Buying & Selling in the Shutdown: What to Expect
The federal government shutdown is already creating ripple effects in the housing market. While shutdowns are temporary, they can complicate mortgage timelines, insurance requirements, and buyer qualification—especially in Northern Virginia where many households rely on federal employment.
How Buyers Are Affected
Loan processing & verifications
Government-backed loans (FHA/VA/USDA) may see slower turn times due to reduced staffing and paused ancillary services. Lenders can face delays with IRS income transcripts (4506-T) and other federal checks, which can slow approvals. Fannie Mae and Freddie Mac have issued temporary guidance to help loans keep moving, but some friction is still likely.
Flood insurance (NFIP)
If you’re buying in a designated flood zone, the National Flood Insurance Program can’t issue new policies or renewals during a lapse in authorization—common during shutdowns. Buyers may need to secure private flood coverage (e.g., Lloyd’s of London) to close on time.
Government worker income
Furloughed employees typically can’t use that income to qualify during the shutdown; historically, once the government reopens and the employee is reinstated, lenders can count that income again. (Essential employees’ income is generally not interrupted for qualification purposes.) Lenders will follow investor guidance (e.g., Fannie/Freddie) on how to document employment and income during the lapse.
Social Security & disability income
Those benefit payments continue, though some non-critical SSA services can be slower—so qualification using Social Security/disability income shouldn’t be interrupted.
How Sellers Are Affected
Closings could be delayed
Transactions in flood zones or those involving furloughed buyers may need extra time for insurance or income documentation.
Smaller active buyer pool
Buyer confidence can dip during a shutdown, and financing timelines can stretch—leading to longer days on market or more back-and-forth on terms.
Why Arlington Feels It More
With a high concentration of federal employees and contractors, the DC metro area tends to feel shutdown effects more directly—both on buyer readiness and on deal logistics.
What Buyers & Sellers Can Do Now
Buyers
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Get fully pre-approved (not just pre-qualified) and ask your lender how they’re handling IRS/SSA verification workarounds under current Fannie/Freddie guidance.
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If your property requires flood coverage, price a private policy immediately in case NFIP policies can’t be issued.
Sellers
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Build in timeline flexibility and consider contract language acknowledging potential shutdown delays (e.g., insurance or verification-related).
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Prioritize buyers with solid pre-approvals and clear paths on insurance.
Both
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Keep tight communication between agent, lender, and title. Early identification of flood-zone needs, income documentation, and appraisal timing can keep deals on track.
