^{By Jack Norton}
Many people considering the purchase of real estate in the Las Vegas/Henderson area frequently fail to take into account the effect their choice of property will have on the financing available to them. While in the past, many types of financing were available for nearly every borrower and situation, the recent financial turmoil has basically reduced the choice of loan programs to three, which include FHA, VA and conforming conventional (more commonly known as Fannie Mae/Freddie Mac).

Each of these types of programs has specific requirements that apply to not only the borrower, but to the property as well. I am often confronted with a situation in which a buyer has not been provided with sound advice from a mortgage professional prior to writing an offer. The buyer finds he now cannot qualify for the specific program that would best suit his needs were he to purchase a qualifying property. While it is impossible to address all of the program-specific property requirements in this article, I will address a few of the more common problems that buyers encounter in the Las Vegas/Henderson market.

Condo and townhouse projects that are not HUD approved:  With FHA loans accounting for approximately 78 percent of all purchase transactions in the Las Vegas area, it is essential to be aware of the rather severe restrictions HUD (the administrator of the FHA program) has placed on the type of project they will insure.

The most common problem is that of a project that is involved in litigation. If a particular condo project has taken a builder to court over an alleged construction defect claim, the entire project is typically ineligible for FHA financing. In addition, if the percentage of units in the project that are owned by investors exceeds certain percentage thresholds, the project is likewise excluded from the program. A responsible realtor will work closely with a mortgage professional to determine, prior to showing you the property, whether or not a particular project appears on HUD's list of eligible properties.

Condition of the property: Each of the loan programs available has different requirements regarding the state of repair of the subject property. For example, in order to obtain FHA financing, a pool must be filled with water, and the appraiser must provide photos proving this is done. While for a conventional loan, an appraiser's statement that the pool is functional will suffice. The programs also have varying requirements concerning the appliances that must be present and in working order. As a general rule, conventional financing is less restrictive regarding condition, but not in every case.

According to long time local Realtor Richard Lasica of Realty Executives “With bank- owned properties dominating the Las Vegas/Henderson market, I am seeing increased cases of condition affecting the availability of financing. Many times the prior owners do not leave the property in terrific condition, and it is incumbent upon the realtor, working in concert with the loan officer, to determine which properties to show the client based upon the type of mortgage desired.” In summary, it is essential that any potential buyer put a knowledgeable, trusted team in place prior to beginning their search. Those that treat financing as a process that begins after an offer is accepted, are likely to find themselves with a mortgage that is not optimal to their situation.