How does a government shutdown impact mortgages?

Originally published: September 28, 2023

Last updated: October 1, 2025

The United States' federal government has entered a shutdown as of October 1, 2025. Please read on for information as to how this impacts new and existing mortgages. This article will continue to be updated as we have more information.

The government gets funded with a combination of American taxpayer dollars and government debt. Our elected representatives must pass a budget detailing how the government funds are to be spent. If there’s no agreement in place by the deadline, a federal government shutdown takes place.

As Congress comes up on its annual deadline, it’s reasonable for people to wonder about what a government shutdown would mean for all kinds of different concerns. There’s a lot of great reporting out there, but we want to focus on the impact of a government shutdown on mortgages, whether they be new or existing.

What is a government shutdown?

A government shutdown involves the federal government ceasing operations that are deemed nonessential. Although it’s called a “shutdown,” there is flexibility for the continuation of functions such as defense, veterans benefits and Social Security.

The government fiscal year runs from October 1 – September 30 of the following year. Members can also agree on short-term measures to fund the government for some time while they work out the year’s final budget.

If Congress doesn’t pass appropriations prior to the current deadline, a government shutdown can result. 

What does a government shutdown mean for mortgages?

The impact of a government shutdown on your mortgage is going to vary based on whether you’re looking to finance a new home, refinance your current one or make payments on an existing mortgage.

The impact of a government shutdown on new mortgages

If you’re trying to originate a new mortgage, in most cases, as of this writing, you shouldn’t see any problems. That could change the longer a shutdown goes on, so be sure to speak with a Home Loan Expert about the situation if you have any questions. There are a few areas, however, in which the shutdown could come into play.

The Department of Housing and Urban Development (HUD) will continue to process FHA loans. The Department of Veterans Affairs (VA) will also continue its loan origination role as of the latest update. Fannie Mae and Freddie Mac are government-sponsored entities, but they’re ultimately separate from the federal government, so operations should continue as normal. However, there may be some delays.

The first issue you may run into involves getting documentation from the government that you may need to qualify. The IRS will maintain full operations for the first 5 business days of any shutdown, based on its contingency plan. After that, the services provided are based on what's deemed essential.

Thankfully, the IRS has an automated system for getting tax transcripts that doesn’t involve human intervention. Obtaining payoff letters for federal tax liens on the other hand, may face delays.

If you work for the federal government, verifying employment could be challenging depending on the contingency plan for your agency.

Another big impact is flood insurance. If you live within a Special Flood Hazard Area starting with the letter A or V as designated by the Federal Emergency Management Agency (FEMA), your lender, like Rocket Mortgage^®, may require you to carry flood insurance.

When a private provider is more expensive or unavailable, the National Flood Insurance Program (NFIP) is often a resource. While people with current policies will be covered, new policies won’t be issued.

If you have a current policy dated prior to the government shutdown through NFIP and you’re closing on a refinance, Rocket Mortgage can close the loan as long as we see the declarations page outlining your coverage.

It’s important to note that many government workers are still working during this period with the promise of backpay when the shutdown is over. Because of this, for qualification purposes, Rocket Mortgage still counts you as maintaining your employment during the shutdown Other lenders may have different policies.

If you receive income from government-funded programs like Social Security or VA benefits, those checks will continue to come.

 

The impact of a government shutdown on existing mortgages

With the temporary cessation of funding across various parts of the government, federal employees could have trouble making their mortgage payments. We would encourage you to speak with your servicer as soon as possible if you think you’re going to run into problems.

Clients who are impacted by the federal government shutdown requesting assistance may be offered an initial 3-month forbearance, which is a pause in mortgage payments. During a forbearance, late payment fees are waived and there is no minimum payment.

If you are a federal government employee, you would pay back any past-due payments when government funding for your agency or department resumes. Paying whatever you can each month will lessen what you owe when the forbearance ends.

The bottom line

A government shutdown involves the suspension of funding for, and the temporary halt of, certain federal government activities deemed nonessential. If you’re trying to get a mortgage, the process at the moment should be normal, with delays possible. However, there could be issues getting certain required documentation or flood insurance.

In terms of income, federal employees still qualify because the expectation is that you’re going to be paid at the end of the shutdown if you’re working through it. Clients who need relief options should contact their servicer to discuss available options.

If you’re ready to move forward with a new mortgage, we can still help. Apply online. Rocket Mortgage clients who have been impacted and are having trouble making payments can reach out by signing into their Rocket Account and navigating to Help > Payment assistance under the Mortgage tab.