Termite Report Mortgage 2026: When It Is Required and Who Pays

The requirement for a termite or wood destroying insect (WDI) report depends on the loan type and the property state. Getting this wrong delays closings and creates last-minute scrambles. Understanding the rules by program prevents both.

VA Loan Requirements

VA requires a WDI inspection at purchase in states that the VA designates as having termite infestation probability. This includes most of the South and Southeast, parts of the Midwest, and California. The VA publishes a map of high and moderate probability states; MLOs in those markets should treat a WDI report as a standard purchase document. The inspector must be licensed in the state where the property is located. If active infestation or structural damage from prior infestation is found, treatment and repair are required before the VA will insure the loan.

FHA Requirements

FHA does not have a blanket termite inspection mandate. The HUD handbook removed mandatory WDI requirements for most standard FHA loans. However, if an appraiser observes evidence of wood destroying insect activity, such as frass, mud tubes, or visible structural damage, they will note it and the lender will condition on inspection and remediation. Some state addenda or lender overlays may impose their own requirements beyond what FHA mandates. Always check your specific lender guidelines.

Conventional Loans and Who Pays

Fannie Mae and Freddie Mac do not require termite inspections. The appraiser notes observable property conditions; if structural damage is visible and attributable to pests, it becomes an appraisal condition. For VA loans, VA rules have historically prohibited the veteran from paying for certain inspections, including the WDI report in many states. This means the cost typically falls on the seller or the lender. Check current VA circular guidance for the exact list of non-allowable veteran fees, as these rules are updated periodically.