, Prosper typically doesn’t require an in-person appraisal for loans less than $250,000. For HELOCs and loans exceeding this amount, an in-home appraisal is necessary. Here’s what you need to know:

• Method: In-person for loans over $250,000; otherwise, an online evaluation suffices.
• Duration: Approximately seven to 10 business days for an in-person appraisal.
• Required from applicant: Proof of home ownership and, in some cases, recent tax assessments.
• Comparative analysis: Many lenders require in-person appraisals for all loan sizes, making Prosper’s process more convenient for loans under $250,000.

Time frame

The appraisal process can take anywhere from a few days to a couple of weeks, depending on factors such as the need for an in-person appraisal.

Method

If an in-person appraisal is required, a certified appraiser will visit your property to assess its value. For smaller loans, Prosper may rely on online data and other automated valuation models.

What’s needed from you

In most cases, you’ll need to provide basic property information and possibly financial documents if requested. For in-person appraisals, you’ll need to schedule and accommodate the appraiser’s visit.

Compared to other lenders

Prosper’s dual method—automated for smaller loans and in-person for larger ones—offers flexibility you might not find with every lender.

Prosper’s appraisal process is straightforward but offers options to fit different needs. Whether you’re borrowing a smaller amount or going big, it has an appraisal process that works to accurately determine your home’s value.

Pros and cons of Prosper home equity products

Before diving into a home equity loan or HELOC with Prosper, it’s crucial to weigh the pros and cons. Let’s break it down.

Pros

• Soft inquiry for prequalification

  Get a personalized rate quote after just a few questions, and it won’t ding your credit score.

• Quick access to funds

  Prosper claims you can access funds in 11 days, although the average is 26 days.

• 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 relatively high minimum draw of $50,000.

• Variable access times for funds

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

In summary, Prosper has its advantages, including  quick prequalification and extended repayment terms for home equity loans. 

However, it’s not without its drawbacks, such as limited state availability and higher rates. If these cons are deal-breakers for you, it may be worth exploring competitors we’ve reviewed that offer better options for HELOCs and home equity loans.

Is Prosper a reputable lender?

To evaluate Prosper’s reputation, let’s look at customer reviews from multiple platforms.

Source	Customer rating	Number of reviews
Trustpilot	4.7 out of 5	12,151
Google	2.4 out of 5	51 reviews
Better Business Bureau	1.05 out of 5	127

Data collected September 29, 2023

Prosper enjoys a high rating of 4.7 out of five stars on Trustpilot, where customers often highlight the ease of applying, helpful customer service, and swift fund disbursement. We consider Trustpilot reviews reliable because they undergo a verification process to ensure authenticity.

However, it’s a different story on the Better Business Bureau (BBB) website. Prosper has earned an A+ rating from BBB, but the customer reviews paint a different picture, with a 1.05 out of five star rating.

Complaints revolve around payment issues and security concerns, among other topics. The BBB is a recognized authority on business reputation, but its reviews may encompass a wide range of products and services offered by Prosper, not just home equity products.

Prosper’s reviews on Google are also middle of the road with complaints largely centered around customer service.Given these mixed reviews, it’s wise to read through customer experiences on multiple platforms to get a comprehensive view. 

Does Prosper have a customer service team?

When it comes to customer service, Prosper has you covered. The team is based in the United States and is available to assist you with any questions or concerns. 

Whether you need clarification on your loan terms or assistance with the application process, the customer service team is trained to help. Here’s how you can reach out to Prosper’s customer service:

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

Choose the contact method that works best for you, and rest assured Prosper’s customer service team is there to assist.

How to apply for a Prosper home equity loan or HELOC

The application process at Prosper stands out for its simplicity and online convenience. Unlike some competitors, Prosper lets you check your rate without a hard pull on your credit. That means 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, which is 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 to upload various documents, including:
   1. Contact details
   2. Two years’ worth of income documentation
   3. Bank and investment statements from the last two months
   4. Records of any major financial events, such as a divorce
   5. Documentation for any other properties owned
   6. The appraised value of your home
8. Wait for approval and funds: After a successful application, funds could be in your account in as little as 11 days.

