The big unknown that will drive almost everything about the impact of the Government shutdown (the first since 2018/9) is how long the shutdown will last.  A few hours or days will have a very different impact than an extended period, say weeks or even months. The longest most recent shutdown was 35 days. The shutdown will primarily affect loans backed by federal agencies like the USDA and, to a lesser extent, the FHA. Conventional loans are mostly unaffected. However,  a prolonged shutdown could create economic uncertainty that affects interest rates and the broader housing market.

USDA loans will face the most significant disruptions during the shutdown. The U.S. Department of Agriculture (USDA) will halt the issuance of all new direct and guaranteed home loans. Scheduled closings for direct loans will be postponed. Closings on guaranteed loans with a pre-existing conditional commitment may proceed, but the lender assumes all risk until the shutdown ends and the guarantee is issued.

FHA loans will continue during a shutdown, but with limited staff and a reduced capacity resulting in slower processing and closing of FHA-insured loans. The longer the shutdown lasts, the more severe the delays become. Some specialized FHA products, like Home Equity Conversion Mortgages (HECMs) and Title I loans, will not be endorsed during the shutdown. Any tasks that require a staff review, such as some condo project approvals, will be suspended.

VA loans will largely remain unaffected due to advance appropriations, and most loan processing continues. The VA will continue to guarantee home loans, allowing lenders to proceed with most applications. Some support functions may be reduced, causing slight delays in appraisals or the issuance of Certificates of Eligibility.