FHA rules for termite inspections

appraisers must report termite damageIf you have ever bought or sold real estate with FHA financing you know that HUD/FHA loans are a little different than conventional loans.  In an effort to keep everyone updated I thought I would share some information HUD/FHA provided recently.

FHA does not automatically require inspections to be made on all loans, however several situations do require pest inspections.  These include

  • Evidence of active infestation
  • If it is mandated by state or local jurisdiction
  • If it is customary in an area, or
  • At the lenders discretion

If an appraiser sees signs of active termite infestation they must report it on the appraisal form.  This would trigger the lender/underwriter to then call for an inspection to verify the damage.  The appraiser also reports if there has been prior damage and treatment, if it is readily observable.

HUD notes that if a termite inspection provisions are called for in standard real estate contracts for your area, or where a high likelihood of termite infestation exists then an inspection is required.  Some states have their own wood destroying insect/organisms form that must be filled out in which case an inspection would be required.  Another good way to determine whether an area has a high probability of termite infestation is to look up the “Termite Infestation Probability (T.I.P) Zone.  If the home you are interested in is within this zone then an inspection will probably be called for by the loan underwriter.  Underwriters have the final decision in calling for an inspection and this is usually handled on a case by case basis.  Do you know of any other situations where you should definitely get a termite inspection?

If you have any real estate appraisal related questions you can call me at 205.243.9304, email me, or connect with me on Facebook., Twitter, or Youtube.


  1. Tom Gildea says

    Do FHA guidelines state that the exterminator who treats the infestation provide a 1-year warranty? I have a deal now where the infestation is ancient and long inactive. Buyers added treatment to contract. Sellers have now wasted money treating a non-existing condition. Exterminator wants another $500 to provide a 1 year warranty.

    • FHA appraisal guidelines do not address whether the exterminator is required to provide a 1 year warranty. They only specify that if there is damage it has to be treated and the exterminator needs to comment on the condition and if it has been fixed. This is from the appraisers perspective (and HUD guidelines), I am not sure what an underwriter might say or the lenders own requirements.

  2. Ann Capps says

    Thanks Tom !! You are always a wealth of information !

  3. Good stuff, Tom.

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