Note: Depending on your state and marital status, your spouse or other co-owners might also need to participate in the application process.

The Prosper application is tailored for ease and speed, but it requires thorough documentation. Have all your paperwork ready to expedite the process.

What if I’m denied by Prosper?

Being denied for a home equity product at Prosper may not be the end of the road. The lender is obligated to provide you with a reason for your denial, which can be a useful tool for making improvements. You have the option to reapply, but it’s wise to address the reasons for the initial denial before doing so.

Common reasons for denial and next steps:

• Low credit score: If this is the case, consider credit repair strategies.
• High debt-to-income ratio: Look into debt consolidation or management solutions. We have reviewed several debt relief companies that may help you lower your DTI.
• Insufficient home equity: If you don’t have enough equity in your home, you might need to wait and build more equity before applying again.
• Unstable employment history: Prosper values stable income. You may need to secure stable employment for a period before reapplying.

Being proactive about improving your financial situation can increase your chances of a successful reapplication. Use the resources available to you to improve on the areas that led to your denial.

How do other home equity products compare to Prosper?

When you’re considering a home equity loan or a HELOC from Prosper, it’s helpful to know your alternatives. One option is a reverse mortgage, often geared toward seniors who own their homes outright. 

Unlike Prosper’s home equity products, a reverse mortgage doesn’t require monthly payments. However, the loan becomes due when the borrower sells the home, moves out, or passes away.

Another alternative is a cash-out refinance. This lets you refinance your mortgage and take out some of your home equity as cash. While this can offer a potentially lower interest rate, remember you’re also resetting your mortgage clock. 

Prosper’s home equity loan or HELOC doesn’t change the terms of your first mortgage, which can be a plus for those not looking to lengthen their payment schedule. By understanding these alternatives, you can better gauge whether Prosper’s home equity products align with your financial objectives.

Prosper home equity loans FAQ

How long does it take to receive funds from Prosper?

Once you submit your application for a home equity loan or HELOC, Prosper begins its approval process. This can take varying amounts of time depending on several factors, including how quickly you provide required documents. 

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. Unlike some personal loans, the use of funds from a home equity loan or HELOC isn’t restricted. 

However, it’s wise to have a clear plan for how you’ll use the money because your home acts as collateral for the loan.

Are there any 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, but ensure your policy meets Prosper’s specific requirements. 

Generally, the insurance must cover at least the amount of the home equity loan or the HELOC limit. It’s crucial to maintain this insurance throughout the life of the loan.

Can you back out of a HELOC contract?

If you’re having second thoughts, the stage you’re at in the process matters. During the application process, backing out 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 complex and costly. Always read the fine print and consult with Prosper on its specific policies.

Can you close your HELOC account at any time?

Closing a HELOC account with Prosper is possible, but the process and potential penalties vary. If you decide to terminate the line of credit early, expect some form of prepayment penalty or closure fee. 

It’s critical to review the terms and conditions for early termination before you make this decision. Always reach out to Prosper’s customer service for the most accurate and personalized information.

How we rated Prosper

We designed LendEDU’s editorial rating system to help consumers identify companies that offer the best financial products. Our experts spend hours researching these companies each year to ensure our ratings are fresh and accurate.

Our most recent evaluation compared Prosper to several HELOC and home equity lenders across a number of factors, including rates, loan amounts, customer reviews, repayment details, and eligibility requirements. We weighted, scored, and combined these factors to produce a final editorial rating. This rating is expressed on a scale from 1 to 5, with 5 being the highest possible score. We round all ratings to the nearest tenth decimal place.

Product	Best for	Our rating
Home equity loan	No best-for designation	No rating	View rates
HELOC	No best-for designation	3.9 out of 5	View rates