10/03/2025
I've had a few people ask me how the federal government shutdown will effect then as a buyer or seller.
Lets take a look:
1. Mortgage Processing & Loan Approvals
FHA, VA, and USDA loans: These depend on government staff. In a shutdown, processing slows or halts since fewer employees are available. That means delays in getting approvals.
Conventional loans (Fannie Mae/Freddie Mac): These usually keep running, but lenders often need IRS income verifications (Form 4506-T) or Social Security number checks. If those services are paused, buyers can face bottlenecks.
Impact: Buyers may struggle to close on time; sellers may face delayed settlements.
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2. Interest Rates & Market Uncertainty
Markets often react to shutdowns with volatility. If investors seek “safe” assets like Treasury bonds, mortgage rates could actually dip slightly.
But prolonged shutdowns can also shake confidence, leading to higher rates if government creditworthiness is questioned.
Impact: Buyers could see more favorable rates short term, but uncertainty makes locking a rate important.
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3. Government & Federal Employee Buyers
Hundreds of thousands of federal workers may be furloughed or go without pay temporarily.
That means:
They may pause buying homes due to financial uncertainty.
If they’re already under contract, lenders may re-check employment/income status before closing, causing deals to stall.
Impact: Reduced buyer demand, especially in areas with large federal workforces (e.g., D.C., Maryland, Virginia).
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4. IRS, Flood Insurance & Other Verifications
IRS transcripts: Needed for income verification on many loans. Shutdowns can delay this.
National Flood Insurance Program (NFIP): If it’s not renewed during a shutdown, buyers in flood zones might not be able to close because they can’t obtain required flood insurance.
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5. Confidence & Timing
Sellers may get nervous if deals are dragging out.
Buyers might wait for stability before making big financial decisions.
In hot markets, shutdown delays can make deals fall through if timelines expire.
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Summary:
Buyers may face delays in mortgage approval, difficulty securing flood insurance, and uncertainty about rates.
Sellers may see slower transactions, more deals falling through, and reduced buyer demand (especially from federal employees).
