As of October 1, 2025, the U.S. federal government has entered a shutdown, which is affecting many agencies and services. While this may cause some adjustments in the mortgage process, many homebuyers can continue moving forward with their plans —especially with the right guidance and preparation.
If you’re currently applying for a mortgage, preparing to close on a home, or relying on government-backed loans such as FHA, VA, or USDA, there may be some additional steps or delays. Here’s what you should know to keep your homebuying journey on track.
How Does the Government Shutdown Affect Mortgage Applications and Closings?
The impact of the shutdown depends on the type of loan and the documentation needed:
- Conventional loans: These are typically the least affected, especially if your application is already complete. If you’re still early in the process, your loan originator will be there to guide you every step of the way.
- Government-backed loans (FHA, VA, USDA): Processing may take additional time during the shutdown, depending on staffing and available services.
- Flood insurance requirements: If your property is in a flood zone, the National Flood Insurance Program (NFIP) may temporarily pause new or renewal policies, which could extend the timeline. Private flood insurance may be an alternative to keep things moving.
Can I Still Close on My Home During the Shutdown?
Yes! You can still close on your new home, though timing may vary:
- Conventional loan borrowers: You can move forward smoothly, especially if your paperwork is already complete. If you’re early in the process, your loan originator will provide guidance each step of the way.
- FHA, VA, and USDA loan borrowers: Processing may take a little longer than usual, depending on agency staffing and services.
- Flood insurance delays: NFIP may pause new or renewal policies, which could add extra time for homes in designated flood zones. Private flood insurance may be an option.
- IRS and Social Security verifications: Some services may be temporarily unavailable, so lenders may request alternative documentation if needed.
What to do: Stay in close contact with your loan officer so you know exactly where your file stands and if any next steps are needed. They are ready to support you.
What Should I Know About Flood Insurance and Mortgage Delays During a Shutdown?
If your home requires flood insurance through the NFIP, you may experience a delay in your mortgage approval or closing, as new policies or renewals may not be issued.
- Most lenders require proof of active flood insurance before closing.
- Consider private flood insurance as an alternative to avoid shutdown-related delays.
- Coordinate quickly with your lender and insurance agent to keep your home loan timeline intact.
What if I’m Applying for a USDA, VA, or FHA Loan During the Shutdown?
- USDA loans are more likely to experience pauses, as loan commitments can’t be issued during a shutdown. These are required for USDA loans to close.
- FHA and VA loans may continue, but with slower processing times for income verification and approvals.
- Ask about private flood insurance and possible contract extensions to avoid closing disruptions.
What to do: Contact your lender early, ask about documentation you can complete now, and explore options like private flood insurance or contract extensions if needed.
As a Federal Employee, will the Shutdown Affect My Mortgage Approval?
If you’re a federal employee who is furloughed or experiencing a temporary delay in pay:
- Your lender may need to take extra steps to verify income or employment during the shutdown.
- Temporary changes in income may mean your lender needs to review debt-to-income ratios a little differently.
What to do: Provide your lender with the most recent pay stubs and an employment verification letter, and discuss any additional documentation that may help.
Will Mortgage Rates Change Because of the Government Shutdown?
There is no certain answer, but mortgage rates may fluctuate because of the shutdown:
- Rates could decrease temporarily as investors seek safe assets like U.S. Treasury bonds.
- On the other hand, uncertainty may cause rates to increase due to risk premiums and reduced economic data flow.
What to do: It’s best to stay in touch with your loan officer, who can help you make decisions based on your specific situation.
How Waterstone Mortgage Is Supporting You During the Shutdown
We are actively monitoring the shutdown and are committed to communicating regularly with our customers and business partners to minimize surprises and delays. Our priority is making sure you feel confident moving forward, even during times of uncertainty.
- We’ll keep you informed as the situation evolves.
- We’ll work with you to minimize surprises or delays.
- We’ll continue to guide you with clarity so your homebuying goals stay within reach.
Bottom Line: How to Navigate the Government Shutdown as a Homebuyer
If you are currently purchasing a home or applying for a mortgage, keep these helpful tips in mind:
- Talk to your loan officer early and often.
- Consider private flood insurance if NFIP services are unavailable.
- Build extra time into your closing schedule, especially for government-backed loans.
- If you’re a homeowner affected by the shutdown, contact your loan servicer for assistance options.
The homebuying process may take a little extra patience right now, but with the right preparation and a trusted advisor by your side, you can still move forward with confidence.
If you have any questions about how the shutdown affects your mortgage approval process or home purchase, please reach out to your Waterstone Mortgage loan officer.
