Veterans and other eligible borrowers have questions about how their home loan benefits are affected during a federal government shutdown. We have the answers.
Q: A VA mortgage is my only option, so how would I get one if the federal government were closed?
A: For the most part, VA and FHA loans should not be affected by a shutdown, as long as a shutdown is not extended for a long period. Go ahead and apply for your loan with the approved lender of your choice. It's likely there will be no delay in the government stamp of approval.
In the event of a shutdown, the VA will “continue to process and deliver benefits to veterans, including compensation, pension, education, and housing benefits,” VA Secretary Denis McDonough said Friday, Sept. 22, 2023.
For many borrowers, especially first-time home buyers or low-income loan applicants, a VA mortgage or FHA loan may be the only or best option. These loans are easier to qualify for in part because they have low- and no-down payment requirements. Also, VA and FHA loans are backed by the federal government, so lenders have the security to offer more favorable terms.
For VA- and FHA-eligible borrowers who were counting on making home purchases with little or no cash down, a government shutdown may cause some confusion.
During previous government shutdowns, government-backed loans couldn't be processed, as those offices were closed, and many approved borrowers had to wait for their government loan guarantees and endorsements until the federal government reopened for business.
Today, that's not a reason to wait, as VA and FHA loans are both expected to continue to be processed during a government shutdown.
According to the U.S. Department of Housing and Urban Development, FHA "will be able to endorse single family loans, with the exception of Home Equity Conversion Mortgages (HECM) and Title I loans" during a government shutdown.
"A limited number of FHA staff will be available to endorse new loans. Due to limited staff, the time to endorse the cases may be extended."
Q: Are government-backed loans handled differently than during the previous government shutdowns?
A: Yes. Both departments have revised their shutdown procedures since 1995. Processing of VA and FHA loans are both considered essential services that Americans cannot afford to live without. Here are some facts to consider:
- Veterans Field Guide to Government Shutdown states that VA loan guarantees will not stop.
- HUD says home loan endorsements are essential during any shutdown.
- Both VA and FHA loans are made by private lenders that are not closed during a shutdown.
Q: Are there enough employees to process all the government-backed home loans?
A: As long as a shutdown doesn't last too long, we should see no delays. While the government is shut down, both U.S. Department of Veterans Affairs and the Federal Housing Administration are operating partially staffed. Fully staffed, the two departments combined can process more than 100,000 loans a month.
If you're interested in an VA or FHA loan, get in touch with a direct VA loan professional who specializes in government- backed mortgages.
Ready to Get Started?
If you're ready to get started, or just want to get more information on the process, the first step is to get multiple rate quotes with no obligation. You can then discuss qualifications, debt to income ratios, and any other concerns you have about the process with the lenders.