If you can find/afford it, Eucalyptus does not attract and repels many bad insects.
I piled it on apple and mulberry trunk cavities that had wood eating ants and they went away.

Termites are in almost all soil. The only way to prevent them is by treatment, Wither or not eucalyptus will prevent them or not I do not know. You should have some slab exposure above the mulch. This helps but does not prevent them. But at least you could see their dirt ways going up the side.
What mulch does do as far as the foundation is concerned is to help the soil maintain moisture. This combined with good drainage helps maintain the foundation stability, especially in expansive clay soils.
I dust around the foundation with diatomaceous earth 3 or 4 times a year. This has gotten rid of roaches and scorpions that at one time were a major problem.I have also read that it controls termits but since I have never had them I cannot atest to this.

Zone 7 ... hmmm... where is that? Termite prevention is dependent upon where you live.

Where I live, as long as the mulch isn't very deep, it's not going to be a haven for insects because it freezes in the winter.

I have used Pine Bark Nuggets, mixed wood chips, shredded leaves, and Lava rock as mulches near my house foundations and have not found any of them to be any more, or less, attractive to the various insects. The only time I have found evidence of termites near the foundation is when I dug up some construction debris the previous owner buried, and in the structural support of a shed the previous owner built too close to the soil level. Inadequate footing, too close to soil with wood easily reached by not only termites but carpenter ants and any number of other wee buggers.

Thanks everyone for the comments. In this case, Zone 7 is Long Island, NY. I still haven't mulched the beds near the foundation. Since the house has had a history of both termites and carpenter ants, I'm considering using an 18"-24" rock or dirt barrier where the bed meets the foundation, and then use mulch for the rest of the bed. From what I can gather, most organic mulches will increase the chance of attracting wood boring insects. I've haven't received a single definitive answer that a particular type of wood was completely safe, or acted as a deterrent. I will investigate both Eucalyptus & Cypress. Thanks again and I'll update this thread if I learn anything interesting.

The only mulch I use in a couple of the foundation beds is a light layer of cedar bark mulch. I do not put the mulch all the way up to the foundation. Parts have no mulch at all. An addition was added to house about 20 years ago and that is all surrounded by 3 feet of crushed stone.

I try to keep all organic debris raked away from the foundation, and have relatively little foundation shrubbery. What is there is cut back away so it is not touching the siding, or it is compact shrubbery (i.e. Viburnum carlesii 'Compactum'). This is to minimize any vegetation that will harbor moisture and pests around the house. I know that foundation plantings are very popular - and often people will plant shrubs and even trees that eventually will overwhelm the house. This makes NO sense to me as far as maintaining the integrity of a structure.

That said, this house needs to be treated for termites, because there have been infestations in the past when the previous owner was likely not so conscientious.

You could spread beneficial nematodes around in your soil. They kill termite larvae.

Deanna

The conditions that attract Carpenter Ants are very different from those that are attractive to termites. Carpenter Ants prefer wet wood and find that no matter where it is. The presence of Carpenter Ants is an indiction of a major problem with your homes structure, a leak allowing water in. Find and fix that and the Carpenter Ants will stop visiting.
Termites feed on dry cellulose, dry wood, although they do neede a moist environment to live in and that is why they have tunnels from the soil up your foundation to your wood framing.
Both might find the relatively cool, moist environment of the mulch attractive but the presence of either in the mulch is not an indication that are in your house.