Thinking about a second home in Lahaina or West Maui and wondering what lenders will ask for? You are not alone. Financing a vacation place in Maui looks a little different than financing your primary residence, and local factors like condo‑hotels, short‑term rental rules, and post‑fire insurance can change the playbook. This guide shows you what lenders typically require, how Maui’s market can affect approval, and how to prepare a clean file before you tour. Let’s dive in.
What counts as a second home
A second home is a one‑unit property you plan to occupy part of the year for personal use. Lenders expect it will not be used primarily as a short‑term rental. If you plan to rent nightly or place the home in a hotel‑style program, many lenders classify it as an investment property.
For conventional loans, the rules come from agency guides. You can review the Fannie Mae Selling Guide on occupancy types and the Freddie Mac Seller/Servicer Guide for a sense of how lenders define second homes. FHA and most VA financing require the borrower to occupy the property as a primary residence, so they are generally not options for second homes. See the HUD FHA Single Family Handbook and this CFPB overview of mortgage programs for basics.
In West Maui, many prices sit above conforming loan limits, so you may need a jumbo or portfolio loan. Jumbo loans usually come with tighter rules: larger down payments, stronger credit, more reserves, and careful appraisals.
Loan types you will see
- Conventional conforming: Common for second homes within local loan limits. Some programs allow as little as 10 percent down, but lender overlays vary.
- Jumbo or portfolio: Often needed in Lahaina, Kāʻanapali, Napili, and Kapalua due to higher prices. Expect stricter terms and more documentation.
- FHA/VA: Generally reserved for primary residences, not second homes or properties used mainly for short‑term rentals.
Core lender requirements
Down payment and LTV
- Conforming second‑home loans sometimes allow about 10 to 20 percent down.
- Jumbo loans often require 20 to 30 percent down, sometimes more depending on your profile.
- Condo‑hotel properties or buildings with heavy short‑term rental use can trigger higher down payment needs or ineligibility for certain programs.
Credit score and rate pricing
- Some conventional second‑home programs accept scores as low as 620, but many lenders look for 700 or higher for better pricing and approval odds.
- Jumbo and portfolio programs often prefer 720 to 740 or higher.
- Rates for second homes are usually priced higher than for primary residences.
Debt‑to‑income (DTI)
- Maximum DTI often ranges from 43 to 50 percent depending on the program and your overall profile.
- Lenders include the full new housing payment for the Maui home in your DTI even if you plan to rent it later.
Cash reserves
- Plan on at least 6 months of PITI reserves for a second home. Jumbo and portfolio loans can require 6 to 12 months.
- If you carry multiple financed properties, lenders may require reserves for each property.
Documentation and funds
- Expect two recent pay stubs, last two years of W‑2s or 1099s, and tax returns if self‑employed.
- Provide 60 to 90 days of bank and asset statements. Large deposits need a paper trail.
- Some programs allow gift funds. Others limit gifts for second homes.
Appraisal and valuation
- Appraisers look for comparable sales that reflect vacation‑area dynamics. On an island with fewer comps, values can be conservative.
- Condo‑hotel units or buildings with hotel‑style operations may require extra valuation steps and deeper project reviews.
Mortgage insurance and costs
- PMI may be available on some conventional second‑home loans above 80 percent LTV. Pricing varies.
- Jumbo loans do not use PMI but often require larger down payments and stronger reserves.
West Maui factors that change underwriting
Insurance after the Lahaina fires
Lenders require insurability. After the 2023 Lahaina fires, some carriers reduced exposure in higher‑risk zones, which can affect availability and premiums. Securing coverage can take time, and high premiums can impact your DTI and approval. Review the Hawaii Insurance Division bulletins and the state’s wildfire insurance guidance in Hawaii to understand trends and requirements. Get quotes early and confirm replacement cost coverage and required endorsements.
Short‑term rentals and condo‑tels
Many West Maui condos operate with vacation‑rental programs. Lenders analyze these buildings carefully. Projects with hotel‑like features, on‑site rental desks, or heavy short‑term rental concentration may be treated as condo‑hotels. That can limit program eligibility and increase down payment needs. Fannie Mae and Freddie Mac both publish project standards that lenders follow. You can review Fannie Mae condo project standards and Freddie Mac condominium unit mortgages for context.
