Who Pays for Termite Inspections on VA Loans?

Purchasing a home is an exciting milestone, but it also involves a lot of different processes. This is especially true if you plan to use a VA loan. VA loans offer several benefits for eligible veterans and service members, like zero down payment and discounted interest rates. However, VA mortgages also come with additional requirements, like a pest inspection in certain states affected by termites. So who pays for the termite inspection with a VA loan? Let’s discuss the details.

Overview of Termite Inspections for VA Loans

The Department of Veterans Affairs has minimum property requirements (MPRs) that homes must meet to qualify for a VA-backed loan. One key standard is ensuring the home is structurally sound and free of pest infestations that could compromise the integrity.

Termites are tiny insects that feed on and destroy wood, including homes. They cause over $5 billion in property damages annually in the U.S. Due to their destructive nature, the VA requires termite inspections in areas heavily infested with these pests. This helps protect the homebuyer’s investment.

Whether a termite inspection is mandatory or discretionary depends on your location:

• Mandatory states – Certain states with moderate to high termite populations like Florida, Texas, and South Carolina require an inspection.

• Discretionary states – For areas with low termite activity, it’s up to the appraiser. This includes states like Alaska, Colorado, and Wyoming.

• County-dependent – Some states mandate inspections only in select, high-risk counties Examples are Michigan, Wisconsin, and New York

Who Pays the Termite Inspection Fee on a VA Loan?

When it comes to who pays for the termite inspection on VA home loans, there are a few possibilities:

The Veteran Homebuyer

Traditionally, VA guidelines prohibited the buyer from paying for the termite inspection so the burden fell on the seller or lender. However, the VA amended its rules in 2022. Now, the veteran or service member can pay for the inspection in certain high-risk states, including:

• Alabama
• Arkansas
• Arizona
• California
• Florida
• Louisiana
• Mississippi
• Oklahoma
• Texas

This change helps ease the process and makes sellers less resistant to VA loans Homebuyers can expect to pay $50 – $280 for the inspection on average depending on the home’s size and location

The Seller

Just because VA buyers can pay doesn’t mean they have to. Covering the termite inspection cost is still negotiable.

In many cases, the seller ends up paying for the inspection. This is often easiest since they already live in the home and will likely obtain inspections for disclosure purposes anyway.

Sellers may be more motivated to cover the cost in competitive markets where VA loans give buyers an advantage. This small concession can help seal the deal.

The Lender

VA lenders can also opt to cover the fee for the termite inspection. They may do this as an incentive to earn the borrower’s business.

Lenders can recoup the relatively small cost through application fees, origination charges, or other closing costs. Paying for inspections also helps loans progress smoothly to closing.

Real Estate Agent

While less common, real estate agents may offer pest inspections as a buyer incentive. The agent has a vested interest in ensuring the transaction goes through.

Paying out of pocket for the termite inspection could sway buyers to work with that agent over others. They benefit from securing both the buyer’s and seller’s business.

When Do You Need the Inspection Completed?

Timing is an important consideration for VA termite inspections. The appraisal cannot be finalized until the pest inspection report is complete.

You’ll want to schedule the appointment as soon as possible in the home buying process so you don’t delay closing. Inspections typically take 1-2 hours. Allow a few days for the inspector to provide the full report.

The inspection is valid for 90 days in the eyes of the VA. So if your closing gets delayed, you may need to foot the bill for an updated inspection. This ensures there are no new infestations since the initial check.

Using Your VA Termite Inspection Report

The pest inspection report serves a couple of key purposes:

• It verifies whether termites or other wood-destroying insects are present both visibly and behind walls/ceilings. This gives the appraiser confidence in the property’s structural integrity.

• It identifies any existing pest damage that may require repairs prior to closing. The inspector notes recommended treatments.

Any issues raised must be resolved according to VA protocols before you can proceed with the mortgage. You may need to contract pest control services for fumigation and use approved methods for any repairs.

A follow-up inspection confirms all problems are fixed. Review the full report closely and ask questions so you know what needs to be done.

Additional Termite Inspection Tips for VA Buyers

• Research reputable pest control companies in your area for the most thorough inspection. Look for good reviews and certifications.

• Time the appointment concurrently with your home inspection to save money. Some firms offer package discounts.

• Negotiate who pays for the inspection early in the process. Don’t wait until the last minute.

• Review state laws to see if the seller must provide a previous termite inspection report. This may reveal past treatments.

• Carefully check the full home yourself, in addition to the inspection, for signs of termites – tunnels, hollow wood, etc.

• Address any recommended termite treatments ASAP. Use a qualified company and approved products.

• Keep the inspection report. It provides useful documentation should termites reappear after closing.

Using a VA loan provides great home financing benefits for veterans, service members, and surviving spouses. While the termite inspection requirement adds a step, it’s for the long-term good of your investment. Knowing exactly who covers the cost upfront makes coordinating the process easier.