Financing a resort condo in Wailea looks different from buying a typical suburban condo. Many Wailea projects operate like hotels, which often makes them non‑warrantable under agency rules. The good news is you still have clear financing paths through condotel and portfolio loans. With the right plan, you can move fast, protect your investment, and close with confidence.
How Resort Condo Financing Works
Resort condos blend vacation living with hospitality operations. If a building offers daily rentals, a front desk, cleaning services, or a hotel‑style rental program, many lenders treat it as a condominium‑hotel. Agency buyers like Fannie Mae and Freddie Mac usually do not purchase these loans, which means standard conventional financing may not be available. That is why condotel loans and bank‑held portfolio loans are common tools in Wailea per Fannie Mae’s ineligible project guidance.
Local policy also shapes lending. Maui County has pursued measures to phase out many transient vacation rentals in certain apartment zones while treating hotel‑zoned resort areas differently. The details matter for each parcel and project, so confirm zoning and permitting before you count on nightly rental income see Maui County’s Bill 9 overview. Hawaii also enacted a statewide climate resilience “green fee” that raises the state Transient Accommodations Tax by 0.75 percentage points to 11 percent starting January 1, 2026, which affects net rental yields and lender views of risk according to the Associated Press.
What Condotel Loans Cover
Condotel and non‑warrantable basics
A condotel loan is designed for condos that look and act like hotels. Projects with hotel‑type services, mandatory rental pools, shared hotel amenities, or daily rental operations are typically considered ineligible for agency purchase and are labeled non‑warrantable as defined by Fannie Mae. FHA financing also requires strict project approval or single‑unit approval, which many resort projects do not hold per HUD condominium guidance.
Property and HOA factors lenders weigh
Lenders review the building and HOA closely. They may look at:
- Rental operations and marketing that resemble a hotel
- Presence of a front desk, daily housekeeping, or mandatory rental program
- HOA financials, reserves, litigation and insurance coverage per HUD review elements
- Unit features like size and a full kitchen, which can affect eligibility and pricing
- Zoning and permitting status for short‑term rentals in Maui County see county STR resources
Pros and trade‑offs for buyers
Pros:
- Access to financing for properties that do not fit conventional rules
- Options for investors, second‑home buyers, and some owner‑occupants
- Flexible documentation paths in certain programs, including DSCR loans that focus on property cash flow see non‑QM overview
Trade‑offs:
- Higher rates and fees than conforming loans
- Larger down payments and cash reserves
- More detailed project reviews and case‑by‑case underwriting
- A smaller future buyer pool, which can affect resale liquidity industry note on non‑warrantable liquidity
How Portfolio Loans Work
Why lenders keep loans in‑house
Portfolio loans are held by the bank instead of being sold to Fannie Mae or Freddie Mac. A lender may offer these when a property does not fit agency rules but still presents acceptable risk. Keeping the loan allows the bank to set its own guidelines and price the risk accordingly.
Common structures and terms
While every bank is different, you will often see:
- Fixed or adjustable periods with amortization up to standard terms
- Larger down payment requirements and rate premiums relative to conforming loans
- Reserve requirements to cover several months of housing and HOA costs
- Flexible documentation, including bank‑statement or asset‑based options in non‑QM programs local portfolio program examples
When a portfolio loan fits
- The condo is clearly non‑warrantable due to hotel‑like operations
- You plan to rent nightly and need a lender comfortable with STR economics
- You are buying a unique unit type that agencies typically exclude
- You prefer a lender that already understands Maui projects and HOA structures
Condotel vs Conventional Loans
Key differences at a glance
- Eligibility: Conventional loans require warrantable projects. Condotel loans accept hotel‑like operations that agencies will not purchase per Fannie Mae ineligible criteria.
- Project review: Conventional requires standard condo reviews. Condotel lending performs a deeper, custom review of HOA rules, reserves, insurance, and rental operations see HUD’s focus areas for project approval.
- Documentation: Conventional focuses on borrower income. Condotel and non‑QM may allow DSCR or bank‑statement alternatives that weigh property cash flow more heavily overview of alt‑doc options.
Impact on down payment and rates
Because lenders view condotels and non‑warrantable condos as higher risk, you should plan for:
- Higher down payment ranges, especially for investor use
- Rate premiums and lender fees that exceed conforming pricing
- Additional reserves and stricter credit score floors in some cases typical portfolio patterns and industry notes on non‑warrantable pricing
Short‑term rental and occupancy rules
Nightly rental use is a major dividing line. Agencies often exclude daily rentals and hotel‑style services. Condotel and portfolio lenders are more open to STR use but will verify that the use is legal under Maui County rules, that taxes are handled correctly, and that HOA policies permit the operation Maui County STR info and state TAT context.
