A termite inspection is not required for a conventional loan as a matter of Fannie Mae or Freddie Mac policy. Neither agency includes a blanket wood-destroying insect inspection in its guidelines. Whether you actually need one on your file comes down to what the appraiser sees at the property, what your state or locality requires, and whether your lender adds its own rule on top.
What Fannie Mae and Freddie Mac Say
Fannie Mae’s Selling Guide asks whether a property’s improvements are in a condition “acceptable to typical purchasers in the subject neighborhood.” It does not prescribe a pest report.1Fannie Mae. B4-1.3-05, Improvements Section of the Appraisal Report Freddie Mac takes the same approach, putting the burden on the lender to confirm the property is structurally sound rather than requiring a specific pest report for every transaction.2Freddie Mac. Guide Section 5601.12
So if a loan officer tells you a termite report is required on your conventional file, the requirement is almost never coming from the federal guidelines. It’s coming from something specific about the property, the location, or the lender.
When an Inspection Actually Gets Required
Three situations turn the inspection from optional to mandatory:
The appraiser flags a problem. During the standard walkthrough, the appraiser looks at visible wood components for signs of pest activity. Mud tubes, hollow-sounding wood, frass, or damage consistent with wood-destroying insects will get the appraisal marked “subject to” a professional pest inspection. Underwriting won’t clear the loan until that report is in the file. This is the most common trigger.
State or local law requires it. Some jurisdictions mandate termite reports for all real estate transfers regardless of loan type. That requirement lives in local health and safety codes, not in your loan program. Your closing attorney or title company can tell you whether your area has such a rule.
Your lender has an overlay. Individual lenders can layer requirements on top of Fannie Mae and Freddie Mac minimums. A lender that writes a lot of business in a termite-heavy region may require a pest clearance on every conventional file. Ask your loan officer early whether the lender has an internal policy.
If the appraisal comes back clean, your state doesn’t mandate a report, and your lender has no overlay, most conventional lenders won’t ask for one.
How This Differs from FHA and VA
Government-backed loans are stricter. FHA requires a wood-destroying insect inspection wherever state or local law mandates one, and HUD publishes a list of states with their own mandated forms.3Department of Housing and Urban Development (HUD). HOC Reference Guide – Pest Control VA goes further, publishing a roster of states and specific counties where a wood-destroying insect report is required for every transaction.4Department of Veterans Affairs. Local Requirements – VA Home Loans Conventional loans carry neither of these baseline requirements.
What the Report Looks Like and What Findings Mean
When an inspection is required, the standard document is the NPMA-33, formally the Wood Destroying Insect Inspection Report, developed by the National Pest Management Association. It’s the accepted format for FHA and VA loans and is widely used for conventional transactions.5Department of Housing and Urban Development (HUD). Wood Destroying Insect Inspection Report NPMA-33
The report splits findings into two categories, and the difference matters:
Section I covers active infestations, active infections, and conditions that resulted from either. This is the category that stops a loan. If Section I items appear, you’ll need treatment and a follow-up clearance before underwriting will proceed.3Department of Housing and Urban Development (HUD). HOC Reference Guide – Pest Control
Section II describes conditions that could lead to future infestation but where no active evidence was found. Excessive moisture near the foundation, wood-to-soil contact, or cellulose debris in a crawlspace all fall here. Most conventional lenders won’t block a loan over Section II items alone, though they may recommend addressing them.
Most lenders treat a termite report as current for roughly 90 days. If closing gets delayed past that window, expect to pay for a reinspection. There’s no universal rule on the exact validity period, so confirm it with your loan officer.
What Happens If Termites Are Found
Section I findings put the loan on hold until the property is treated and cleared. The sequence usually runs like this:
- A licensed pest control company treats the active infestation. The method depends on species and severity, commonly a liquid soil barrier or a baiting system.
- The pest control company issues a clearance letter confirming the property is free of active wood-destroying organisms. Some lenders want this on the same NPMA-33 form; others accept a standalone letter from the treatment provider.
- If the infestation caused structural damage, the lender may require repairs before closing. Load-bearing wood or framing replacement is where costs climb fast.
The underwriter needs the clearance documentation, treatment invoices, and any repair receipts in the file before the loan moves to funding. This is the single biggest reason termite findings delay closings. The treatment-and-clearance cycle can run several weeks, and lenders won’t budge on it.
Who Pays, and What It Costs
Who writes the check depends on your purchase contract, not on the loan program. In many markets, sellers cover the initial termite inspection as a standard part of the transaction. When treatment is needed, the purchase agreement spells out whether the seller handles it directly, reduces the sale price, or credits the buyer at closing. All of it is negotiable.
If you’re pushing for a closing credit to cover treatment, be aware that Fannie Mae caps seller concessions based on loan-to-value: 3% for LTV above 90%, 6% for LTV between 75.01% and 90%, 9% for LTV at or below 75%, and 2% on investment properties.6Fannie Mae. Interested Party Contributions (IPCs) Treatment costs that push the total credit past the cap force a workaround, usually a direct price reduction instead.
The costs themselves are manageable on the inspection side and unpredictable on the repair side:
- A standalone inspection runs roughly $100 to $200 for a single-family home. Some pest control companies offer free inspections tied to a real estate transaction, hoping to win the treatment contract.
- Liquid soil treatments generally cost $5 to $15 per linear foot of perimeter. Baiting systems run around $10 per linear foot. A full perimeter treatment on an average home usually falls in the $250 to $1,000 range.
- Repairs are the wildcard. A few damaged boards or joists might cost $250 to $1,000. Moderate damage to walls, flooring, or framing runs $1,000 to $3,000. Major structural work involving load-bearing components can reach $10,000 or more.
Should You Get One Anyway
Nothing in Fannie Mae or Freddie Mac’s rules stops you from ordering a termite inspection on a conventional purchase even when no one requires it. Given the gap between what an inspection costs and what undiscovered damage costs to repair after closing, many buyers choose to pay for one on their own. If you’re buying in a region with heavy termite pressure, or the home is older and has wood in contact with soil, the inspection is cheap insurance regardless of what your loan program demands.