- VA loans and most Veteran benefits should continue with little disruption if a government shutdown occurs.
- A government shutdown could postpone key economic reports, creating uncertainty and potential volatility in interest rates.
There's been a lot of confusion and uncertainty about how a government shutdown will affect VA home loans.
The good news is that there would likely be minimal impacts on VA lending if the government shuts down on October 1, 2025. Lenders would still be able to order appraisals, obtain a borrower's Certificate of Eligibility, submit the VA Funding Fee and more.
In short, Veterans would still be able to use their home loan benefit to buy a home or refinance an existing mortgage.
During the last government shutdown in 2018-2019, some lenders reported issues obtaining documentation or verifications for prospective borrowers. Veterans United was able to troubleshoot issues with the VA and other stakeholders, finding solutions to keep our Veteran borrowers on track.
From an underwriting standpoint, the impact of the government shutdown on VA loans is relatively low risk as long as the shutdown is short-term and VA systems remain online.
Most VA employees would remain in their roles during a shutdown, either because they're in fully funded positions or are exempt, given the critical nature of their work. In fact, data shows that 97% of VA employees are expected to continue working.
Other Mortgage Products
The shutdown story looks similar for FHA loans, which didn't experience major widespread impacts from the last government shutdown. But every buyer's situation is different.
The Department of Housing and Urban Development would close its regional and field offices with limited exceptions during the shutdown, which means borrowers with unique situations that require a closer look from HUD may experience delays.
The FHA's condo approval process can also pause during the shutdown.
Conventional lending would experience minimal direct impacts because of the shutdown, in part because these loans aren't backed by the government.
USDA borrowers could face meaningful disruptions in the event of a government shutdown. While the Rural Development guarantees and commitments are typically halted during a shutdown, borrowers whose loans already have a valid conditional commitment may still be able to close, provided the lender is willing to assume risk until USDA issues the formal guarantee.
Due to this uncertainty, borrowers anticipating a USDA loan closing during a potential shutdown should proactively contact their loan team to confirm their status and any backup plans.
Additional VA Services
The Loan Guaranty program is one of many programs and services the VA says will not be impacted by a shutdown.
VA medical facilities and clinics will remain fully functional. Burials would continue at VA national cemeteries. VA would continue to process and deliver benefits to Veterans, including compensation, pension, education and housing benefits. And the board would continue to process appeals.
But some services and outreach would slow or stop. The VA's regional offices would close until the shutdown ends. Transition support services, career counseling, health care inspections and other functions would be suspended.
Read more about the VA’s contingency plan and who’s impacted.
Economic Data Delays and Fed Decisions
Another ripple effect of a government shutdown is the potential delay of key economic reports that the Federal Reserve relies on to guide interest rate decisions.
Agencies like the Bureau of Labor Statistics and the Commerce Department suspend data collection and publication during a lapse, which means important releases such as the monthly jobs report, inflation numbers and GDP updates could be postponed.
Without timely data, the Fed and financial markets are left to work with outdated information, creating additional uncertainty. That uncertainty can lead to increased market volatility and make it more challenging to predict the path of interest rates, which in turn affect VA mortgage rates and homebuyer confidence.
Credit Impacts of a Prolonged Shutdown
A prolonged shutdown could make it difficult for some VA homeowners to stay current on their mortgage.
During the previous shutdown, the VA encouraged lenders and servicers to extend forbearance to homeowners in distress.
They also encouraged mortgage servicers to waive fees and penalties for late mortgage payments and to suspend credit reporting to the credit bureaus. Even just one 30-day late mortgage payment can take a toll on a consumer's credit.
In the event of a government shutdown, talk with your mortgage servicer as soon as possible if you anticipate having problems making your monthly mortgage payment. Speak with a Veterans United VA loan expert at 855-870-8845 to see how a government shutdown affects your VA home loan.
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How We Maintain Content Accuracy
Our mortgage experts continuously track industry trends, regulatory changes, and market conditions to keep our information accurate and relevant. We update our articles whenever new insights or updates become available to help you make informed homebuying and selling decisions.
Current Version
Sep 30, 2025
Written ByChris Birk
Reviewed ByDon Wilson
Article updated for possible government shutdown in October 2025. Reviewed and fact checked by underwriter Don Wilson.
Veterans United often cites authoritative third-party sources to provide context, verify claims, and ensure accuracy in our content. Our commitment to delivering clear, factual, and unbiased information guides every piece we publish. Learn more about our editorial standards and how we work to serve Veterans and military families with trust and transparency.
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