Qualifying and Documentation Checklist
Borrower income, assets, and reserves
Prepare:
- Recent tax returns and W‑2s or K‑1s if using full‑doc
- Bank statements or asset statements for alt‑doc or asset‑depletion options
- Proof of liquid reserves covering several months of PITI and HOA dues
- Credit report and ID documentation
For DSCR or investor loans, gather:
- Rental history, calendar, and management agreements
- Operating statements with gross income, expenses, and net operating income DSCR underwriting basics
Property review and condo questionnaire
Expect a deep dive into:
- HOA declarations, bylaws, budgets, reserves, and insurance certificates HUD project approval focus
- Whether the HOA or manager offers hotel‑style services or rental pooling Fannie Mae ineligible signs
- Zoning and permit status for short‑term rentals under Maui County rules county STR portal
Appraisal, insurance, and closing items
- Appraisal will consider resort comps and STR influence on value
- Lender will confirm master insurance, wind, flood, and liability coverage
- If using FHA or agency alternatives, confirm any project or single‑unit approvals upfront FHA condo guidance
Steps, Costs, and Risk Management
Pre‑approval through closing timeline
- Strategy call and pre‑approval that fits the target property type
- Lender match based on project profile and your goals
- Offer with financing and condo‑doc timelines that fit portfolio review
- Order condo docs, questionnaire, and insurance certs immediately
- Appraisal and underwriting, including any DSCR or alt‑doc checks
- Final conditions, rate lock decisions, and clear‑to‑close
If the property is in a building with hotel‑like features, loop the HOA and manager in early so the questionnaire returns quickly. Portfolio lenders and specialized brokers on Maui often pre‑screen projects to avoid surprises examples of local portfolio programs and specialized condotel broker resources.
Typical fees and cash to close
Plan for:
- Loan origination and underwriting fees
- Appraisal(s) and condo questionnaire fees
- Title, escrow, and recording
- Prepaid taxes, insurance, and HOA dues
- Reserves required by the lender
Because portfolio and non‑QM loans carry a rate premium, total cash to close can be higher than for a conforming condo. Price this in when you compare properties.
Mitigating appraisal and underwriting risk
- Verify zoning, STR legality, and tax obligations before you make income claims Maui County overview of Bill 9.
- Include updated TAT assumptions in your pro forma, including the 2026 state increase to 11 percent AP coverage of the green fee.
- Order HOA docs and master insurance early and review for hotel‑like provisions.
- If the project is borderline, consider a lender with in‑house credit and Wailea experience.
Work With Local Resort Experts
Wailea deals move quickly, and the finance details are nuanced. A local agent who knows the buildings, managers, lenders, and escrow teams can save you weeks. I coordinate with Maui portfolio lenders, review HOA documents early, and keep off‑island clients updated every step of the way. If you want tailored lender introductions and a clear plan for your Wailea purchase, contact Steve Landin to get started.
FAQs
What makes a Wailea condo “non‑warrantable”?
- Hotel‑like operations such as daily rentals, front desk, or rental pooling typically trigger non‑warrantable status under agency rules per Fannie Mae guidance.
Can I still finance a condotel in Wailea?
- Yes. Local portfolio and non‑QM programs finance many condotels, though with higher down payments, rate premiums, and reserve needs example portfolio overview.
What is a DSCR loan and when does it help?
- A DSCR loan underwrites to the property’s rental income rather than only your personal income. Many investors use DSCR for nightly‑rental units non‑QM and DSCR basics.
How do Maui County STR rules affect financing?
- Zoning and permit status influence lender risk. Units in apartment zones face phase‑out proposals, while hotel‑zoned areas are treated differently. Verify each parcel with Maui County Planning Bill 9 overview and STR portal.
Will taxes on rentals change soon?
- The state TAT increases by 0.75 percentage points to 11 percent on January 1, 2026, reducing net yields for STRs AP report. Maui County also has its own TAT surcharge county TAT info.
Is FHA an option for Wailea resort condos?
- Only if the project meets FHA approval or qualifies for single‑unit approval, which many resort projects do not. Confirm status early with your lender FHA condo guidance.
Who offers condotel and portfolio loans on Maui?
- Several local lenders and brokers offer these programs and keep loans in‑house or place them with investors. Examples include Hawaii‑based portfolio lenders and specialized brokers familiar with Wailea projects portfolio program example and condotel broker resource.
