Buying or Selling During the 2025 Government Shutdown: What Could Be Delayed

Yes, you can still buy or sell a home during the 2025 government shutdown, and most Northern Virginia transactions are moving forward. The risks are concentrated in a few places: properties that need a new federal flood insurance policy, loans that depend on IRS or USDA processing, and buyers whose own paychecks come from the federal government or a federal contractor. Here is what I am telling clients as of October 8, 2025, and the steps that keep a contract on schedule.

What has happened so far

• October 1: Federal appropriations lapsed and the government shut down shortly after midnight. Agencies began following their contingency plans.
• First week: Data releases that markets watch, including the September jobs report, were delayed, which adds uncertainty ahead of the Federal Reserve’s late-October meeting.
• October 8: The IRS announced furloughs for about 34,000 employees, roughly half its staff, after using other funding to keep operating during the first days of the shutdown.
• Ongoing: Many federal employees in our region are furloughed, while others are working without pay until funding is restored.

Nobody knows how long this will last. That is why the right approach is to identify which parts of your specific transaction depend on a federal office and build in a cushion.

What could be delayed, item by item

Transaction step	Federal link	Risk level now	What to do
Flood insurance (homes in a mapped flood zone)	NFIP new policies require program authority	High if an NFIP policy is needed	Get quotes from private flood insurers; ask if the seller’s policy can be assumed
Income verification by tax transcript	IRS (Form 4506-C requests)	Moderate	Ask your lender whether it can close with other documentation and verify later
FHA loans	HUD/FHA	Low to moderate	FHA has historically kept endorsing loans with limited staff; confirm with lender
VA loans	Department of Veterans Affairs	Low	VA home loan guaranty work has historically continued; confirm appraisal timing
USDA rural housing loans	USDA Rural Development	High	Expect possible pauses on new guarantees; discuss backup financing
Social Security number verification	SSA	Low to moderate	Lenders may see slower responses; ask early
Employment verification for federal workers	Agency HR / contractors	Varies	Lender may re-verify days before closing; plan for questions
Recording the deed	Arlington, Fairfax, Alexandria, Loudoun, Prince William land records	None (local, not federal)	No change

Flood insurance is the biggest single risk

When Congress lets the National Flood Insurance Program’s authorization lapse, the program generally cannot issue new policies until it is renewed, though existing policies stay in force and claims are paid. Lenders require flood insurance for federally backed mortgages on homes in a FEMA Special Flood Hazard Area, so a buyer who needs a new policy can get stuck. In Northern Virginia, that touches pockets along the Potomac, Four Mile Run, Cameron Run, Difficult Run and other stream valleys. Check any address using FEMA’s maps on FloodSmart.gov and ask your insurance agent about private flood coverage, which many lenders accept.

IRS transcripts and income verification

Many lenders confirm income by requesting IRS tax transcripts. With half of the IRS furloughed starting this week, slower responses are possible. Some lenders can close and verify afterward, others cannot. Ask your loan officer what their investor allows, and get your full tax returns and W-2s ready now. My guide to how to choose a mortgage lender covers the questions to ask about processing.

If you are a federal employee or contractor buyer

This is the question I hear most in Arlington, Fairfax and Prince William County. Lenders typically re-verify employment shortly before closing, and a furlough or contractor stop-work order can complicate that check.

1. Tell your loan officer your status today, not the day before closing.
2. Ask how the lender treats furlough status for employment and income verification, and what documents help (a recent pay stub, an agency letter, a contractor letter).
3. Keep cash reserves intact. Do not move money between accounts without telling your lender.
4. Review your contract’s financing contingency and closing date with me so we know your options if timing slips.
5. Talk with a Virginia real estate attorney if you need advice on contract rights, and with your lender for loan-specific guidance.

Military members on PCS orders should coordinate with their lender and housing office. My guide to buying on PCS orders covers the normal process.

For sellers: keeping your deal together

• Ask your buyer’s lender, through me, whether any step depends on IRS, USDA or NFIP processing.
• If your home is in a flood zone, gather your current flood policy declarations and elevation certificate now.
• Consider a short closing date extension clause rather than letting a contract terminate over a federal delay.
• Price and prep as usual. Local deed recording and county offices are not affected by a federal shutdown.

A worked example: building in a cushion

This is an illustrative timeline, not a real transaction. Suppose a buyer ratifies a contract on October 8 with a 30-day closing and an FHA loan on a home that sits in a flood zone.

Step	Normal timing	Shutdown-aware plan
Flood insurance quote	Week 1	Day 1 to 3: get private and NFIP quotes; confirm what the lender accepts
Appraisal ordered	Week 1	Same, no federal dependency
Tax transcript request	Week 1 to 2	Day 1, plus full returns uploaded as backup
Clear to close	Week 4	Target Week 3 to leave a buffer
Closing	Day 30	Day 30, with a pre-agreed extension option of up to 10 days

The goal is to move every federal touchpoint to the front of the timeline and agree in advance on what happens if one stalls. Use the closing cost estimator to plan cash, since a later rate lock extension can add cost.

Common mistakes during a shutdown

• Waiting to order flood insurance until the week of closing.
• Assuming every loan type is affected equally. Conventional loans usually have the fewest federal dependencies.
• Federal workers hiding a furlough from their lender. That creates bigger problems later.
• Letting a contract expire instead of negotiating a short extension.
• Pausing a home search entirely. Fewer active buyers can mean more room to negotiate.

For context on where rates were heading before the shutdown, see my post on the September 2025 Fed rate cut.

Frequently asked questions

Can you close on a house during a government shutdown?

Yes, most closings proceed because deed recording, title work and most lending are not run by the federal government. Delays tend to involve flood insurance, IRS verifications and USDA loans.

Does the government shutdown affect FHA loans?

FHA has historically continued endorsing single-family loans with reduced staff during shutdowns, so most FHA purchases can close. Confirm with your lender, since processing can be slower.

Can I get flood insurance during the shutdown?

With the NFIP’s authority lapsed, new NFIP policies generally cannot be issued until Congress acts. Private flood insurance is the main alternative, and many lenders accept it.

I’m a furloughed federal employee. Can I still buy a house?

Possibly, but it depends on your lender’s rules for verifying employment and income. Tell your loan officer about your status right away so you can plan the documentation.

Sources

• FloodSmart.gov (NFIP)
• U.S. Department of Housing and Urban Development
• Internal Revenue Service
• U.S. Office of Personnel Management