How a Government Shutdown Impacts Homebuyers, Sellers & the Real Estate Market

When you hear “government shutdown,” your first thought might be about politics or federal employees. But what many don’t realize is that a shutdown can also create ripple effects in the housing and mortgage markets. If you’re buying, selling, or refinancing, here’s what you need to know—and how Wits Realty helps keep your goals moving forward.

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What It Means for Mortgage Loans

1. FHA, VA & USDA Loans
These government-backed loans rely on federal staff for processing and approvals. During a shutdown, some of that staffing is reduced, which can lead to delays. If you’re using one of these programs, expect longer timelines.

2. Conventional Loans (Fannie Mae & Freddie Mac)
The good news? Conventional loans keep moving, since they aren’t directly funded by Congress. The only potential slowdown comes from IRS verifications (like pulling tax transcripts), which may be delayed if federal systems are understaffed.

3. Flood Insurance (NFIP)
This is one of the most critical pieces. The National Flood Insurance Program (NFIP) must be reauthorized by Congress. If that doesn’t happen, new flood insurance policies and renewals stop. Since lenders require flood insurance for homes in certain zones, that means closings in those areas could stall.

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What It Means for the Real Estate Market

Closing Timelines
With verifications and government-backed loans slowed, some closings may be pushed back. While this is frustrating, it’s usually a temporary hurdle.

Buyer & Seller Confidence
Uncertainty can make buyers hesitate to write offers or sellers decide to hold off listing. That can reduce activity in the short term.

Mortgage Rates
In past shutdowns, financial markets have shifted toward “safe” investments, which sometimes nudges mortgage rates a little lower. But it’s unpredictable, and rates can move either direction depending on market reaction.

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The Wits Approach

At Wits Realty, we believe challenges are just part of the journey—and we walk alongside you every step of the way. Here’s how we support our clients during times like these:

• Proactive Communication → We’ll let you know right away if your loan or closing could be affected.
• Creative Problem-Solving → If federal verifications are delayed, we’ll work with lenders to find alternative documentation where possible.
• Calm Guidance → The market may get jittery, but we’ll keep your focus on what matters most—your goals and the big picture.

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Bottom Line

A short shutdown usually means small delays. A longer one can have bigger effects, especially for government-backed loans and flood insurance. But the majority of home sales still move forward.

No matter what, Wits Realty is here to navigate the bumps, keep your transaction on track, and help you make confident real estate decisions—even in uncertain times.

Thinking about buying or selling? Let’s connect—we’ll make sure you’re prepared for every step of the process.