You fall in love with the oceanfront lifestyle in Kaanapali, then discover your favorite buildings run like hotels. Financing a resort condotel at Honua Kai, Kaanapali Alii, or The Whaler can feel different than a typical condo purchase. You are not alone. The good news is there are clear paths to closing, especially with jumbo and portfolio loans tailored to Maui’s resort market. In this guide, you will learn how these options work, what underwriters look for, and how to prepare a clean, confident file. Let’s dive in.
What lenders mean by “condotel”
Condotels are condominium units in buildings that operate like hotels, often with centralized on-site rental management and a rental pool. Lenders evaluate two layers: you as a borrower and the project itself. The project’s hotel-style features, short-term rental operations, owner-occupancy mix, HOA reserves, and insurance will all be reviewed.
Because of these hotel and commercial elements, many condotels do not meet agency condo project rules, which affects access to conventional financing. This is why jumbo and portfolio lenders are so important in Kaanapali.
Why jumbo and portfolio loans dominate in Kaanapali
Conventional conforming loans are sometimes possible if a project passes strict agency approval tests, but many resort properties do not. Kaanapali pricing also often exceeds conforming loan limits, which pushes buyers into larger loan amounts.
That combination makes two avenues especially useful:
- Jumbo loans for higher-priced units that need larger loan amounts or do not fit agency rules.
- Portfolio and non-QM loans from local banks, credit unions, and private lenders that keep loans in-house and can underwrite unique project features.
Jumbo loans for condotels
When a jumbo fits
A jumbo loan can be a strong solution if you have strong credit, solid reserves, and are buying a higher-priced unit above conforming limits. Some national and local banks will consider Kaanapali condotels, but guidelines and appetite vary by lender and by project.
Typical down payments and terms
For condotel jumbo loans, expect ranges rather than guarantees:
- Typical down payment ranges for well-documented buyers: about 20% to 35%.
- For investor purchases or projects with more hotel-style features: about 30% to 50%.
- Lenders often require stronger credit, documented reserves, and detailed project review.
Exact numbers depend on the property, your profile, and the lender’s exposure to condotels.
What underwriters look for
- Credit profile and liquidity. Strong scores and 6 to 12 months of reserves are common requests.
- Debt-to-income and income stability. Traditional income documentation is standard for full-doc jumbo loans.
- Project health. Budget, reserves, HOA delinquencies, and any litigation matter.
- Rental program structure. Some lenders limit or discount income from rental pools.
- Insurance strength. Adequate hazard, wind, and flood coverage is required in coastal Maui.
Pros and cons of jumbo
- Pros: larger loan amounts and, in many cases, better pricing than private loans.
- Cons: tighter underwriting, lower maximum LTVs for condotels, and more documentation.
Portfolio and non-QM options
Portfolio lenders
Portfolio lenders underwrite to their own guidelines and keep loans on their books. In resort markets like Kaanapali, this flexibility can be a win for properties that look and function like hotels.
What to expect:
- LTVs often fall between 65% and 80% depending on borrower strength and project features.
- Lenders can consider alternative documentation and unique project structures.
- Pricing and fees may be higher than standard jumbos, and timelines can vary.
DSCR and investor-focused products
If you are buying for rental income or cannot document traditional income, investor loans that focus on property cash flow can help.
- DSCR loans qualify based on the ratio of rental income to debt payments. Lenders set a minimum DSCR threshold, often near 1.0 to 1.25.
- Non-QM programs may allow bank statements or asset-based documentation.
These products offer flexibility, but you should expect higher rates, covenants tied to rental performance, and larger down payments.
Pros and cons of portfolio and non-QM
- Pros: flexibility for condotel features, acceptance of alternative documentation, and accommodation of rental income.
- Cons: variable pricing, stricter covenants, and lower maximum LTVs in many cases.
What affects your LTV and pricing
Borrower factors
- Credit score. Higher scores support better pricing and higher LTVs.
- Reserves and liquidity. Many lenders want 6 to 12 months of payments in reserves for condotels.
- Documentation type. Full documentation can improve terms compared to alternative documentation.
Property and project factors
- Owner-occupancy and investor mix. High investor concentration increases scrutiny.
- Rental pool and hotel elements. Heavier hotel features often mean lower LTV caps.
- HOA health. Strong reserves and low delinquencies support better terms. Special assessments or litigation reduce leverage.
- Leasehold vs fee simple. Leasehold units are financeable with some lenders, but terms depend on the ground lease. This can limit LTV.
Insurance in coastal Maui
- Wind and hurricane risk raises premiums and lender attention.
- Flood insurance may be required depending on FEMA zone.
- Lenders review policy coverage, deductibles, and renewal history.
Income and appraisal for resort units
Rental income treatment
Rental pool income can help, but lenders vary. Some will accept documented net rental income with 2 years of audited statements or tax returns. Others will discount or disallow pooled income, especially if it is volatile or poorly documented. Strong, long-term on-site management with a stable rental history is a plus.
Appraisal approach
Resort units often have few recent comparable sales. Appraisers may use comparable sales from similar resort projects or use an income approach that capitalizes rental income. Unique layouts, views, and hotel components can complicate valuation, so allow time for a detailed appraisal.
