Housing News

It Should Be Easier to Get a Mortgage Now That the Government Shutdown is Over

The longest government shutdown in U.S. history ended Wednesday evening, which should make it easier for homebuyers and homeowners to secure new loans.

Many government mortgages and housing-related programs had been paused or delayed during the 43-day shutdown. The federal government will now be funded through Jan. 30.

“This agreement brings programs critical to housing back online and is welcome news for Americans whose home purchases and insurance renewals have been delayed or derailed over the past several weeks,” said Shannon McGahn, chief advocacy officer for the National Association of Realtors (NAR), in a statement.

Most mortgage applications were not affected by the shutdown as the majority are guaranteed by Fannie Mae and Freddie Mac. These are government-sponsored enterprises that are not funded by the government itself, so they continued operating as normal during the shutdown.

However, many government loans were impacted by the shutdown and will likely continue to be delayed. Agencies now have to play catch-up on processing applications that stacked up during the last month-and-a-half.

“There is a six-week backlog with many of these programs, so I would expect there to be some additional delays as they work through them,” said McGahn.

Homebuyers should be able to secure USDA and other government loans again

With the government reopened, homebuyers should be able to receive USDA loans again. But they may need to be patient as the U.S. Department of Agriculture works through its backlog. The agency had stopped issuing new mortgages during the shutdown.

The loans are popular with buyers in more rural and suburban areas outside cities because they may be able to purchase homes with no money down.

Buyers should be able to secure new FHA loans for multifamily homes as well. These were paused during the shutdown.

FHA loans for single-family homes were still issued during the shutdown, with some delays due to lower staffing levels affecting approval times.

And older homeowners will be able to get reverse mortgages again. The agency had stopped issuing these during the pandemic.

“The end of a government shutdown initiates a market ‘snap-back’ from delayed closings,” said Realtor.com Senior Economist Anthony Smith. “But a full recovery will be a slower, weeks-long process due to accumulated agency backlogs, cautious consumer behavior, and permanent economic loss.”

Reopening the government should make it easier to obtain flood insurance

Homebuyers and homeowners in need of flood insurance should be able to get new policies and renew existing ones through the National Flood Insurance Program (NFIP). However, they should anticipate potential delays as the NFIP works through pending applications.

Many lenders require flood insurance policies for homes located in flood zones in order for borrowers to be approved for loans.  

Some lenders had suspended their flood insurance requirements during the shutdown. And some buyers and owners had switched to pricier, private insurers.

Only about 3.3% of all homes across the country were insured through the NFIP between 2023 and 2024, according to a ValuePenguin study.

Despite the reopening of the government, a certain level of unease is likely to linger in the housing market until the threat of another shutdown early next year has passed.

“There will still be a significant level of uncertainty for consumers and businesses until the longer-term appropriations are passed,” said Smith.