So, what happens to VA and FHA loans during a government shutdown? Often, first-time home buyers have no alternative but to use these low- and no-down government-backed loans. Think about it; most VA borrowers are able to purchase homes without any down payment at all. And, an FHA borrower can buy a house with as little as 3.5% cash down. For people with little money in the bank, these programs can make the dream of homeownership attainable, even if a conventional loan just isn’t in the cards.
It’s been nearly two decades since the Feds last shut down. Back then, it was nearly impossible to get a government-backed loan processed as those services were stopped temporarily. Now that we’re in this situation again, will anything change?
The VA and FHA have revised their shutdown plans since 1995, namely to better maintain essential services like VA and FHA mortgage loan processing. Both departments deem loan processing essential for Americans despite a government shutdown. Let’s look at the facts:
Veterans Field Guide to Government Shutdown says VA loan backing will go on
- HUD cites home loan endorsements as essential during a shutdown
- Both VA and FHA loans are made by private lenders that are not part of the shutdown
During a shutdown, both the VA and FHA operate partially staffed. We know that fully staffed, FHA and VA can process more than 100,000 loans monthly between the two of them. As long as the shutdown doesn’t last too long, we can likely see government-backed loan processing continue without a hitch.
For specific information on how each department handles their services during a government shutdown, check out this article or visit the VA and FHA official websites.
To apply for VA or FHA loans today, contact a loan professional who specializes in government- backed mortgages.