Termite and Wood-Destroying Insect Inspection Requirements

Most government-backed mortgages require a termite inspection before closing, and in practice this is where the termite inspection requirements for a mortgage come from. VA, FHA, and USDA loans each have their own trigger rules, but across most of the country the property must receive a clear wood-destroying insect report before the loan can fund. Conventional lenders set their own policies and often require one when the property sits in a high-risk area or the appraiser flags a concern.

When Each Loan Type Requires an Inspection

VA Loans

The VA ties its requirement to the Termite Infestation Probability (TIP) map, which sorts the country into four risk zones. When a property falls in a “very heavy” or “moderate to heavy” zone, the VA appraiser adds a wood-destroying insect inspection as a condition on the Notice of Value, and the loan cannot close without a clear report.¹ The VA publishes a state-by-state list translating the map into specific geographic requirements: inspections are mandatory across the South, Mid-Atlantic, and much of the Midwest, while states like Colorado, Iowa, and Nebraska require them only in certain counties. States with minimal termite risk, such as Alaska and North Dakota, are not listed.² Vertically stacked condominium units are exempt unless the appraiser notices signs of a problem.

FHA Loans

FHA takes a different approach. An inspection is triggered when there is evidence of active infestation, when state or local law requires one, when it is customary in the area, or when the lender requests it.³ HUD also publishes a Termite Treatment Exception Areas list identifying counties that are exempt. Most of the country is covered; the exceptions cluster in northern states like Alaska, North Dakota, Oregon, and Washington, plus selected counties in Colorado, Montana, and New York.⁴

USDA Loans

USDA direct loans for rural housing require a state-licensed inspector to evaluate the property for termites and other pests as part of the whole-house inspection. A State Director can waive the termite portion if three conditions all apply: the state sits in a “none to slight” or “slight to moderate” zone on the TIP map, state and local codes do not require one, and neither the home inspection nor the appraisal shows signs of active infestation.⁵

Conventional Loans

No federal rule forces a wood-destroying insect inspection on a conventional mortgage. Individual lenders write their own policies, and many require one when the property is in a high-risk termite area or the appraiser notes potential infestation. Skipping it is a gamble even when the lender permits it. Termite damage repair averages around $3,000 and can exceed $10,000 for major structural work.

What the Inspection Covers

The standard inspection targets a defined set of wood-destroying insects. Subterranean termites get the most attention because they cause the most damage nationally; they build mud tubes from soil to wood, and those tubes are one of the clearest signs an inspector hunts for. Drywood termites live entirely inside the wood they eat and leave small pellet-like droppings. Dampwood termites prefer high-moisture wood and are most common in the Pacific Northwest and coastal areas.

Beyond termites, the inspection covers carpenter ants, which hollow out wood for nesting rather than eating it, and carpenter bees, which bore round holes into exterior wood to lay eggs. Powderpost beetles and other wood-boring beetles leave fine powdery frass and small exit holes in floorboards, joists, and beams. The inspector determines whether an infestation is active, previously treated, or some combination.

One scope limit catches many buyers off guard: the report does not cover wood-decay fungi, commonly known as wood rot. An inspector may note moisture conditions or visible rot because those conditions attract termites, but fungal damage itself falls outside the report. A separate evaluation is needed if rot is a concern.

The NPMA-33 Report and Its 90-Day Window

Most residential transactions use the NPMA-33, the standardized Wood Destroying Insect Inspection Report developed by the National Pest Management Association. The form captures findings across five sections: general information about the property and inspector, inspection findings including live insects and visible damage, treatment recommendations, obstructed or inaccessible areas, and additional comments.⁶ This is the “termite letter” the lender reviews to clear the condition.

The report is valid for 90 days from the inspection date. If the transaction has not settled before that window closes, you need a new inspection.⁶ A closing that drags past 90 days forces someone to pay for a second inspection and risks a different result.

Fourteen states use their own mandated forms instead of or alongside the NPMA-33: Alabama, Arizona, California, Florida, Georgia, Hawaii, Louisiana, Maryland, Mississippi, Nevada, North Carolina, Oklahoma, South Carolina, and Texas.³ Confirm with your lender which form they need; HUD may still require the NPMA-33 for FHA-insured loans in those states.

What the Inspector Can and Cannot Reach

The assessment is a visual inspection. The inspector walks the basement, crawlspaces, attic, and the interior and exterior perimeter looking for mud tubes, frass, exit holes, damaged wood, live or dead insects, and moisture conditions that invite infestation. It usually takes one to two hours.

