Government Shutdown's Impact on FHA Loans

The government shutdown will not close the FHA, but it might slow approvals to a trickle.

Recent reports have stated that the government shutdown would virtually shutter the FHA, preventing the agency from approving any additional FHA backed loans. This is significant since 45% of all home purchases last year were made with an FHA backed loan. 

But in what appears to be a change in its position from last week, the U.S. Department of Housing and Urban Development (HUD)’s Office of Single Family Housing said that it would continue to endorse new loans “in order to support the health and stability of the U.S. mortgage market” 

While HUD and the FHA  will remain open, it remains to be seen how many loans will actually be endorsed. It is estimated that only 4% of HUD staff will remain at their jobs as "excepted" employees. With approximately 60,000 loan applications per month, it's hard to see how this skeleton staff will be able to handle new applications. 

If you are planning to get an FHA-backed loan, I'd recommend either hoping for a quick resolution to the funding deadlock, looking for an alternate funding source for your home, or delaying the purchase of a home until the standoff is resolved. 

Sol Nasisi
Sol Nasisi: Sol Nasisi is the co-founder and a past president of BestCashCow, an online resource for comprehensive bank rate information. In this capacity, he closely followed rate trends for all savings-related and loan products and the impact of rate fluctuations on the economy. He specifically focused on how rates impact consumers' ability to borrow and save. He also has authored a wee... Read More

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