The federal government shutdown is here, and if you are working with buyers or sellers right now, you may be asking the same question I’ve been getting from agents all week: how does this affect my closings?
The good news is that most loans will continue to move forward. However, there are a few programs and processes where you may see delays or temporary pauses. Here is a clear breakdown you can use to stay ahead of client questions and protect your pipeline.
Conventional Loans (Fannie Mae and Freddie Mac)
Conventional loans will keep moving. Lenders have built-in flexibility if certain government verifications like tax transcripts or employment checks are delayed. In other words, these loans are not expected to see major issues.
FHA Loans
FHA loans can still close. The main areas to watch are condo approvals and FHA staff-dependent reviews, which may slow down. For most FHA buyers, the impact will be minimal, but if a condo is involved, it is wise to prepare your clients for possible timing adjustments.
VA Loans
VA loans remain active. Borrowers using VA financing can continue, though VA appraisals and support services may take longer than usual. This is more of a timing consideration than a deal stopper.
USDA Loans
This is the program most directly affected. USDA will not issue new loan guarantees during the shutdown. If a file already has a valid conditional commitment, it can still close, but new USDA approvals will not move forward until the government reopens. Agents working with USDA buyers should set expectations early and prepare for delays.
IRS Tax Transcripts
Borrowers will still sign Form 4506-C, but most loans do not require transcripts before closing. Lenders typically pull these after closing for quality control. For your clients, this means transcripts should not hold up their loan.
Social Security Number Validation
If a loan requires Social Security validation, it must still be cleared before delivery to Fannie Mae or Freddie Mac. Some files may take longer, but most buyers will not notice an issue here.
Flood Insurance (NFIP)
During the shutdown, FEMA cannot issue or renew NFIP flood insurance policies. Existing policies remain active. If your buyer needs a new or renewal policy during this time, they may need to consider private flood insurance. This is especially important for sellers with flood-zone listings and buyers writing new contracts.
Federal Employees and Contractors
Borrowers who are federal employees or contractors can still qualify, but documentation may be harder to obtain if they are furloughed. Lenders may waive verbal verification of employment if it is unavailable, as long as they document their attempts. Flexibility also applies to how recent a paystub needs to be. If the shutdown extends beyond November 3, 2025, reserve requirements will increase to at least two months or as required by DU findings.
What You Can Tell Clients
- Buyers under contract
“Your loan can still move forward. Some processes may run slower, but we have solutions in place to keep things on track.” - Sellers with flood-zone listings
“NFIP renewals cannot be processed during the lapse. We will explore private insurance or timing adjustments to keep your contract intact.” - USDA buyers
“New USDA guarantees are paused until the government reopens. We will prepare the file so it is ready to move the moment the program resumes.”
Bottom Line
Most loans will still close, but it is important to watch USDA loans, flood insurance renewals, and buyers relying on federal employee income. Being proactive with your clients will prevent surprises and help keep contracts moving forward.
If you would like me to review how the shutdown could affect one of your current files, call or text me directly at 832-449-2915. I will continue to track guidance daily and keep you updated so you can focus on your business with confidence.
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