How the Government Shutdown May Affect Mortgages

Even with the ongoing government shutdown, our Atlantic Bay team is here to help you navigate your homebuying journey and answer any questions along the way. 

While federal furloughs (temporary unpaid leave for government employees) and staffing shortages are causing some loan delays, agencies and lenders are adapting quickly to keep things moving. Here’s what we know right now: 

How Different Loan Types are Affected 

Each loan program relies on different federal agencies, so impact varies. Most lending continues, though some programs may move a little slower than usual. Here’s a quick snapshot of what’s happening across the most common loan types: 

• Conventional Loans (Fannie Mae and Freddie Mac): These are moving forward as usual, with little to no disruption. 

• FHA loans (Federal Housing Administration): Still processing, though you might see minor delays. 

• USDA Loans (U.S. Department of Agriculture): Applications for new loans are largely paused. However, if a borrower already received a Conditional Commitment, the loan can still close. 

• VA loans (U.S. Department of Veterans Affairs): Continuing to close, but at a slower pace than usual. 

Flood Insurance and Closings 

Closings that require flood insurance through the National Flood Insurance Program (NFIP) are temporarily on hold while the program’s funding is paused. However, there is some good news. 

Buyers can often use private flood insurance instead, and Fannie Mae and Freddie Mac will accept proof that an NFIP application is in progress. 

What About Borrowers Affected by the Shutdown? 

If you have been furloughed, mortgage approval may still be possible. We’ll review employment history, income before the furlough, credit, and any documentation showing a return-to-work date. Every situation is unique, and we’ll work together on the best plan forward. 

The Shutdown and Interest Rates 

Historically speaking, government shutdowns have led to mixed results for mortgage rates. 

Sometimes they dip slightly, other times they hold steady or rise. So far, rates have remained relatively stable, but longer periods of uncertainty around federal finances could cause fluctuations in the weeks ahead.  

Staying Informed and Supported 

The Atlantic Bay team is continuing to monitor updates in real time and working closely with our industry relationships, including the Mortgage Bankers Association (MBA), to help reduce any disruption. 

If you have questions about how the shutdown might affect your loan, or if you just want to talk through your options, reach out anytime. Our team is here to guide you, answer your questions, and lend peace of mind through every step of your home journey.