With Congress unable to reach a funding agreement by the midnight September 30 deadline, a partial government shutdown took effect. While key services continue to operate, many housing-related programs are running at limited capacity or are temporarily suspended. Both the public and real estate professionals need to understand which parts of the homebuying process may be affected and what alternatives may be available in the meantime.
The National Association of Realtors (NAR) has issued a detailed summary of how various agencies and programs are expected to function during the shutdown. Below is a public-friendly overview of the most relevant impacts.
Key Housing-Related Programs Affected by the Shutdown
Federal Housing Administration (FHA) & HUD Programs. The FHA continues to endorse most new single-family mortgage loans, with some exceptions, including reverse mortgages (HECMs) and Title I loans. However, services that require direct staff involvement, such as certain condominium project approvals, are currently suspended. While the FHA Resource Center remains open to answer questions, it is operating with limited staff, which may result in slower response times. Housing counseling services may continue, provided that funding has already been awarded. New grants and payment requests are on hold. Payments under the Housing Choice Voucher program are continuing under existing contracts, but no new funding approvals are being processed during the shutdown.
National Flood Insurance Program (NFIP). New and renewal flood insurance policies cannot be issued under the NFIP during the shutdown. However, existing policies remain in effect, and claims can still be processed until funding runs out. Buyers who need flood coverage during this period may want to explore private flood insurance as an alternative.
USDA Rural Housing Loans. The U.S. Department of Agriculture has paused the issuance of new direct and guaranteed loans during the shutdown. While some scheduled closings may still proceed, they do so at the lender's own risk, unless the loan guarantee has already been issued. Rental assistance payments may also be delayed if the shutdown continues for more than 30 days.
Veterans Affairs (VA) Loans. The Department of Veterans Affairs is still guaranteeing home loans, which means VA-backed mortgages can move forward. That said, delays are possible due to reduced staffing, particularly in areas such as appraisals, approvals, and certificate of eligibility processing.
Environmental Protection Agency (EPA). Most EPA staff are furloughed, which is affecting regulatory processes, including lead-based paint rule enforcement and wetlands determinations. Any home sale or renovation project that requires EPA review may experience delays.
Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac continue to operate as usual because they do not rely on congressional appropriations. However, some loan processing tasks that depend on external federal agencies, such as employment verification or flood insurance verification, may face slowdowns. Both entities allow some flexibility in closing requirements when federal documentation is temporarily unavailable.
Internal Revenue Service (IRS). While the IRS has not officially released a contingency plan for the current shutdown, previous shutdowns have severely limited its operations. The agency typically halts services such as tax transcript processing, which are often required for mortgage underwriting. This may cause delays in closings where such documentation is needed.
Small Business Administration (SBA). The SBA is not approving new loans during the shutdown, including its commonly used 504 and 7(a) loan programs. However, the agency will continue to close previously approved 504 loans and manage limited servicing and liquidation activities. SBA disaster loans will remain available if needed.
Work Visa and Labor Certification Programs. Visa and labor certification programs, including the H-2B process, are currently suspended, with Department of Labor systems offline during the shutdown. While the EB-5 Investor Program continues thanks to alternate funding, processing times may be extended due to interagency slowdowns. Realtors working with investor clients should anticipate potential delays and watch for updated timelines.
How Buyers, Sellers, and Agents Are Affected. A previous survey on NAR's website, www.NAR.Realtor, found that while 75% of Realtors experienced no major impact during past shutdowns, about 11% saw delays in transactions, often due to buyer hesitation or specific loan program interruptions.
In our own Chattanooga market, we encourage buyers and sellers to speak with their lenders, insurance agents, and Realtors to understand how the shutdown may impact loan timelines, insurance coverage, or federal approvals.
Government shutdowns bring uncertainty, especially when it comes to one of the most important financial decisions a person can make before buying or selling a home. Realtors are committed to helping clients understand their options, adapt when necessary, and move forward with confidence, no matter what the market or moment brings. For ongoing updates on how federal policy impacts real estate, tune into NAR’s Advocacy Scoop podcast on your preferred listening platform, and follow the National Association of Realtors on social media for real-time news and resources. #That'sWhoWeR
Greater Chattanooga REALTORS® is The Voice of Real Estate in Greater Chattanooga. A regional organization with nearly 3,000 members, Greater Chattanooga Realtors is one of some 1,200 local boards and associations of Realtors nationwide that comprise the National Association of Realtors. Greater Chattanooga Realtors service Hamilton and Sequatchie counties in southeast Tennessee, and Catoosa, Dade, and Walker counties in northwest Georgia. For more information, visit www.gcar.net or call 423.698.8001.