The Federal Housing Administration (FHA) requires an appraisal for every home loan. However, in cases where an appraisal uncovers signs of termites or when local regulations mandate it, a termite inspection will also be necessary. Here is everything you need to know about termite inspections for FHA home loans.
Termite Inspections for FHA Home Loans
The main goal of a termite inspection is to look for signs of termites and other wood-destroying insects and any visible damage to prevent further harm to the structure and ensure the home’s safety. A licensed pest control expert thoroughly examines the interior, exterior, and crawl spaces to identify termite issues.
Termite inspection requirements for FHA loans can vary based on a home’s location. An inspection is needed if it’s mandated by state or local authorities, if termites are common in the area, if the lender requests it, or if the appraiser finds evidence of a current termite infestation.
Why Termite Inspections are Required
Termites cause billions of dollars in damage each year in the U.S., including structural damage that jeopardizes a home’s safety. An FHA home loan mandates a termite inspection in certain cases to protect both the lender and the borrower from potential financial risks associated with termite-related problems.
FHA Appraisal Requirements For Termites
A home appraisal is an assessment conducted by a professional appraiser to determine the value of a property. Factors such as location, size, and condition are considered. The purpose is to establish fair market value, which is important for buyers and lenders. Lenders use appraisals to ensure the home is worth the asking price.
An appraisal of the home is the first step when applying for an FHA loan. The appraiser must check for termites or similar wood-destroying insects like carpenter ants and report any damage. If termites are discovered, a separate pest inspection is required, and the loan cannot be approved until all treatments and repairs have been completed.
FHA Termite Requirements By State
While most states require a termite inspection before buying a house, not all counties have this rule. Check local regulations for what is needed for your new home.
States that DO NOT require termite inspection unless termites are present:
- Alaska
- Idaho
- North Dakota
- Oregon
- Washington
States that require termite inspection in SOME COUNTIES:
- Colorado
- Maine (York and Cumberland counties only)
- Michigan
- Minnesota
- Montana
- New Hampshire
- New York
- South Dakota
- Utah
- Vermont
- Wyoming
Every other U.S. state requires termite inspections for FHA home loans in every county.
FHA Termite Inspection For New Construction
The FHA mandates all properties meet its minimum property requirements and standards, including that the property is free of termite infestation. An FHA-approved, licensed appraiser will inspect the property and report their findings. This report, commonly called a termite letter, will confirm that the house has been examined and is free of termites.
New construction also requires a subterranean termite service record (Form NPMA-99-B) or a subterranean termite builder’s guarantee (Form NPMA-99-A) that lists what the builder did to prevent termite infestations. The FHA defines new construction as a property that fits into one of the following categories:
- Proposed construction refers to a property where no construction has begun. If any permanent material, such as concrete, has already been laid down, then it is classified as under construction.
- Under construction refers to the time when permanent materials are first placed on a property until completion. Properties that are under construction don’t yet have a Certificate of Occupancy (CO) or a similar document.
- Newly built refers to a property that has been completed within a year of the Certificate of Occupancy (CO) or equivalent. It is important to note that the property must not have been occupied in order to be classified as new construction.
FHA Loan vs. Conventional Loan Termite Requirements
The main difference between an FHA loan and a conventional loan is that an FHA loan is government-insured, while a conventional loan is not. An FHA loan is a mortgage loan guaranteed by the Federal Housing Administration (FHA). The FHA loan program has more flexible qualification standards than conventional loans, making it an attractive option for many first-time home-buyers.
| FHA Loan | Conventional Loan | |
| Qualification Requirements | More flexible | Stricter |
| Down Payment | Lower down payment | Higher down payment |
| Credit Rating | Accepts lower credit scores | Requires a higher credit score |
| Insurance | Loan is government-insured | Loan is not insured |
| Risk of Default | FHA pays lender remaining balance on loans | Lender is responsible for the entire risk |
FHA Loan vs. FHA 203(k) Termite Requirements
The FHA 203(k) loan program enables borrowers to finance both the purchase of a property and the expenses for renovations or repairs in a single loan. The termite requirements for FHA 203(k) loans are identical to those for standard FHA loans, but the repair costs are incorporated into the loan amount.
It is important to note that the specific termite requirements may vary based on state and local regulations. It is recommended to consult with local professionals and FHA guidelines to determine the exact termite requirements for FHA 203(k) loans in your area.
Cost of FHA Termite Inspection
The cost of an FHA termite inspection can vary depending on factors such as the location of the home and the type of mortgage. On average, a termite inspection costs between $65 to $265. It’s important to note that some pest control professionals offer free inspections or may reimburse the inspection costs if you hire them for treatment.
Regarding FHA home loans, the responsibility for paying the termite inspection fee can vary by state. In most cases, the buyer is the one who pays for the FHA termite inspection. However, there are instances where the seller may offer to pay for the inspection as an incentive for potential buyers. The fee may be due at the time of application or added to the total loan amount.
Signs of Termites
Don’t let termites chew through your dreams. As a buyer, take the time to inspect your new home for pests. Watch out for the following signs of termites, as early detection can save you time, money, and heartache.
- Mud tubes or tunnels on exterior walls
- Discarded wings near windows or doors
- Hollow-sounding or damaged wood
- Small holes in wood, windowsills, or baseboards
- Termite droppings (frass) are present
- Sagging or buckling floors
- Clicking or banging sounds coming from walls
- Tight-fitting doors or hard-to-open windows
- Termite swarmers (winged termites) are seen
FAQ: FHA Loan Termite Inspections
Is a Termite Inspection Required for a Conventional Loan?
A termite inspection isn’t required for every conventional loan. However, some lenders or state regulations may require a termite inspection as part of the loan process. It’s important to check with your lender or mortgage advisor to determine if a termite inspection is necessary for your situation.
How Long is a Termite Inspection Good For?
Typically, the termite inspection is valid for 90 days regardless of the type of loan. However, the lender may request a more recent inspection if there are any concerns or if the loan process extends beyond the initial 90-day period. It is recommended to consult with your lender or mortgage advisor to verify the timeline.
What Happens to an FHA Loan if Termites are Found?
If termites are found during an FHA termite inspection, a licensed professional must treat and repair the property, if needed, using EPA-approved methods. A follow-up inspection is necessary to ensure the complete elimination of termites.
Typically, the seller is responsible for treatment and repairs.
When to Call a Pro
Whether you’re a current homeowner or looking to be one, hiring a professional termite inspection company can protect your investment. Pest Gnome is a trusted platform that connects homeowners and home buyers with reliable pest control services. Book a termite inspection for your FHA loan property and safeguard your home.
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