To make the caramel, heat together the water and sugar gently, over a medium flame, until it is golden brown, about 10 minutes, ensuring the mixture does not burn.
Meanwhile, pour the condensed milk and whole milk into a pan. Add the lime zest. Slice the vanilla pod in half and carefully scrape out the vanilla seeds and add these to the milk mixture. Simmer the milk slowly for 15 minutes to let the flavors combine.
Once the caramel is ready, pour into a cake pan and swirl it around to evenly coat the bottom of the pan. Set aside.
In a bowl, crack the eggs and beat together. Slowly pour a little of the warm milk, vanilla, and lime mixture into the eggs. This will temper the eggs and prevent them from scrambling. Once the warm milk has raised the temperature of the eggs (tempered), pour in the rest of the milk. Pour all of the mixture into the cake pan over the caramel. Cook the cake pan in a water bath by placing the pan inside a larger pan that is filled half-way with water. Place in the oven and cook for 45 minutes to 1 hour.
Once ready, allow to cool and place inside a refrigerator overnight. The flan is then ready to be flipped over gently and served.