How the Government Shutdown Could Disrupt Your Home Financing & Closing

by Jessica J Baldovinos

🔒 How the Government Shutdown Could Disrupt Your Home Financing & Closing:

The federal government officially shut down on October 1, 2025, and its ripple effects are already being felt across many sectors — including real estate. While many transactions will still move forward, those relying on government-backed mortgage programs (FHA, VA, USDA) or requiring flood insurance may face delays, added risk, or last-minute hurdles.

As your REALTOR®, I want you to know what to watch for, what to do differently now, and why having an experienced negotiator in your corner could save (or protect) you thousands.

🏛 What’s Changing (and What’s Likely to Be Impacted)

Here’s a breakdown of how the shutdown is affecting FHA, VA, and USDA financing, plus related services like flood insurance:

Program / Service	What’s Happening Now	Key Risks / Delays	What You Should Do
FHA (Federal Housing Administration)	FHA programs are still open, but staffing is reduced, and some closings may be delayed or halted. Trust Lending+3FHA.com+3First Heritage Mortgage+3	Appraisal reviews, endorsements, and final processing may slow. Some files may stall if they require federal agency actions.	Get your documentation in early. Work with your lender to monitor for bottlenecks. Don’t rely on tight deadlines.
VA (Veterans Affairs / VA-guaranteed loans)	VA loan guarantees generally continue, since the VA guarantee function is not fully shuttered. VA Loan Network+2National Military Family Association+2	Some steps like COE (Certificate of Eligibility), appraisal review, or verifications may take extra time if agency systems are constrained. VA Loan Network+2First Heritage Mortgage+2	Request your COE early, coordinate with your agent so you hit deadlines with buffer time, and plan for possible extensions.
USDA / Rural Development	This is arguably the hardest hit. New USDA loan guarantees or conditional approvals are largely paused until the shutdown ends. Housing Assistance Council+4National Association of Home Builders+4The MortgagePoint -+4	If you don’t already have a valid commitment, your closing could stall indefinitely. Some closings with existing commitments may proceed, but with extra risk. VA Loan Network+2National Association of Home Builders+2	If you’re using USDA financing, stay in constant touch with your lender and agent. Be prepared to shift to alternate financing if the shutdown drags on.
Flood Insurance (NFIP / FEMA)	The National Flood Insurance Program (NFIP) is affected: new policies and renewals may be suspended or delayed during the shutdown. National Association of Realtors+3First Heritage Mortgage+3CBS News+3	For properties in flood zones, a lack of valid flood insurance can stop a closing cold — many lenders require it for government-backed loans.	Explore private flood insurance as a backup. Ask your insurer and your agent what contingency language to include in your contract to cover this possibility.
Income Verification / IRS / Tax Transcripts	IRS and federal agencies handling verifications may scale back operations, slowing down income verification or tax transcript requests. Investopedia+2Mortgage Professional America+2	Delayed or missing tax transcripts could block underwriting or push back “cleared to close.”	Be proactive — supply alternate documentation (W-2s, pay stubs, etc.) and work with your lender to stay ahead of verification needs.

⚠️ Real-World Effects & Reported Impacts

REALTORS® have reported that about 5% of contract terminations since the shutdown began are directly tied to federal loan issues. Home Ownership Matters
In flood-prone regions, transaction volume is expected to take a hit because NFIP suspensions threaten closings. Reuters+2First Heritage Mortgage+2
Some FHA-backed loan closings may be paused or delayed, depending on staffing and how far along the file is. FHA.com+2First Heritage Mortgage+2
USDA direct or guaranteed loans that haven’t yet reached a conditional commitment stage are particularly vulnerable to being put on hold. VA Loan Network+3Housing Assistance Council+3National Association of Home Builders+3

✅ What You Can Do to Protect Your Transaction

Here’s how to be proactive and shield your deal from shutdown-driven delays:

Strengthen your contract with buffer language
Ask your REALTOR® to include contingency and extension clauses explicitly acknowledging possible delays from government shutdowns — giving you legal breathing room.
Submit your documentation ASAP
The more complete your loan file is early (income docs, employment verifications, COE, tax transcripts), the less likely you’ll get caught by delays in agency processing.
Lock your interest rate with cushion time
Work with your lender to ensure your rate lock spans beyond your anticipated closing date — accounting for possible delay days.
Explore alternate loan backup plans
If you were depending on USDA or FHA, have a fallback plan (e.g. conventional, VA if eligible, or bridging options) ready in case the primary path stalls.
Include flood insurance contingencies
If you’re in or near a flood zone, require that flood coverage be obtained (or acceptable alternate) before closing, or assert the right to back out or renegotiate if it’s delayed.
Stay in constant communication
Lean on your lender, title company, and especially your REALTOR® to manage every deadline, push for resolution, and catch issues early — not at the 11th hour.

🤝 Why You Can’t Go Wrong Having a Trusted Negotiator (REALTOR®) on Your Side

In a normal market, savvy negotiation matters. In a disrupted market like this, it can make or break your deal.

I understand the newest policy shifts, government contingencies, and contract language needed to protect you.
I can preempt and resolve issues (like flood insurance or conditional approvals) before they derail your closing.
I’ll coordinate with your lender and title team to spot red flags early and keep the momentum moving.
In tight situations (e.g. delayed appraisals or verifications), I can negotiate extensions or concessions that preserve your position.
Most importantly: I’m on your side, not the other party’s. When tension or uncertainty arises, I advocate for your best outcome — not theirs.

If you’re in the process of buying or selling and the government shutdown is making you anxious, I’d be glad to walk you through your contract, build shutdown-safe protections into your deal, and give you peace of mind.

📅 Book a Strategy Call
📱 Or call/text me: (336) 567-5843

Let’s make sure your closing doesn’t stall — we’ll build it smart from the start.