Whenever talk of a government shutdown makes the news, homeowners and homebuyers often worry: Will this impact my mortgage or my ability to buy a home? The good news is that in most cases, mortgage programs and closings continue with little disruption. However, there are a few specific areas where borrowers could see temporary delays or added requirements.
Loan Programs Continue as Usual
The majority of loan programs, including Conventional (Fannie Mae & Freddie Mac), FHA, and VA loans, remain available and can close as usual during a shutdown. That means buyers can still move forward with their home purchase or refinance.
The main exceptions:
- Certain VA loans that require prior approval from a VA Regional Center may be delayed since those centers may not be staffed.
- USDA loans requiring manual underwriting or final review at USDA centers may be delayed.
Services That May See Minor Disruptions
FHA Loans: FHA systems, such as case number assignment and appraisal logging, remain available. However, some background check systems (like CAIVRS) may not update in real time.
VA Loans: Most VA systems, like the VA Portal, remain operational.
USDA Loans: USDA may issue conditional commitments, but final guarantees could be delayed until after the shutdown.
Flood Insurance: If the National Flood Insurance Program (NFIP) lapses, new or renewed NFIP flood policies may not be available. In such cases, private flood insurance can often be used as an alternative.
IRS Verifications
Mortgage lenders may occasionally require IRS tax transcripts to verify income. If IRS services are impacted, lenders can often proceed with alternatives (such as proof of e-filing) and collect the official transcripts later once operations resume. This typically does not stop a closing, but it can add some extra paperwork.
Borrowers Who Work for the Government
If you are a federal employee, military service member, USPS worker, or civil service employee, you may wonder how a shutdown affects you directly. Lenders normally confirm your employment before closing. If that is not possible due to the shutdown, Fannie Mae and Freddie Mac allow lenders to document the attempt and proceed. Even if your pay is temporarily interrupted, lenders can use your pre-shutdown income to qualify you for a loan. For military borrowers, a Leave and Earnings Statement can also be used. For extended shutdowns, additional financial reserves such as two months of savings may be required.
Bottom Line
For most homebuyers, a government shutdown will not prevent a mortgage loan from closing. While certain niche loan types and services may experience delays, lenders and investors have contingency plans in place to ensure loans continue to move forward. If you are in the process of buying or refinancing a home, the key takeaway is this: mortgages are still closing even during a shutdown. Some steps may take longer or require extra documentation, but the path to homeownership remains open.