How a Government Shutdown Actually Impacts Buying and Selling a Home

And What Still Moves Forward—Even When Washington Doesn’t

Every time a government shutdown makes the news, I get the same questions from buyers and sellers:

“Should we pause?”
“Will this delay our closing?”
“Is it smarter to wait this out?”

The headlines make it sound like everything grinds to a halt—but real estate is more nuanced than that. The truth is, a government shutdown does not stop the housing market, but it can affect certain parts of a transaction depending on the loan type, timing, and how prepared your team is.

Here’s what actually matters in this shutdown, what doesn’t, and how smart buyers and sellers navigate it without unnecessary stress.

First: What a Government Shutdown Is (and Isn’t)

A government shutdown happens when Congress fails to pass funding legislation, causing non-essential federal operations to pause. Essential services continue. Many federal employees are furloughed or work without pay until funding is restored.

What this means for real estate:

• Private markets keep functioning

• Most real estate professionals are not federal employees

• Closings don’t automatically stop

The impact depends on which parts of your transaction rely on federal agencies.

What Parts of a Real Estate Transaction Can Be Affected

1. Government-Backed Loans (FHA, VA, USDA)

Loans backed by federal programs—like Federal Housing Administration (FHA), Department of Veterans Affairs(VA), and **USDA Rural Development loans—are the most sensitive during a shutdown.

What can happen:

• Loan processing may continue, but with reduced staffing

• Certain approvals can take longer

• Appraisal reviews or final sign-offs may slow

Important nuance:
Most lenders are private institutions, not government offices. Many steps still move forward—especially if the loan is already well underway.

2. IRS Income Verification Delays

Some lenders require IRS transcripts to verify income. During a shutdown:

• IRS operations are often limited

• Transcript requests can be delayed

This doesn’t stop all transactions—but it can affect:

• Self-employed buyers

• Buyers with complex income structures

Experienced lenders often plan ahead or adjust documentation requirements when this risk is known.

3. Flood Insurance & Certain Regulatory Reviews

Flood insurance updates or FEMA-related confirmations can slow during a shutdown. This is more common in high-risk flood zones and less common in most Denver-area transactions—but it’s still part of the broader picture.

What Usually Continues Without Issue

This is the part many people don’t hear enough.

Conventional Loans

Most conventional mortgages (not government-backed) move forward normally because they’re handled entirely by private lenders and investors.

Cash Transactions

Cash deals are largely unaffected by a government shutdown.

Showings, Offers, Negotiations

Homes are still listed, toured, negotiated, and put under contract. Buyer behavior may shift emotionally—but the mechanics continue.

Title Companies & Closings

Title companies, escrow services, and real estate brokerages are private businesses. Closings continue unless delayed by a specific loan-related issue.

Should Buyers Pause During a Government Shutdown?

For most buyers, the answer is no—but be strategic.

A shutdown can actually create:

• Less competition from hesitant buyers

• More negotiating leverage

• Increased seller flexibility on concessions or timelines

What matters more than the shutdown itself:

• Your loan type

• Your lender’s experience

• Your agent’s ability to anticipate friction points

Buying real estate is rarely about perfect conditions—it’s about managed risk.

What Sellers Should Know Right Now

Sellers often worry that uncertainty means fewer buyers. In reality:

• Serious buyers stay active

• Inventory timing matters more than headlines

• Well-priced homes still move

In Denver especially, buyers who are watching rates and inventory closely don’t disappear during uncertainty—they get more selective, which rewards strong preparation and smart pricing.

Why Denver Often Behaves Differently

Local job stability, population growth, and long-term housing demand matter more than federal dysfunction. Denver’s market has historically shown resilience during national disruptions, including prior shutdowns.

National noise doesn’t override local fundamentals.

The Bottom Line

A government shutdown:

• Does not shut down real estate

• May slow specific transaction components

• Rewards preparation over panic

The difference between a smooth closing and a stressful one often comes down to who you hire and how proactively the deal is structured.

FAQs: Government Shutdowns & Real Estate

Can you buy or sell a home during a government shutdown?
Yes. Most transactions continue, especially with conventional loans or cash purchases.

Do FHA or VA loans stop during a shutdown?
They don’t stop entirely, but some steps may slow depending on staffing and timing.

Will a shutdown affect mortgage rates?
Indirectly. Market uncertainty can influence rates, but shutdowns alone don’t dictate long-term rate movement.

Should buyers or sellers wait until the shutdown ends?
Not automatically. Waiting often means more competition later.

Thinking About Buying or Selling This Year?

If you’re considering a move, timing and strategy matter far more than headlines. I walk buyers and sellers through uncertainty every year—and help them make decisions based on data, not fear.

If you’re buying, start here:
👉 Denver Buyer Game Plan

If you’re selling, this is your next step:
👉 Denver Seller Game Plan

Even if you’re just watching the market, having a plan beats guessing.