What the inspector cannot do matters just as much. The NPMA-33 states that the inspection does not cover anything behind walls, under floor coverings, above fixed ceilings, or behind insulation, furniture, or appliances. The inspector cannot break into or dismantle any part of the structure. Crawl spaces with less than 24 inches between the floor joists and the ground are treated as inaccessible.⁶ Dense vegetation against the foundation, standing water in a crawl space, spray foam insulation covering structural members, and stored items blocking access all get listed as obstructions in Section IV. Those obstructed areas are where hidden infestations tend to sit.

The report is a snapshot of what was visible on one day. The 90-day validity period is not a warranty.

Who Pays for the Inspection

Who pays is negotiable in most transactions. Fees generally run between $75 and $325 depending on size and location.

VA loans used to bar veterans from paying for the termite inspection. That changed in June 2022, when VA Circular 26-22-11 authorized veterans to pay for wood-destroying pest inspection fees when the Notice of Value requires them. Veterans can also pay for repairs needed to meet VA minimum property requirements.⁷ The VA still encourages veterans to negotiate the cost with the seller, and an itemized invoice identifying the veteran and the property must appear on the Closing Disclosure.

FHA and USDA rules do not dictate which party pays. The cost falls wherever the purchase contract assigns it, which varies by local custom and negotiating leverage.

What Happens If the Inspector Finds a Problem

A report showing active infestation does not automatically kill the deal, but it creates conditions that must be satisfied before closing. For FHA loans, all structures within the property lines must be inspected and free of active infestation before the loan can be insured, and any chemical treatments or bait systems must be EPA-approved and applied according to label instructions.³ VA loans similarly require that any infestation or structural damage affecting value be corrected before settlement.¹

Professional treatment for subterranean termites, including soil treatments and bait station installation, typically costs between $240 and $2,500 depending on severity and the size of the structure. Repairing the damage itself is a separate expense, running from a few hundred dollars for minor board replacement to $10,000 or more when load-bearing beams or major framing need to be rebuilt. Who pays for treatment and repairs is a negotiation point, and many contracts give the buyer the right to walk away if repair costs exceed a set threshold.

For condominiums, if the inspection reveals problems in common areas, FHA requires a letter from the homeowners association listing the scheduled repair date, the contractor handling the work, and confirmation that funds have been budgeted or collected.³

New Construction

Newly built homes financed through FHA or VA loans carry their own documentation. In areas with meaningful termite risk, the builder completes Form HUD-NPMA-99-A, guaranteeing that the home has been protected against subterranean termites. If chemical soil treatment or bait systems were used instead of pressure-treated lumber, a licensed pest control company documents the treatment on Form HUD-NPMA-99-B.⁸

The builder’s guarantee covers one year from closing. If subterranean termites infest the home during that year, the builder must arrange for a licensed pest control company to treat the structure at no cost to the buyer and repair all termite damage.⁸ Using pressure-treated sills as the sole method of termite prevention does not satisfy FHA requirements; additional protection is required. Federal regulations separately require that sites for HUD-insured properties meet termite and decay protection standards before construction begins, so the soil treatment or physical barrier happens during the build rather than after.⁹

Preparing for the Inspection

Clear access to every area the inspector needs to reach: basement, crawl spaces, attic, garage, and the exterior perimeter of the foundation. Move stored items, furniture, and appliances away from walls in those areas. Trim vegetation touching the foundation so the inspector can see the exterior slab line. If the home has a crawl space, make sure the access opening is clear and any standing water has been addressed.

Gather any documentation of previous pest treatments, active bait station contracts, or prior inspection reports. That history helps the inspector distinguish old damage from new activity.

Verify that the inspector holds a valid pest control license in your state. The license number goes directly on the NPMA-33, and a report signed by an unlicensed operator will not satisfy any lender.⁶ Ask about turnaround time; most inspectors deliver within 48 hours, but during peak real estate season that timeline can stretch. A few days of buffer in your closing schedule prevents a last-minute delay.

1
U.S. Department of Veterans Affairs. VA Pamphlet 26-7, Lenders Handbook
2
U.S. Department of Veterans Affairs. VA Home Loans – Local Requirements
3
U.S. Department of Housing and Urban Development. HOC Reference Guide – Pest Control
4
U.S. Department of Housing and Urban Development. Termite Treatment Exception Areas
5
USDA Rural Development. HB-1-3550 Direct Single Family Housing Loan and Grant Handbook – Chapter 5: Property Requirements
6
U.S. Department of Housing and Urban Development. Wood Destroying Insect Inspection Report
7
U.S. Department of Veterans Affairs. VA Circular 26-22-11: Pest Inspection Fees and Repair Costs
8
U.S. Department of Housing and Urban Development. Subterranean Termite Protection Builders Guarantee – Form HUD-NPMA-99-A
9
eCFR. 24 CFR 200.926d – Construction Requirements