When the Government Shuts Down: What It Means for Your Home Sale or Purchase

Buying or selling a home is stressful enough without federal gridlock adding to the mix. If the government shuts down, some key parts of the home buying process can slow down or stall. Here’s what that actually looks like for buyers and sellers—and how to stay prepared.

What Is a Government Shutdown?

A government shutdown happens when Congress cannot agree on a budget. Non-essential federal agencies close or cut staff until funding is restored. Essential services like mail delivery and Social Security checks continue, but many housing-related functions take a hit.

Which Housing Services Are Affected

Home buying might feel local, but several steps run through federal agencies:

• FHA and VA loans: Backed by the government. Fewer staff can mean slower appraisals and underwriting.

• USDA loans: Often used in rural areas. These usually stop processing completely during a shutdown.

• IRS tax transcripts: Lenders often need these to verify income. Delays can stall loan approval.

• Social Security Administration checks: Sometimes used to verify buyer data. Staffing cuts can slow this down.

• Flood insurance renewals: The National Flood Insurance Program may pause, which can hold up closings in flood-prone areas.

Where Delays Show Up

When federal offices go dark or skeleton-staffed, buyers and sellers can see:

• Slower appraisals for FHA and VA loans

• USDA loans in limbo until funding returns

• Loan underwriting stuck waiting on tax verification

• Title offices waiting on federal lien or record checks

Think of it like traffic: the road isn’t closed, but every lane is moving at half speed.

For Buyers: How to Protect Yourself

If you’re shopping or under contract during a shutdown, plan for detours.

• Build in buffer time for closing dates.

• Ask if a conventional loan is possible. Private loans are less exposed to federal delays.

• Include flexible closing language in your contract.

• Keep contingencies (like financing and appraisal) in place to protect your deposit.

• Stay glued to your lender’s updates—every file moves differently.

Scenario: You’re buying with a VA loan. Underwriting clears, but the appraisal department is backed up. Instead of closing in 30 days, you’re looking at 45. A built-in buffer keeps your earnest money safe.

For Sellers: What to Expect

Shutdowns don’t just affect buyers. Sellers should be ready for:

• Longer timelines to close, especially with FHA, VA, or USDA loans

• Possible requests to extend contracts

• Buyers asking to renegotiate terms if delays cause extra costs

• More back-and-forth communication with agents and lenders

Scenario: Your buyer is approved for a USDA loan, but processing pauses mid-shutdown. You may have to extend the contract or risk starting over with a new buyer.

What Still Works

Not everything freezes when Washington does:

• Conventional loans through banks and credit unions

• Cash deals

• State and local title work, inspections, and appraisals

The real estate gears keep turning, just with fewer federal cogs in the wheel.

Bottom Line

A government shutdown doesn’t mean the housing market stops, but it can create headaches in the process. Buyers should prepare for extra time and keep financing options flexible. Sellers should stay patient and responsive. With clear communication and smart contract planning, you can still cross the finish line—even if Washington stalls out.

Until next week!