Prosper: 2023 Home Equity Review

Home equity loan types	Home equity line of credit (HELOC) Home equity loan
Loan amounts	Up to $500,000
Credit score minimum	660 for HELOC; 620 for home equity loan
Repayment terms	10-year draw period and 20-year repayment term for HELOC; 5 years to 30 years for home equity loans
Average time to approval	Funding in as little as 11 days

Methodology

To create our Bankrate Scores, we evaluated lenders based on availability, affordability and customer experience. Availability was assessed based on the minimum loan amount required, time to approval, days to close, minimum draw requirements, minimum credit score requirements and loan types offered. Affordability was assessed based on minimum APR, discounts and promotions offered and associated fees. Customer experience was assessed based on online application and account availability, customer support, auto payment availability and mobile app availability and ratings.

Benefits

• 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.
• If you’re able to pay off your HELOC or home equity loan early, you won’t get stuck with a prepayment penalty fee.

Drawbacks

• Prosper’s HELOC is currently available only in certain states, and Prosper’s home equity loan is only available in 12 states.
• Those seeking to borrow more than $250,000 must have an in-home appraisal and title insurance.

Types of fees charged

There are no application or origination fees on Prosper’s HELOC, but the home equity loan might come with a $1,495 charge depending on the state you live in. During the application and closing process, you’re responsible for the cost of an additional appraisal on your home, if necessary, and potentially other charges. There are no prepayment penalties on either product.

Home equity loan products offered

Prosper offers both variable-rate HELOCs and fixed-rate home equity loans.

The lender’s HELOC is available to borrowers 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. The amount you can borrow varies by state, but you won’t be able to borrow any more than 95 percent of your home’s value. (In Texas, HELOC borrowing is limited to 80 percent.)

When you close on the HELOC, you’ll be required to draw at least $50,000 (only $4,000 in Texas). After that, you’ll need to wait 90 days before you make another draw. At that point, each draw must be at least $1,000.

During 10-year HELOC draw period, you’ll be required to make minimum monthly payments equal to the greater of either $100 or the total of all accrued finance charges and any other charges that were accumulated during each monthly billing cycle. There is a 20-year repayment period.

Prosper’s home equity loans are only available in some states (as of this review). With the lender’s home equity loan, you can borrow up to 95 percent of your home’s value, provided it’s your primary residence. For second homes or investment properties, that threshold shrinks to 85 percent and 70 percent, respectively.

For either the HELOC or home equity loan, you can borrow up to $500,000 if you qualify.

How to qualify for a HELOC with Prosper

Prosper requires a minimum 620 credit score for home equity loans and a minimum 660 score for HELOCs. 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.

How to get started

To apply for a Prosper home equity product, you’ll 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. You might be able to receive your funds in as few as 11 days. If you have questions about a line of credit or loan, you can call 800-954-2172.