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Update: VA Loan Home Buyers Can Now Pay for Termite Inspections

VA loan home buyers in California and nationwide can now choose to pay for their termite / pest inspections. This is a change from previous VA policy, which prevented buyers from paying for certain inspections.

This policy adjustment could benefit borrowers by giving them more flexibility and making their offers more appealing to sellers. And there could be more VA loan program changes coming in 2022 – 2023.

Update Regarding VA Loans and Termite Inspections

On June 15, 2022, the Department of Veterans Affairs announced a minor change to its policies regarding termite inspections on homes purchased with a VA loan. In it, they explained that home buyers using a VA-guaranteed mortgage loan can now pay for termite inspections and related repairs on a house they’re buying.

In the past, only VA home buyers in certain parts of the country were allowed to pay for termite and wood-destroying insect inspections. For homes located outside of these designated areas, the seller (or another party to the transaction) had to cover the termite inspection cost.

According to Circular 26-22-11, the policy update published in June:

“Effective immediately, VA is authorizing in advance, as a local variance, that Veterans may be charged wood destroying pest inspection fees, where required by the NOV. Veterans may also pay for any repairs required to ensure compliance with MPRs. Veterans are encouraged to negotiate the cost of the wood destroying pest inspection and repairs with the seller.”

How It Could Benefit Home Buyers

This change means that VA loan home buyers in California and nationwide can now pay for their own termite inspections, or ask the seller to pay for it. In other words, it gives home buyers more flexibility as to how they shape their offers and negotiate with homeowners.

This change could be helpful for home buyers in California and elsewhere, especially those who are in a competitive real estate market. In a hot market, sellers tend to be less likely to pay for buyer closing costs or other expenses. In the context of VA loans, sellers in competitive housing markets are often unwilling to pay for termite inspections or related repairs.

Previously, VA loan home buyers in some parts of the country were prohibited from paying for the pest inspection. This often put buyers at a disadvantage, by making the seller more inclined to choose another offer. If a homeowner has multiple offers to choose from (as in a hot market), they usually choose the best offer with the fewest “strings attached.”

Going forward, however, VA home buyers in California and across the nation can choose to cover their own termite inspection cost — or put it up for negotiation. This is one of several policy changes designed to give borrowers an advantage in the market.

More Changes Could Be Coming Soon

The new termite inspection policy is one of several changes that could benefit California home buyers who use VA loans to purchase a house.

As we wrote in a previous blog post, some members of Congress have introduced a bill that would simplify the home appraisal process. The Improving Access to the VA Home Loan Act of 2022, as it is officially known, would allow VA loan appraisers to rely on digital data alone, instead of making onsite visits every time.

These changes are designed to help military members and veterans compete in the housing market, at a time when multiple-offer scenarios are still common.

Have Questions About California VA Loans?

The VA home loan program offers many benefits for borrowers. It allows eligible buyers to purchase a home in California with no money down, and without having to pay mortgage insurance. It’s also one of the easiest financing program to qualify for, due to the government’s backing.

Most military members and veterans are eligible for the VA loan program. You can learn more about the basic eligibility requirements here.

Here at Bridgepoint Funding, we specialize in the VA program and serve borrowers all across the state of California. We can help you determine your eligibility, gather necessary documents, and get pre-approved to establish a house-hunting budget.

Please contact us if you have questions about applying for a VA loan in California.

Mike Trejo

Mike Trejo is a Bay Area mortgage broker with 20+ years of knowledge and experience.

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