If you’re in the middle of buying a home, the current government shutdown might sound like a nightmare waiting to happen. But here’s the truth: for most borrowers, it’s more of a speed bump than a roadblock.
Lenders across the country are still issuing mortgages, even as parts of the federal government hit “pause.” That said, buyers relying on government-backed loans—like FHA, VA, or USDA—may experience some bureaucratic hiccups before they can reach the closing table.
“For most people, it’s a minor delay, not a deal-breaker,” said housing analysts who’ve seen this before. “But if you’re closing soon, expect a few extra days added to your timeline.”
Private Mortgages Keep Moving
The majority of US mortgages come from private lenders such as banks and credit unions. These conventional loans don’t depend directly on federal operations, which means they’ll continue to move through underwriting and approval as normal.
However, even private loans sometimes touch a federal process here and there—such as income verification through the IRS or flood insurance checks through FEMA. If those offices are short-staffed or closed, it can cause small—but annoying—delays.
Borrowers Using FHA, VA, or USDA Loans Could See Delays
Buyers using federal programs will feel the impact more than conventional borrowers. Here’s how the shutdown could affect different types of government-backed mortgages:
- FHA loans: The Federal Housing Administration will still process most loans, but expect slower turnarounds if staff are furloughed or systems go down temporarily.
- VA loans: The Department of Veterans Affairs plans to keep guaranteeing loans for veterans, though backlogs could build up.
- USDA loans: Rural buyers may face the most disruption, since the Department of Agriculture typically halts new mortgage approvals during a shutdown. Scheduled closings for direct loans might also be pushed back until government funding resumes.
Together, these programs make up roughly a quarter of all US mortgages. So while the overall housing market will keep moving, that’s still a lot of buyers stuck in the waiting game.
Fannie Mae and Freddie Mac Still Function... Mostly
Good news for most borrowers: Fannie Mae and Freddie Mac—the two giants that purchase and guarantee the majority of American home loans—don’t depend on Congress for funding. They’ve weathered past shutdowns with minimal disruption.
Still, they occasionally rely on other federal systems. For example, they can’t finalize certain verifications if the IRS isn’t processing income transcripts. It’s like trying to bake cookies when the oven’s fine—but the power’s out.
Flood Insurance Could Be a Snag
If you’re buying a home in a flood-prone area (and South Jersey has plenty of them), the biggest headache might be flood insurance.
Federal law requires borrowers using federally backed loans to carry flood coverage through the National Flood Insurance Program (NFIP)—run by FEMA. The problem? That program loses authorization to issue or renew policies when the government shuts down.
Translation: if you need new flood insurance to close, your deal might stall until Washington gets its act together.
Private flood insurance may be an option in some cases, but lenders don’t always accept it. Check with your lender now instead of finding out the day before closing that you’re stuck in limbo.
What Buyers Should Do Right Now
If you’re under contract—or even thinking of making an offer—here’s how to keep your purchase on track:
- Ask your lender directly: “Will this shutdown delay my loan type?”
- Build in buffer time: Consider negotiating an extra week or two in your closing timeline.
- Verify your flood zone: If your property needs flood insurance, find out whether private coverage could be accepted if NFIP is unavailable.
- Stay in touch: Keep your lender, agent, and title company looped in on any updates from federal programs.
The Bottom Line
A government shutdown might throw a few curveballs, but it’s not the end of your homebuying journey. Most conventional loans will keep humming along, and even borrowers with FHA or VA loans usually face delays—not denials.
The key is communication: talk early and often with your lender and your real estate agent so you’re ready to pivot if something stalls. The mortgage process is already complex enough—don’t let Washington’s drama steal your closing-day joy.
