VA Loan Termite Inspection: Who Pays?

VA loans provide a significant benefit for eligible service members, veterans, and surviving spouses, facilitating homeownership with favorable terms. The Department of Veterans Affairs (VA) has specific property requirements designed to protect borrowers. These requirements help confirm a home is safe, sanitary, and structurally sound before loan approval. Property inspections, including those for potential pest infestations, play an important role in this framework.

When is a Termite Inspection Required for VA Loans?

A termite inspection, often called a Wood-Destroying Insect (WDI) inspection, is not universally required for VA loans. Its necessity largely depends on the geographic risk of termite activity. The VA uses a Termite Infestation Probability Map to identify areas with “Moderate to Heavy” or “Very Heavy” chances of infestation, where an inspection is typically mandatory. Over 30 states generally require these inspections for VA-financed properties.

Even in low-risk areas, a termite inspection may still be required if the VA appraiser observes signs of active infestation or previous wood-destroying insect damage during the property appraisal. Such signs include mud tubes, damaged wood, or visible insects. While often necessary for existing homes, inspections are less common for newly constructed properties unless specific issues are noted. For condominiums or townhouses, an inspection might also be necessary, depending on the specific unit and state regulations.

Who Pays for the Termite Inspection?

Historically, VA regulations generally prohibited veteran borrowers from paying for the termite inspection, aiming to reduce their out-of-pocket expenses. This meant the seller, lender, or real estate agent typically covered the cost. The rationale was to shield veterans from fees not directly related to standard loan closing costs.

A policy update in June 2022 now permits all VA loan borrowers to pay for required termite inspection reports. This change provides flexibility in competitive real estate markets, allowing veteran buyers to make offers that are more appealing to sellers. While veterans are allowed to pay, they are not obligated to do so. Many sellers still choose to cover the expense, especially as part of negotiations to facilitate the sale.

The cost for a termite inspection varies based on home size and location, typically ranging from $50 to $280, with an average of $100 to $200. Regardless of who pays, the inspection invoice must be provided to the lender as part of the loan documentation. This supports a smoother transaction process.

Addressing Termite Findings and Repairs

If a termite inspection reveals active infestation or structural damage caused by wood-destroying insects, the issue must be fully addressed before the VA loan can be approved. Properties financed with a VA loan must meet the VA’s Minimum Property Requirements (MPRs), which require them to be free from active infestations and damage that could compromise the home’s structural integrity or safety. Any active infestation must undergo professional treatment to eradicate the pests.

Beyond extermination, any structural damage resulting from the infestation must be properly repaired. These repair costs are distinct from the initial inspection fee and are usually the responsibility of the seller. Sellers typically cover these expenses to ensure the property meets the VA’s habitability standards, making it eligible for VA financing. While the VA does not explicitly dictate who pays for these repairs, some state regulations or lender requirements may mandate the seller’s responsibility.

After treatment and repairs are completed, a re-inspection is mandatory to confirm the infestation has been eliminated and all damage has been adequately remediated. The loan cannot close if there are still signs of active wood-destroying insects or if the damage remains untreated. This process ensures veteran borrowers acquire homes that are safe, structurally sound, and free from pest-related issues.