How the Current Government Shutdown Is (and Isn’t) Affecting Real Estate Transactions
With the federal government currently shut down, many home buyers and sellers are understandably anxious about how this might affect real estate transactions already in progress—or those about to begin.
The truth? Most parts of your deal will likely move forward smoothly, while others could face slowdowns or temporary complications depending on the loan type and required federal services.
Here’s a clear look at what’s happening now and how it may or may not impact your current or upcoming home purchase or sale.
Why You Shouldn’t Worry Too Much
1. Private Sector Services Are Still Operating Normally
The majority of professionals involved in your transaction—realtors, mortgage brokers, appraisers, title companies, inspectors, escrow officers—are not federal employees. These services continue uninterrupted during a government shutdown.
2. Conventional Loans Are Mostly Unaffected
If you’re using a conventional loan (backed by Fannie Mae or Freddie Mac), the shutdown likely won’t impact your closing. These agencies are funded through fees rather than federal appropriations and remain operational.
3. Local Government Offices Are Open
Permits, zoning, occupancy certificates, and deed recordings are handled at the city or county level and are generally unaffected by federal shutdowns.
Where You Might See Delays or Issues
1. FHA and VA Loan Processing May Slow Down
While these agencies aren’t completely closed, they are operating with reduced staff. FHA loans may still be endorsed, but slower processing is possible. VA loans can still close, but lenders may face delays with certificate of eligibility processing or appraisal reviews.
2. IRS Income Verification Is Likely Delayed
Many lenders require income verification using IRS Form 4506-C to confirm a buyer’s tax return data. During a shutdown, the IRS operates on a limited basis—so if this verification is required, it could delay underwriting and closing timelines.
3. Social Security Number Verifications May Be Affected
Some lenders verify Social Security numbers through the Social Security Administration (SSA). Like the IRS, the SSA may have limited operations during the shutdown, which can cause minor delays in borrower identity verification.
4. Flood Insurance Could Be a Problem
One area that’s often overlooked is flood insurance. If you’re buying a home in a federally designated flood zone, you may be required to obtain coverage through the National Flood Insurance Program (NFIP)—which is a federal program. During a government shutdown, the NFIP may be unable to issue new flood insurance policies or make policy changes, which can directly delay closings on homes in flood-prone areas.
Additionally, flood zone certifications or updates from FEMA might not be available in a timely manner. If your lender or insurer requires this documentation, it could hold things up.
What You Can Do Right Now
Talk to your lender ASAP: Ask whether your loan requires federal verifications or flood insurance.
If you're in a flood zone, act quickly to secure insurance—if you haven't already.
Stay flexible with contract dates and closing timelines to allow for potential delays.
Lean on your agent: A knowledgeable real estate agent can help anticipate problems and keep your transaction moving as efficiently as possible.
Final Thoughts
Yes, a government shutdown can introduce a few complications to the real estate process—but it doesn’t mean your transaction is doomed. In most cases, deals still close just fine. The key is knowing where the potential slowdowns are and planning ahead where you can.
That’s why having an experienced real estate professional on your side is more important than ever. From understanding how federal disruptions can impact lending and insurance, to navigating delays with confidence and calm, I help my clients stay ahead of potential issues—so nothing catches them off guard. Whether you're planning to buy or sell next month or next year, I’ll make sure you're prepared for anything, shutdown or not.
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