Who Pays for Termite Inspection on a VA Loan?

When securing a home loan backed by the Department of Veterans Affairs (VA), prospective homeowners navigate a process to ensure the property meets specific standards. This financial benefit aids eligible service members, veterans, and surviving spouses in achieving homeownership, often with advantages such as no down payment and competitive interest rates. Evaluating the property’s condition is a significant aspect, protecting the buyer by ensuring the home is safe, sanitary, and structurally sound. This assessment identifies and addresses potential issues before loan finalization, safeguarding the investment.

Property Condition Requirements for VA Loans

The Department of Veterans Affairs establishes Minimum Property Requirements (MPRs) for all homes financed with a VA loan. These requirements ensure a property is habitable. The appraisal process verifies adherence to these MPRs, not just valuing the home. This includes ensuring adequate living space, proper sanitation facilities, a safe heating system, and a sufficient water supply.

A key component of these requirements, especially in certain areas, is the wood-destroying insect (WDI) inspection. WDI inspections identify wood-destroying organisms like termites, carpenter ants, carpenter bees, old-house borers, and powderpost beetles, which can compromise structural integrity. The VA uses a Termite Infestation Probability Map to determine regions where these inspections are typically required due to infestation likelihood. Even if a state does not generally require a WDI inspection, it becomes mandatory if the VA appraiser notes any evidence of wood-destroying insect damage during their assessment.

WDI inspection necessity varies across the U.S. Some states have blanket requirements due to high infestation risks, while others are discretionary. For instance, states in warm, humid climates often have mandatory inspection requirements. In discretionary states, an inspection is only triggered if the VA appraiser identifies specific issues. Certain property types, like condominiums or townhomes, typically require a WDI inspection, though exceptions may apply for higher-level units.

During a WDI inspection, a qualified professional examines accessible interior and exterior areas, including attics and crawl spaces. They look for signs of wood-destroying insects, such as live infestations or past activity, and conditions conducive to their presence. A detailed report, often using the NPMA-33 form, is generated upon completion, outlining findings and recommendations. This report is generally valid for 90 days, allowing sufficient time for the loan closing process.

VA Guidelines on Termite Inspection Fees

VA guidelines on who pays for the wood-destroying insect (WDI) inspection report have changed significantly. Historically, veterans were generally prohibited from paying for this inspection. This often meant the seller, lender, or a real estate agent typically covered the cost to facilitate the transaction.

VA Circular 26-22-11, issued June 15, 2022, revised these rules. This change allows veteran borrowers to pay for the WDI inspection fee when required by the VA Notice of Value. This adjustment provides greater flexibility, removing a potential hurdle for VA buyers in competitive markets. The new guideline acknowledges that the veteran is permitted, but not necessarily required, to pay for the inspection.

Despite this change, the responsibility for the WDI inspection cost remains a point of negotiation between the buyer and the seller. If the veteran chooses not to pay, other parties like the seller, lender, or real estate agent may still cover the expense. The VA maintains limits on fees charged to borrowers, ensuring the inspection cost is not an undue financial burden. An itemized invoice identifying the veteran and property is required to verify the cost on the Closing Disclosure Statement.

Addressing Termite Findings and Remediation

Once a wood-destroying insect (WDI) inspection report is completed, the focus shifts to addressing its findings, particularly if active infestations or significant damage are identified. A satisfactory report indicates no current infestation or structural damage, allowing the loan process to continue smoothly. If the inspection reveals active infestations or conditions conducive to them, or evidence of past damage, remediation becomes a mandatory step before VA loan approval.

The VA requires active infestations be treated and resulting damage repaired to meet Minimum Property Requirements. This work must be performed by a qualified pest control company or contractor. The specific nature of the treatment can vary, ranging from chemical applications to fumigation, depending on the type and extent of the infestation. Repairs to damaged wood components must restore structural integrity and safety.

While the VA permits veterans to pay for the initial WDI inspection, treatment and repair costs are typically a separate consideration. Though the VA does not explicitly mandate who pays for remediation, the seller often covers these costs, especially if negotiated or a condition of sale. The veteran is also allowed to pay for any required repairs. Negotiation between the buyer and seller regarding these costs is encouraged to reach a mutually agreeable solution.

After all necessary treatments and repairs are completed, a re-inspection of the property is required. This follow-up inspection verifies that the active infestation has been eradicated and that all identified damage has been properly addressed, ensuring the property meets VA standards. The costs associated with these repairs and treatments typically cannot be included in the VA loan amount, meaning they must be covered outside of the loan.