FHA Now Requiring Termite Inspections

Posted by Alice Leeper on Monday, September 14th, 2015 at 11:36am.

Termite inspections haven't been mandatory for any loans, with the possible exception of VA loans, for a number of years.  Just got word this morning that wood-destroying pest inspections are now required for FHA loans if, there is evidence of active infestation, it is mandated by state or local jurisdiction, it is customary to the area, or at the lender's discretion.

Per HUD FHA Guidelines: "Customary to the area" would be driven by local market practices such as incorporating provisions addressing termite or wood destroying organisms in the standard real estate contract in termite-prone areas or where potential of infestation exists, or local requirements such as states requiring the use of their own wood-destroying insects/organisms form.

Columbia is a termite-prone area and we do have standardized contract riders that can be used.  One lender has already notified us that termite reports will be required.  Other local lenders will probably also begin requiring the reports.

This shouldn't be a big impact for home buyers because we typically recommend that you get a termite inspection anyway.  Termite inspections are paid for by the home buyer and run $60 to $70.  The inspection can be paid for at the time of inspection or billed to closing, depending upon the inspector.

The good news is - Knowing up front means that you can incorporate a termite inspection along with your other inspections and if termite infestation is found, negotiate with the seller to have the house treated.  If you don't do the inspection until the lender notifies you, it will probably be outside of the inspection period and now you have a problem!

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