Thinking about a Nantucket getaway you can call your own? Financing a second home here feels different from the mainland. Prices, coastal factors, and lender rules all shape your plan, especially if you are eyeing a home you may occasionally rent. In this guide, you will learn how lenders view second homes, what jumbo loans mean on Nantucket, and the local issues that can affect timing and approval. Let’s dive in.
Why Nantucket financing is different
Nantucket home values are typically in the multi‑million‑dollar range, so many purchases require jumbo loans. Recent data shows island values commonly fall around the multi‑million mark, which puts many buyers over the conforming cap. You can see a current snapshot of typical values on Zillow’s Nantucket market page.
Conforming loan limits rose for 2025 to about 806,500 dollars in most counties, according to national reporting on FHFA limits. Loans above this are jumbo and often come with stricter credit, reserve, and documentation standards. On an island where many homes exceed that threshold, you should plan your financing with jumbo expectations in mind.
Property taxes are another nuance. Nantucket’s residential tax rate is relatively low per 1,000 dollars of value compared with many Massachusetts towns, but high assessments mean total bills can still be sizable. For current figures and billing details, check the Town’s Assessor page.
Second home vs. investment property
Lenders draw a clear line between a second home used by you and a property primarily used for rentals. A true second home is for your personal use on vacations or weekends. If you plan frequent short‑term rentals, your lender may classify the loan as an investment property with stricter terms. Fannie Mae’s guide outlines reserve and occupancy rules for second homes, including baseline reserve expectations, which you can review in the Selling Guide on minimum reserves.
Condo buyers face extra checks. Projects that operate like hotels or include rental pooling may be ineligible for certain programs. Lenders review HOA documents and rental rules carefully; see examples of excluded features in Fannie Mae’s ineligible project characteristics.
Know your loan options
Conforming conventional
If your loan amount is at or below the local conforming limit and the property meets program rules, you may access competitive pricing and potentially higher loan‑to‑value allowances for second homes. Automated underwriting and program rules determine reserves and documentation, and many island properties still require a full appraisal.
Jumbo mortgages
Because many Nantucket homes are above conforming limits, jumbo financing is common. Expect higher minimum credit scores, lower debt‑to‑income allowances, larger down payments, and more months of reserves. For a quick overview of jumbo basics and why they differ from standard loans, review this primer on what a jumbo mortgage is.
Portfolio and renovation options
Local banks and portfolio lenders sometimes offer flexible options for unique properties or complex financial pictures. If you plan to renovate, certain renovation or construction‑to‑permanent products may apply to second homes, though underwriting is usually tighter. Compare rates, fees, and documentation needs across lenders.
Build a lender‑ready plan
A strong pre‑approval is your best lever in a competitive market. Choose a lender that routinely closes jumbo and second‑home loans and ask them to review reserves, your full asset picture, and any rental plans up front. Confirm that your lender understands island timing for appraisals and inspections.
Here is what most lenders will ask for early:
- Two years of tax returns and W‑2s, plus recent pay stubs
- Bank and investment statements showing down payment funds and required reserves
- A list of other financed properties with current mortgage statements
- Proof of primary residence and a signed occupancy statement for the second home
Budget beyond the down payment. Your cash to close can include closing costs, prepaids for taxes and insurance, HOA reserves for condos, and months of reserves that must remain after closing. Reserve rules for second homes are detailed in Fannie Mae’s minimum reserve requirements, and many jumbo lenders require more.
Island‑specific risks to address early
Flood zones and insurance
Parts of Nantucket fall within FEMA Special Flood Hazard Areas, and lenders must confirm adequate flood coverage before closing. Fannie Mae spells out documentation and coverage requirements, including when elevation certificates or map amendments may apply, in its flood insurance guidance. Start flood determinations and insurance quotes as soon as you go under contract.
Local officials are actively planning for shoreline change and resilience. Reviewing the Town’s Coastal Resilience Plan can help you and your lender understand neighborhood‑level considerations.
Septic and sewer
Many homes rely on on‑site systems governed by Massachusetts Title 5, while sewer expansion continues in parts of the island. Lenders often require a passing Title 5 inspection or evidence of repairs before closing, and they will want clarity if a sewer connection is pending. Learn more about coastal permitting and health protections in the state’s overview of environmental permitting in coastal Massachusetts.
Short‑term rentals and zoning
If you expect to rent the home, disclose your plan early and verify rules. Nantucket requires short‑term rental registration and has local bylaws, which you can review on the Town’s Short‑Term Rentals page. Some condo or HOA documents limit rentals or create a hotel‑like setup that can change your loan classification.
A quick cash‑to‑close framework
Use this simple framework to set expectations before you write offers:
- Down payment: based on program and price, jumbo second homes often require 10 to 20 percent or more
- Closing costs: lender, title, and recording fees, plus potential points for rate selection
- Prepaids and escrows: homeowners and flood insurance premiums, several months of property taxes if escrowed, and first month’s interest
- Reserves after closing: months of principal, interest, taxes, insurance, and HOA dues that must stay in your accounts per lender rules
The final number is often well above the down payment alone, especially on a jumbo second home.
Timeline and checklist
Before you offer
- Confirm likely loan size against the conforming limit and plan for a jumbo if needed, per 2025 limit coverage
- Get a jumbo‑capable pre‑approval that documents reserves and down payment sources
- Run a flood‑zone check and request flood insurance quotes if applicable using Fannie’s flood guidance
- Verify septic Title 5 status or sewer availability using the state’s coastal permitting overview
- If you plan to rent short term, confirm the Town’s STR registration rules and your HOA’s policies
Under contract
- Order the appraisal and inspections immediately and allow for island logistics and weather
- Gather elevation certificates, flood binders, Title 5 reports, HOA docs, and proof of homeowners coverage
Before closing
- Confirm final reserves, insurance binders, any required septic sign‑offs or sewer confirmations, and all HOA documents
Ready to explore homes and map the financing that fits your goals? Reach out for local guidance, from offer strategy to closing day. Connect with Lisa Sherburne to start your Nantucket second‑home journey with a trusted island advisor.
FAQs
What counts as a second home for lenders on Nantucket?
- A property you occupy for personal use on vacations or weekends, not your primary residence and not primarily operated as a rental; frequent short‑term rentals can trigger investment‑property treatment and stricter terms.
How do flood zones affect my mortgage approval?
- If the home sits in a FEMA Special Flood Hazard Area, your lender will require acceptable flood insurance and may request elevation documents, which can add time and cost, so start early.
Do condo rental rules impact financing?
- Yes, condo projects with hotel‑like operations or rental pooling may be ineligible for some programs, and strict rental policies can change how your lender classifies the loan.
What makes a loan “jumbo” on Nantucket?
- Any loan amount above the FHFA conforming limit for the area is jumbo, which typically means higher credit standards, larger down payments, more reserves, and full appraisal requirements.
How much time should I allow for closing on the island?
- Plan for extra time compared with mainland transactions due to appraisal scheduling, ferry and weather logistics, and added documentation for flood, septic, and HOA items.