Kaanapali and Maui-specific factors
- Short-term rental rules change. Maui County and State of Hawaii regulate transient accommodations, including registration and tax remittance. Changes to vacation rental policies can affect income and underwriting, so verify the current status with the county and the HOA before you rely on projected rents.
- Transient Accommodations Tax. If you collect short-term rent, you must register and remit state and county taxes. Lenders may ask for proof of registration or filings when using rental income to qualify.
- Insurance and carrier availability. Hawaii’s insurance market has seen shifting carrier appetite and higher catastrophe deductibles. Lenders review policy terms closely.
- Title and structure. Confirm early whether the unit is fee simple or leasehold. Lease terms can drive financing options and LTV.
What to prepare before you write an offer
Create a clean package so your lender and the HOA can move fast:
Borrower items
- Photo ID, completed application, and credit authorization.
- Two years of tax returns and W-2s, or two years of business returns if self-employed. For non-QM: 12 to 24 months of bank statements or asset documentation.
- Recent pay stubs if applicable.
- Two to three months of statements for accounts funding your down payment and reserves.
- Explanations for any credit issues.
Property and HOA items
- Purchase contract and seller disclosures.
- Condo documents: CC&Rs, bylaws, current budget, reserve study if available, meeting minutes, 12 to 24 months of financials, owner roster, HOA insurance certificate.
- Rental program details: management agreement, audited rental statements, occupancy and average daily rate history, and tax filings if you plan to qualify with rental income.
- Appraisal access and any repair lists if needed.
- Title report and flood zone determination.
Smart questions to ask your lender
Use these to quickly gauge fit and save time:
- Do you finance hotel-style condotels in Kaanapali, and is this under agency, jumbo, or portfolio guidelines?
- What is the maximum LTV for this property, for both second-home and investor use?
- How do you treat rental pool income, and what documentation do you require?
- What reserves, credit score, and DTI or DSCR thresholds do you need?
- Do you require condo project approval, and what does your review need from the HOA?
- Do you lend on leasehold units, and what lease terms must be met?
- What insurance documentation and wind or flood deductible limits do you require?
- How will you value this property, and what appraisal type will you order?
- What timelines should I expect, and are there conditions tied to HOA deliverables?
Real-world scenarios and likely paths
- Scenario A: You want a second home, have strong credit and traditional income, and the project is well documented. Possible path: conforming or jumbo conventional with about 70% to 80% LTV, depending on loan size and project review.
- Scenario B: You are an investor relying on rental pool history and the project lacks agency approval. Possible path: portfolio or DSCR/non-QM with about 60% to 75% LTV, higher reserves, and covenants tied to cash flow.
- Scenario C: You are buying a high-priced luxury unit above conforming limits in a hotel-style building. Possible path: jumbo with a down payment commonly around 25% to 35% or higher, with detailed appraisal and insurance review.
- Scenario D: You are a non-resident or foreign buyer. Possible path: portfolio lender experienced with non-resident loans, often with 30% or more down and additional documentation.
Timeline and process tips
- Start with a lender that has recent Hawaii condotel closings. Ask for a clear list of project documents up front.
- Get pre-qualified before you offer. This helps you set a realistic down payment and LTV target.
- Build in time for HOA and management documents. Budget, reserves, insurance certificates, and rental statements can take time to collect.
- Expect detailed appraisal and insurance review. Align on flood, wind, and hurricane coverage early.
- Keep cash reserves accessible. Many lenders want 6 to 12 months of payments in reserves for condotels, plus a buffer for HOA assessments.
Bringing it all together
Financing a Kaanapali condotel is achievable when you match the property to the right loan channel. Jumbo loans can unlock larger amounts for well-documented buyers, while portfolio and non-QM options bring flexibility for hotel-style projects and investor needs. Focus on clear documentation, HOA transparency, stable insurance coverage, and a lender with proven condotel experience. That preparation can help you close with confidence and enjoy your time by the ocean sooner.
If you are exploring Honua Kai, Kaanapali Alii, The Whaler, or similar resort properties, let’s talk through your goals, timeline, and the financing route that fits. For a tailored game plan and introductions to trusted local lenders, connect with Harrison Mccandless.
FAQs
What is a condotel and why does it affect financing?
- A condotel is a condo in a building that operates like a hotel with short-term rentals and centralized management, which triggers extra project-level underwriting and different loan options.
What down payment do I need for a Kaanapali condotel?
- Many buyers see ranges from about 20% to 40% or more; jumbos often start near 20% to 35% and portfolio or investor loans can require 30% to 50%, depending on risk.
Can I use rental income from the resort to qualify for a loan?
- Sometimes. Some lenders accept documented net rental income with two years of statements or tax returns, while others discount or disallow pooled income.
Are DSCR loans available for Maui condotels?
- Yes. DSCR lenders qualify the loan on property cash flow, using a minimum DSCR threshold that varies by lender, often near 1.0 to 1.25.
How do insurance and flood zones impact my loan?
- Lenders require adequate hazard, wind, and flood coverage where applicable. Policy strength, deductibles, and renewability affect underwriting and terms.
Can I finance a leasehold condotel in Kaanapali?
- Often yes with a portfolio lender, but terms depend on the ground lease. Lenders review remaining term, escalations, and any consent requirements.
How long does condotel financing usually take?
- Timelines vary by lender and HOA responsiveness, but expect a more detailed review. Getting HOA documents early and ordering appraisal quickly can save time.
