Government Shutdown 2025: What DMV Homebuyers & Homeowners Need to Know

by Charles C. Heyward, Jr.

Today (October 1, 2025) the federal government shut down after Congress failed to pass a funding bill. Essential services continue, but several housing-related programs are already constrained.

Here’s a clear, practical guide for buyers, sellers, homeowners, and builders across the Washington DC–Maryland–Virginia (DMV) region. (Reuters)

What Is a Government Shutdown?

A shutdown happens when Congress doesn’t pass a budget or temporary funding to keep agencies open. Many employees are furloughed, and non-essential services pause until funding resumes. Duration is uncertain—days to weeks—so planning ahead is smart. (Congress.gov)

FHA Loans: Operating, With Friction at the Edges

FHA’s core systems generally remain available, so new endorsements can continue, but work that needs staff review (e.g., certain manual underwrites or case-by-case escalations) may move slower. Recent FHA policy updates to servicing and loss-mitigation remain in effect. Stay close to your loan officer for timing. (HUD.gov)

DMV example: A first-time buyer in Prince George’s County using 3.5% down FHA may still close, but if the file needs a manual underwrite (borderline ratios or limited credit), underwriting review could add a few extra days.

VA Loans: Mostly Business as Usual—Plan for Minor Delays

VA indicates the vast majority of staff continue working and benefits/services remain available, so VA purchase and refi pipelines keep moving. Still, allow extra time for appraisals or complex approvals. (U.S. Department of Veterans Affairs)

DMV example: An active-duty service member buying in Woodbridge, VA with a VA loan should expect processing to continue; build in a little buffer for appraisal turn times.

USDA Loans: Expect the Heaviest Impact

During previous shutdowns, USDA Rural Development has paused most single-family loan guarantees until funding resumes. Ongoing items like construction draws or claims sometimes continue with leadership approval, but new approvals generally wait. Talk with your lender about backup plans or a contract extension. (USDA)

DMV example: A buyer purchasing in Nokesville (Prince William County) or western Loudoun using a USDA guarantee may need to push settlement or consider temporary conventional financing if eligible.

Conventional Loans (Fannie Mae & Freddie Mac): Largely Stable

Fannie and Freddie are GSEs regulated by FHFA and don’t rely on annual appropriations, so they typically continue purchasing/guaranteeing loans. However, if they need third-party verifications from shuttered or slowed agencies (IRS/SSA), some files can still be delayed. (Arbor Realty)

DMV example: A conventional condo purchase in Arlington can proceed, but if the borrower’s tax transcript must be pulled mid-process, allow extra time.

Flood Insurance (NFIP): Potential Closing Roadblock

NFIP’s authorization expired Sept. 30. While existing policies remain valid, new policies and renewals can’t be issued during the lapse. If your property is in a Special Flood Hazard Area, most lenders require flood coverage before closing—transactions may pause until reauthorization. (FEMA)

DMV example: A rowhome near the Anacostia River or a townhouse by the Potomac floodplain in Old Town Alexandria may not close until an NFIP policy can be bound again.

Furloughs & Income Verification

If you’re a federal employee or contractor facing furlough, lenders must re-verify employment and income before closing. The GSEs have historically provided limited flexibility (e.g., VOE after closing but before loan delivery), yet eligibility is case-by-case. Communicate any income changes immediately. (Fannie Mae)

DMV example: A furloughed analyst working in L’Enfant Plaza with a planned settlement in Silver Spring may need a revised approval or updated reserves; proactive documentation can save the deal.

Builders & New Construction

Builders may encounter more delayed closings where buyers use FHA/USDA or need NFIP policies. Proactive coordination with lenders and title can keep timelines realistic and limit re-scheduling costs. (HousingWire)

Quick Take

FHA & VA lending keeps operating, though some tasks that require human review may slow. VA says 97% of employees continue working. (Housing Assistance Council)
USDA Single-Family housing programs typically pause new guarantees during shutdowns; expect delays. (USDA)
Fannie Mae/Freddie Mac (conventional loans) are not funded by annual appropriations and generally keep buying/guaranteeing loans; minor knock-on delays are still possible.
The National Flood Insurance Program (NFIP) authorization expired at 11:59 p.m. Sept. 30, 2025. Existing policies remain in force, but new policies/renewals can’t be issued until Congress reauthorizes—this can delay closings in flood zones. (FEMA)
IRS/SSA verifications (e.g., 4506-C tax transcripts, SSA-89 SSN checks) may see service variability; lenders often adjust processes, but some files may slow. (Journal of Accountancy)

What You Can Do Now

Talk to your loan officer early. Ask how the shutdown affects your specific program and timeline.
Pad your contract dates. Add a contingency window—especially for FHA/VA/USDA or if NFIP applies. (USDA)
Confirm verifications. Check whether IRS 4506-C transcripts and SSA-89 SSN checks are back, pending, or delayed for your file. (Journal of Accountancy)
If your income changes, tell us fast. We’ll advise on re-approval paths, reserves, or program switches. (Fannie Mae)
Check flood insurance requirements early. If your property needs NFIP coverage, make a plan with your insurance agent and title company. (FEMA)

FAQs

Can I still close during the shutdown?
Usually yes. Conventional and VA pipelines generally continue; FHA keeps endorsing; USDA may pause new guarantees; NFIP lapses can block flood-zone closings.

Are FHA loans affected?
Core operations continue, but tasks needing staff review can slow. Stay flexible on timing.

What about flood insurance?
Existing policies stay valid; new/renewal NFIP policies cannot be issued during the lapse, which can delay settlements in flood zones.

Will IRS or SSA verifications delay my loan?
They can. Guidance this year indicated IRS could keep operating at least initially during lapses, but practical slowdowns are common; lenders often adjust procedures consistent with GSE policy.

Local DMV Scenarios (Fast Examples)

DC rowhome (100-year floodplain): Ready to close, but NFIP lapse stops new policy binding → closing delayed until reauthorization.
Upper Marlboro townhouse (FHA, manual underwrite): File progresses, but additional human review adds a few days.
Nokesville single-family (USDA): Appraisal complete, but guarantee issuance paused → seller addendum extends closing.
Alexandria condo (Conventional): Cleared to close; IRS transcript pulls lag → lender leverages GSE flexibilities, but delivery conditions apply—expect a minor delay. (National Association of REALTORS®)

Disclosures & Footnotes

This material is for informational purposes only, not legal, tax, or financial advice. Eligibility and timelines vary by borrower, property, and program. Not all applicants will qualify. Program availability and guidance may change as agencies update their contingency plans and as Congress acts (e.g., to reauthorize NFIP). (FEMA)

1st Step Financial Services is not responsible for third-party websites referenced here. This is an advertisement.

Sources for Today’s Updates

Shutdown confirmation & scope: Reuters (Oct. 1, 2025). (Reuters)
VA operations during shutdown: VA contingency planning page. (U.S. Department of Veterans Affairs)
USDA lapse-in-funding plans: USDA shutdown plans hub. (USDA)
NFIP expiration (Sept. 30, 2025) & effects: FEMA NFIP reauthorization page; AP/Insurance Journal coverage. (FEMA)
Fannie/Freddie continuity: Arbor (GSE structure) and NAR guidance for REALTORS®. (Arbor Realty)
IRS/SSA verification dynamics: Journal of Accountancy (IRS staffing note), Kiplinger explainer; historical GSE flexibility on VOE/SSA-89. (Journal of Accountancy)