What a Government Shutdown Could Mean for Mortgages

Whenever the topic of a government shutdown comes up, the natural question for buyers and homeowners is: “Will this impact my mortgage or closing?” The answer really depends on how long a shutdown lasts. A brief pause may only create minor inconveniences, but the longer it stretches, the more it can disrupt timelines in real estate.

Here are a few areas that may be affected:

Flood Insurance

Homes in flood zones could face challenges since the National Flood Insurance Program isn’t able to issue new policies during a shutdown. Without coverage in place, transactions in those areas can’t close until the program is back up and running.

USDA Loans

USDA programs are one of the first to feel the effects. During a shutdown, the agency can’t issue conditional commitments, which effectively puts USDA closings on hold until operations resume.

Tax Transcripts and Social Security Verification

Many lenders rely on IRS tax transcripts to verify income. These requests typically take a few days, but delays become common during a shutdown. Similarly, one of the systems lenders use to validate Social Security numbers (“wet sign verification”) won’t be available, so alternate methods will be needed—often adding more time.

VA Loans and Appraisals

Veterans and service members using VA loans should be proactive with appraisals. VA appraisers already have a generous timeline for completing reports, and if the VA is slower to assign appraisers, it can back up the process. Ordering as early as possible helps keep things on track.

Economic Data and Mortgage Rates

Another piece people don’t always think about is economic data. Key reports—like the jobs report from the Bureau of Labor Statistics—are crucial for financial markets. Without that data, mortgage rates can become more unpredictable because lenders have less guidance on where the economy is heading.

Bottom Line

A government shutdown doesn’t stop the mortgage industry, but it can introduce extra hurdles. The best way to minimize delays is to plan ahead—order what you can early, and lean on an experienced lender who knows how to navigate these situations.

This isn’t about politics; it’s simply a heads-up so you know what to expect. If you’re buying, selling, or refinancing during a potential shutdown, I’m here to walk you through the details and keep your transaction moving forward.