Are termite inspections required on Streamline Refinance transactions?

FHA does not require an appraisal, termite inspection, or credit report on streamline refinances (except credit qualifying streamline refinances).  However, the associated fees may be paid by the borrower out-of-pocket (i.e., not financed) if law, banking regulations, or its secondary market investors require the lender to obtain these services on a streamline refinance made without an FHA appraisal.   

For streamline refinances with an appraisal, repair conditions must be noted on the applicable appraisal form but FHA does not require repairs (except for lead based paint repairs) to be completed, nor does FHA require a termite inspection.  However, the lender may require completion of repairs or a termite inspection as a condition of the appraisal at the lender's discretion.   

For additional information see Handbook 4000.1  at

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-04289