Maui County sets the rules for short‑term rental use, permitting, and compliance. Before you assume you can rent, verify county requirements for the property or building. Start with the county’s page on Maui County short‑term rental permits and confirm any current ordinances or moratoria with your lender and agent.
HOA and legal items
Lenders review HOA budgets, reserve studies, litigation, and owner‑delinquency levels. Post‑disaster assessments or encumbrances can affect approval. If the project’s financials rely heavily on rental income, expect questions about stability and reserves.
Jumbo pricing and appraisals
Because many West Maui properties exceed conforming limits, jumbo loans are common. Appraisal gaps can occur in small island markets with limited comps, which may lead to higher down payments if values come in low.
Prepare a clean file before you tour
Decide on use and disclose it
- Clarify whether this is a personal second home or an STR‑focused investment.
- Tell your lender the intended use early. Misclassifying use can derail underwriting.
Line up the right lender
- Get prequalified or preapproved with a lender experienced in Hawaii, jumbo, and second‑home loans.
- Ask about Hawaii‑specific overlays, condo‑hotel policies, and reserve expectations.
Start insurance early
- Request at least 2 to 3 quotes for hazard, wind, and wildfire coverage. Add flood if the property is in a flood zone.
- Confirm the carrier can issue a policy with lender‑required clauses.
Gather documents now
- Photo ID and two recent pay stubs.
- Two years of W‑2s or 1099s, and tax returns if self‑employed.
- Bank and investment statements for 60 to 90 days, plus proof for large deposits.
- Mortgage and tax statements for any properties you already own.
- If you will include rental income from other properties, collect leases and two‑year history.
Precheck condo and project health
- For condos, request recent HOA budgets, meeting minutes, reserve studies, and rental program terms early.
- Ask your lender if the project is warrantable and what documentation they need to review it.
Manage credit, assets, and reserves
- Keep your credit stable and avoid new debt during underwriting.
- Maintain steady balances and avoid unexplained large transfers.
- Target at least 6 months of PITI in reserves per property. Jumbo loans may require more.
Align your appraisal plan
- Ask your lender how appraisers will handle West Maui comps.
- For condo‑hotels, confirm whether the appraiser needs an income approach or STR comp set.
Common pitfalls to avoid
- Waiting on insurance. If you cannot bind coverage, you cannot close.
- Misclassifying occupancy. If nightly rentals are the plan, expect investment underwriting or ineligibility.
- Assuming FHA or VA will work. These are for primary residences in most cases.
- Skipping HOA review. Heavy STR concentration, low reserves, or litigation can delay or kill a loan.
- Underestimating reserves. Second homes and jumbo loans often require more months of PITI.
- Relying on a verbal preapproval. Get a written preapproval that addresses Hawaii, jumbo, and second‑home specifics.
How West Maui expertise helps
A local team can spot condo‑hotel flags, confirm county STR rules, and help you obtain the right HOA and insurance documents before you write an offer. With many Lahaina and Kāʻanapali properties falling into jumbo ranges, you also want a lender and agent who understand island appraisal dynamics and timelines.
The Marchello Team combines buyer representation with an integrated property‑management channel. That means you get guidance on both financing realities and practical ownership, including how rental programs and HOA rules may affect your options later. It is a smoother path when your advisors understand both underwriting and day‑to‑day operations.
Your next step
If a Lahaina second home is on your list, start with a clear plan: choose your intended use, get a Hawaii‑savvy preapproval, and secure insurance quotes early. Then line up project documents for any condo you love so your lender can move fast.
When you are ready to explore West Maui options, connect with Mark Marchello for local guidance, lender introductions, and a step‑by‑step plan from offer to keys.
FAQs
What is a “second home” for Maui lenders?
- It is a one‑unit property you use personally part of the year and do not primarily operate as a short‑term rental, per agency guidance.
How much down payment is typical in Lahaina?
- Conforming second‑home loans may allow about 10 to 20 percent down; many jumbo loans need 20 to 30 percent depending on the file.
Can I use FHA or VA for a Maui vacation home?
- Generally no; FHA and most VA programs require the property to be your primary residence, not a second home.
How do condo‑hotels affect financing in West Maui?
- Hotel‑style programs and heavy STR use can make a project ineligible for some loans or require bigger down payments and extra review.
Why start insurance shopping so early in Lahaina?
- Post‑fire coverage can be limited or costly; binding acceptable policies early helps protect your approval and closing timeline.