In a Nutshell
- Low introductory rates
- Instant, pre-qualified rates from top banks
- Funding in 3-4 weeks, half the time of other lenders
- Home equity loans not available
- Prosper is relatively new to HELOCs
Prosper at a Glance
Only pay back what you withdraw
Minimum Down Payment
Minimum Credit Score
Using your home equity to set up a line of credit with minimum hassle
Prosper is best known for being the original peer-to-peer lending marketplace in the US. It has facilitated more than $14 billion in unsecured personal loans since its founding in 2005. In early 2019 Prosper branched out into home equity lines of credit, partnering with banks to streamline the HELOC application process. Thanks to Prosper’s proprietary technology, homeowners can now get funded within 3-4 weeks, around half the time it would take if they went directly through the big banks. It takes only a couple of minutes to complete a Prosper application and see prequalified HELOC rates, and there are no origination or service fees.
A home equity line of credit is a good option for any homeowner who wants the convenience of a line of credit without having to pay any fees. Prosper simplifies the process of applying for a HELOC, making it a good choice for homeowners looking to get approved and funded quickly and with minimum hassle.
Types of Loans
Prosper got into the business of HELOCs in 2019 after previously dealing exclusively with unsecured personal loans. The following are the main characteristics of a Prosper home equity line of credit.
Borrower must be a US citizen or permanent resident aged 18 years or older.
Borrower must meet minimum loan-to-value (LTV) requirements of Prosper’s partnering banks. Minimum LTV is usually around 80%-85%, meaning the borrower must have at least 15%-20% equity in their home.
Borrower must meet minimum debt-to-income ratio of Prosper’s partnering banks, which typically stands at 40%-50%.
Borrower must meet minimum credit requirements of Prosper’s partners, typically 620+.
Once approved, borrower can withdraw funds any time they like up to the approved credit limit. As the borrower repays what they borrowed, their balance is replenished, and they can borrow the same amounts over and over as they would with any other line of credit.
Each Prosper partner sets its own terms, typically reaching up to a 10-year limit for withdrawals and 20-year limit for repayments.
The Application Process
Prosper’s HELOC lending platform was still in development when we worked on this review, so this information is based partly on how its personal loans platform operates. It takes only a couple of minutes to fill out the quote request form on Prosper’s website. The user is then redirected instantly to a new page where they see pre-qualified HELOC rates from Prosper’s partnering banks.
By using its proprietary technology to instantly show borrowers pre-qualified rates, Prosper is able to help banks shorten their application process and get homeowners funded within 3 to 4 weeks. This is about half the time it takes when going directly through the banks, who typically take 6 to 8 weeks to fund HELOCs.
Prosper has found ways to shortcut the whole application process, saving the borrower time. The following are the types of documents Prosper and its partners will ask for when assessing your application:
Personal information, ID and Social Security number (which are used to check your credit score)
Property information, such as address, purchase price, purchase date, and property type
Estimated property value
Requested line of credit amount
Employment and income information
Pros and Cons
HELOCs offer substantial benefits over personal loans, including lower introductory rates, flexible credit requirements, and the ability for the borrower to withdraw money on a per-need basis. Prosper helps find borrowers the lowest rates from its partnering banks, then helps the borrowers (and banks) even further by helping the 2 sides get the line of credit set up in half the time it would take without Prosper there to mediate.
The main catch with a HELOC is that the line of credit is secured against your home equity. Failure to pay back the funds in time can put the your home at risk of foreclosure. The other thing to be aware of with Prosper is that it’s new to the HELOC business. While it has a ton of experience in personal loans, the jury is still out on its HELOC lending marketplace.
Rates and Fees – The Bare Basics
Prosper’s HELOC platform was still in beta phase when we checked it out, so we can’t yet report on rates. However, we can report that it pulls in home equity lines of credit from multiple banks to find the best rates for each homeowner’s situation and needs. HELOCs typically offer the convenience of a fixed interest rate for the first few years, followed by an adjustable rate for the remainder of the term. Introductory rates for HELOCs are usually considerably lower than personal loan rates, reflecting the risk the borrower is taking by agreeing to adjustable rates.
Users aren’t charged any origination fees for using Prosper’s HELOC lending platform. By simplifying the application process, Prosper saves its banking partners a lot of money and most of these savings get passed on to the borrowers. Like most lending marketplaces, Prosper earns its money from its lending partners and borrowers aren’t required to pay Prosper any fees.
Each lender determines its own repayment terms. HELOCs typically carry terms of up to 10 years for withdrawing money and up to 20 years for repaying the full amount.
Help & Support
Prosper offers customer support during extended business hours Monday to Friday, as well as daytime hours on Saturday.
Prosper is disrupting the HELOC market by slashing application times in half. By using its proprietary technology to instantly show borrowers pre-qualified rates, Prosper saves its partnering banks time and money and passes on most of the savings to borrowers. HELOCs offer home owners the chance to borrow money at lower rates than personal loans. Prosper is a solid choice for any homeowner looking to use a HELOC to fund large expenses such as debt consolidation or a child’s college tuition.
Q: What is Prosper?
A: Prosper was founded in 2005 as the first peer-to-peer lending marketplace in the United States. It is backed by big investors such as Sequoia Capital, Francisco Partners, Institutional Venture Partners, and Credit Suisse NEXT Fund. Since its founding, it has facilitated more than $14 billion in personal loans to more than 890,000 people.
Q: Why the sudden move into HELOCs?
A: According to TransUnion, the number of HELOC originations is expected to reach 10 million between 2018 and 2022, more than double the 4.8 million from 2012-16. Applying for a HELOC is much more cumbersome than applying for a personal loan, and Prosper saw the opportunity to use its technology to ease the process for borrowers and lenders.
Q: Does Prosper offer home equity loans?
A: No. Prosper ventured into HELOCs in early 2019 but isn’t offering HELs.
Q: How do HELOCs differ from HELs?
A: HELOCs and HELs are two different products that let homeowners borrow against their home equity. A HELOC is a line of credit that lets the borrower withdraw funds when they need, up to a pre-set credit limit. A HEL is a loan delivered to the borrower in one lump sum.
Prosper Funding LLC
221 Main Street, Suite 300
San Francisco, CA