Several years ago, HUD issued an appraisal guideline for properties in "TIP Zones" or Termite Infestation Probability zones. This letter was archived in 2012 but still seems to be the guideline for appraisers and underwriters. See the HUD HOC Reference Guide for Pest Control and regarding certification see the Santa Ana HOC TIP Zone Information Reference Guide. Also be prepared for a surprise. It is often overlooked that these requirements will apply to all structures within the property lines that have potential for infestation.


The requirement of a Termite Report for Real Estate purchased with an FHA loan seems to vary depending on the nature of the current economy. When the market is on the rise, a Termite Report may or may not be required. In our experience, when a Termite Report IS required as a condition of an FHA loan, they will require all Section One work recommended in the Termite Report be completed. In addition, recommendations that are deemed to be "Health and Safety" (habitability) concerns will also be required. The problem with this standard is that most underwriters do not have a reliable criteria to follow in determining if a report recommendation falls under the vague definition of health and safety. So most FHA lenders will play it safe and require that all Section Two recommendations be completed as well. Further Inspection recommendations are almost always required to be completed.


A Termite Report for Real Estate purchased with a USDA loan will most likely be required. These loans are more common in rural communities. It seems that even when FHA is not requiring a Termite Report, USDA still does. If you are obtaining a USDA loan, plan on a Termite Report and all recommended work to be completed as a requirement of the loan.