Does A Government Shutdown Affect Mortgages And The Housing Market?

If you were wondering whether buying a house in 2025 is still hard, even more uncertainty looms in the U.S. with the current government shutdown. As of October 1, government agencies have pressed pause until Congress can reach an agreement on a funding bill. Typically, government shutdowns last no more than a few days. Now may not be the time to lean on precedents for reassurance; a record 34-day shutdown centering around the border wall occurred in President Trump's first term that might make you wary.

U.S. homeowners and buyers may experience a few roadblocks getting mortgages, but for the most part they'll be surmountable. A shutdown typically doesn't affect mortgages much, since homeowners obtain them mainly through private lenders. The federal rate cuts' effect on mortgage rates and the housing market is more notable. For those of you closing on a home sale or re-financing within the next month or less, there may be a slight delay due to the private entities encountering slowdowns with interactions between government agencies.

However, government-run incentives provided by Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the Department of Agriculture (USDA) may encounter a few hiccups. Most single-family FHA and general VA home loans should still be approved amid shutdown. Further, housing analysts haven't experienced a government shutdown halting either of these programs in the past. Since around one quarter of the loans granted in the U.S. are through FHA and the VA, this is reassuring news. However, if you're pursuing a loan for a rural area through the USDA, it appears that none will be issued during a shutdown.

It may put your mind at ease that most mortgage processes should slow only slightly, if at all, while the government is shut down, but there are other possible housing-related consequences to the shutdown that aren't all bad. Constant uncertainty is getting exhausting, but the unknowns related to the shutdown may actually help those seeking new mortgages. Lending percentage rates tend to drop slightly after a shutdown because nervous investors shift their money to more secure options like Treasury bonds. In past government shutdowns, mortgage rates dipped by as much as 0.25%. Combined with the best time of year to buy a house fast-approaching in the next few weeks, there's no reason to put your house hunt on hold unless your targeted bricks and mortar are in a flood zone.

For new insurance policies on homes in flood-prone areas, the FEMA-backed National Flood Insurance Program will be affected. The White House stated that the government can not issue or renew flood insurance during a shutdown, meaning that sales of houses in these areas will halt for the time being. If you happen to live in a flood zone and are tasked with renewing your insurance during the shutdown, cross your fingers that a rainstorm doesn't come your way.