How the Government Shutdown Could Affect Housing and Real Estate

The federal government shut down on October 1, 2025, after Congress and the White House failed to reach a funding agreement. While the length of the shutdown is uncertain, here’s what buyers, sellers, and homeowners in our market need to know.

The Short vs. Long View

• Short shutdowns (a few days to a week): likely minimal impact beyond slower paperwork and small delays.

• Longer shutdowns (several weeks or more): could mean bigger challenges for mortgages, insurance, and housing programs.

Key Areas to Watch

1. Flood Insurance

• No new flood insurance policies can be issued while the government is closed.

• If you’re buying or selling in a flood zone, closings may be delayed.

• Existing policies remain valid until their expiration date.

2. Mortgages & HUD Programs

• FHA loans: Still moving forward, but expect slower processing and possible closing delays.

• Multifamily projects: Deals already underway may close, but no new commitments are being made.

• Rental assistance programs: Payments on existing contracts continue, but new agreements may be stalled.

3. USDA Rural Housing Loans

• No new USDA loans, grants, or guarantees will be issued during the shutdown.

• If you already have a conditional commitment, you may still close.

• A shutdown longer than two weeks could significantly affect rural buyers.

4. IRS & Income Verification

• Many lenders require the IRS to verify income through Form 4506-T.

• With IRS services paused, mortgage approvals may be delayed.

5. Other Programs That May Be Slowed or Paused

• E-Verify (employment checks): Down during the shutdown.

• SBA loans: No new guarantees will be issued.

• EPA, Army Corps, Fish & Wildlife permits: New permits won’t be processed.

• Economic data: Jobs reports, housing starts, and other key statistics may be delayed.

What This Means for You

• If you’re under contract now: Talk with your lender and title company to confirm any possible delays.

• If you’re planning to buy soon: Be aware of extra time needed for loans, insurance, or permits.

• If you’re selling: Stay in close touch with your agent so buyers aren’t surprised by slowdowns.

✅ Bottom Line: Most housing transactions will still move forward, but some may take longer than usual. The biggest immediate challenge is the pause in flood insurance and possible mortgage verification delays. If the shutdown lasts only a short time, impacts should be limited. If it stretches out, expect bigger disruptions in housing programs and lending.

We’ll keep monitoring updates and share changes that could affect buyers and sellers in our area.