Prosper: 2020 Home Equity Review

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Founded in 2005 and based in San Francisco, Prosper was the first peer-to-peer lender in the United States. Over the years, it has helped over 1 million customers borrow over $17 billion.

Prosper launched its home equity line of credit (HELOC) product in 2019. So far, it’s only available in a few states, but Prosper hopes to partner with several banks to make the product more widely available. According to its press release, it’s working to “dramatically improve the HELOC application process and reduce the time from application to closing.”

The online application is easy. Potential borrowers will get a personalized rate quote within minutes and funds delivered in just a few weeks.

Prosper snapshot

Loan types offered HELOC
APR range 3.80% to 10.25% (with autopay)
Loan amount range Up to $300,000
Minimum credit score required 640
Repayment terms 1- to 10-year draw period and 10- to 15-year repayment period
Average time to approval Same day

Benefits

There’s a lot to like about Prosper and its product. Here are some things to be aware of before applying:

  • Instant rates: With Prosper’s online application, you’ll instantly get a personalized rate quote after answering a few basic questions — desired loan amount, current income and location — without it affecting your credit score.
  • No prepayment penalty: If you’re able to pay off your HELOC early, you won’t get stuck with a penalty fee.
  • Quick funding: After filling out the online application, most customers receive funds via direct deposit in just a few weeks.

Drawbacks

While there are many benefits to Prosper, there are also some drawbacks. Here are a few:

  • Annual HELOC fee: After the first anniversary of your HELOC, you will be charged an annual fee of $75.
  • Limits on covered closing costs: Prosper will cover closing costs on HELOCs ranging from $10,000 to $300,000, but only if you draw $10,000 within the first 30 days. Also, if you pay back your HELOC within two years, you’ll have to pay back any closing costs.
  • Limited availability: Prosper’s HELOC is currently available only in Arizona, Alabama, Florida and Texas.

Types of fees charged

There are no application or origination fees on Prosper’s HELOC. During the application and closing process, you’re responsible only for the cost of an additional appraisal on your home if necessary.

After the first anniversary of your HELOC, you will be charged an annual fee of $75. You’ll also be charged a $25 fee for any late payments; in Texas, the late fee is 5 percent of the minimum payment amount or $15 (whichever is less).

While Prosper doesn’t charge a fee for paying off your loan or HELOC early, if Prosper covered your closing costs and you close your HELOC within two years, the costs will become your responsibility and will be added to your principal.

Loan products offered

Prosper’s HELOC was launched in 2019, and currently it’s only available in four states: Alabama, Arizona, Florida and Texas. The minimum amount you can borrow varies by state, but you won’t be able to borrow any more than 85 percent of your home’s equity.

As with most HELOCs, you’ll pay just interest during the draw period, but with Prosper, this monthly payment has a minimum amount of $75.

Your APR will be based on the prime rate plus a margin based on several factors, including your credit score and payment history. Current APRs range from 3.80 percent to 10.25 percent. Your APR has a ceiling rate of 18 percent and will never go below 2.50 percent during your loan. A 1 percent discount is offered if you set up automatic payments from a BBVA account.

During your HELOC draw period, you can decide to convert a line from a variable rate to a fixed rate. You can only have up to three fixed-rate balances at a time, and you can only request two within a one-year period. After your first conversion, anytime you convert to a fixed-rate option, you’ll be charged a $75 fee.

The amount of time you have to pay back your HELOC will depend on the amount you borrow. If your outstanding balance is less than $20,000 after the draw period, you will have a 10-year repayment schedule; for amounts greater than $20,000, you’ll have 15 years to pay off the balance.

Your closing will take place at the BBVA branch location nearest you. But according to a Prosper customer service representative, the lender may be able to send you all the documents that require a signature so that you don’t need to travel for the closing.

How to qualify for a home equity loan with Prosper

Prosper doesn’t have any specific borrower requirements, but most of its customers have a minimum credit score of 640. Since it doesn’t pull a hard credit inquiry when you fill out the initial application, you can apply and see your rate instantly without it negatively affecting your credit score.

View home equity rates

Tap into the value you have in your home to get the funds you need.

How to get started

To apply for Prosper’s HELOC, you need to fill out an online application. The initial application asks for information about how much you want to borrow, your income and your location. Within minutes, you’ll have a personalized interest rate offer; this initial application does not affect your credit score. If you want to proceed, you’ll move on to the next part of the application. Most borrowers receive their funds via direct deposit in just a few weeks.

You can also email Prosper at support@propser.com (just don’t share any personal information this way) or call Prosper’s Home Equity Team at 800-954-2172 from Monday through Friday from 8 a.m. to 9 p.m. ET and Saturdays from 9 a.m. to 5:30 p.m ET

How Bankrate rates Prosper

Overall Score 4.5
Availability 4.1
Affordability 4.8
Customer Experience 4.8

Editorial disclosure: All reviews are prepared by Bankrate.com staff. Opinions expressed therein are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in the review is accurate as of the date of the review. Check the data at the top of this page and the lender’s website for the most current information.