A termite inspection is not required for a conventional loan by default. Fannie Mae and Freddie Mac, which set the rules most conventional lenders follow, leave the call to the lender based on the property’s condition and local law.1Fannie Mae. Environmental Hazards Appraisal Requirements If the appraiser doesn’t flag anything and your area doesn’t mandate a pest clearance, the loan can close without one.
That’s the short answer. The longer answer is that a few specific things can turn an optional inspection into a mandatory one, and it’s worth knowing what they are before you assume you’re in the clear.
What Triggers a Required Inspection
Three situations move a pest inspection from optional to required on a conventional loan.
The appraiser flags something. The Uniform Residential Appraisal Report (Form 1004) has a specific field for “Evidence of Infestation” and asks whether physical deficiencies affect the property’s structural integrity.2Fannie Mae. Uniform Residential Appraisal Report If the appraiser notes mud tubes along the foundation, discarded wings near windows, hollow-sounding wood, or insect droppings, the lender will require a full pest inspection before moving forward.
Local or state law requires one. Some jurisdictions require a pest clearance certificate on every real estate transfer regardless of loan type. Where that applies, the lender needs proof of compliance before funding.
The lender has its own overlay. Individual lenders can add requirements on top of what Fannie Mae and Freddie Mac ask for. A lender that writes a lot of loans in a heavy-termite region may require inspections on every file as internal policy.
Once any of these applies, the inspection is no longer optional. The loan can’t close without a clear report or documentation that the problem was fixed.
How This Differs From FHA and VA Loans
If you’re comparing loan types, don’t assume the pest rules travel between them. FHA loans require termite treatment documentation for new construction in most states, with only a handful of states fully exempt.3HUD. Termite Treatment Areas VA loans go further and require a wood-destroying insect inspection across dozens of states and territories, with additional states where inspections apply in designated counties.4Department of Veterans Affairs. Local Requirements – VA Home Loans
Conventional loans have no comparable regional mandate. That flexibility is one reason conventional closings often move faster than government-backed ones on the same property.
The Wood Destroying Insect Report
When an inspection is required, the results go on a Wood Destroying Insect Inspection Report, known as Form NPMA-33. The form covers four categories of pests: termites, carpenter ants, wood-boring beetles, and carpenter bees.5Purdue University. Wood Destroying Insect Inspection Report – Form NPMA-33 The inspector documents active infestations, signs of previous activity, visible damage, and any areas that were inaccessible during the visit. To be valid for a mortgage, the report has to include the inspector’s license number and the exact property address.
The person doing the inspection must hold a valid state-issued pest control license. Your state’s department of agriculture or pesticide regulation typically maintains a public directory of licensed operators.
The 90-Day Rule
The NPMA-33 form states that it is “invalid for purposes of securing a mortgage and/or settlement of property transfer if not used within ninety (90) days from the date of inspection.”5Purdue University. Wood Destroying Insect Inspection Report – Form NPMA-33 If closing gets pushed past that window, you’ll need a fresh inspection before the lender can fund. Scheduling too early can mean paying twice, so it’s worth coordinating the timing with your lender.
If the Inspection Finds a Problem
An active infestation or real damage doesn’t automatically kill the deal. It just adds steps.
The lender will typically want a paid treatment invoice from a licensed pest control company, a clearance letter confirming the infestation is gone, and, if there’s structural damage, verification that repairs are complete. Fannie Mae allows lenders to verify completion through a follow-up appraisal on Form 1004D, a virtual inspection with photographic evidence, or a borrower attestation letter backed by paid invoices or a report from a qualified professional.6Fannie Mae. Requirements for Verifying Completion and Postponed Improvements
When repairs can’t be finished before closing, Fannie Mae allows the lender to set up a completion escrow. The lender withholds funds equal to 120 percent of the estimated repair cost from the purchase proceeds and releases them once the work is verified.6Fannie Mae. Requirements for Verifying Completion and Postponed Improvements That keeps the transaction on schedule while making sure the repairs happen.
Cost and Who Pays
Conventional loans have no rule about which side pays for the inspection. It’s negotiable in the purchase contract. In some markets, sellers customarily cover it; in others, buyers do. Either party can also fold the fee into broader seller concessions.
The inspection usually runs $75 to $250, depending on the size and location of the property. Larger homes, multiple structures, and high-risk termite regions push toward the top of that range. Some pest control companies offer free inspections but roll the cost into a treatment plan if they find something.
Should You Get One Anyway
Skipping a termite inspection because your lender doesn’t require one is a gamble. Homeowners insurance rarely covers termite damage, and repairs average around $3,000 nationally, with severe cases running $10,000 or more. Finding an active colony before closing gives you room to negotiate repairs or a price reduction. Finding it six months after closing leaves the bill entirely on you.
A voluntary inspection is especially worth the money if the home has a crawl space, sits on a slab in a warm or humid climate, has mature trees close to the foundation, or shows signs of prior pest treatment like drill holes in the concrete. The cost of the inspection is small compared to the cost of inheriting hidden structural damage.