With the ongoing government shutdown, it’s important for consumers, policymakers, and industry partners to stay informed about possible disruptions in critical housing programs across the state. Areas that could be affected include flood insurance, USDA loans, and VA loans.
REALTORS® in Maryland and nationwide are advocating for home buyers and sellers by warning federal leaders of the impacts a prolonged shutdown will have on our communities and our economy.
If you are concerned about how the shutdown may impact your housing situation, talk to your real estate professionals to understand what may change and make an informed plan.
Resources Available for Marylanders
Governor Wes Moore announced on October 1st various resources available to Marylanders affected by the federal shutdown. Housing, utility, loan programs, other financial assistance resources, and more can be found on the state government website.
View Government Shutdown Resources for Marylanders
Department of Veterans Affairs (VA) Loans:
- The VA will continue guaranteeing home loans during a shutdown, allowing lenders to process applications.
- Staffing reductions may delay appraisals, approvals, and the issuance of certificates of eligibility.
Veterans should consult their lenders for updates on processing times.
U.S. Department of Agriculture (USDA) Loans:
Direct and guaranteed loan programs through USDA will be significantly affected:
- No new direct or guaranteed loans will close during the shutdown.
- Some pending conditional commitments may be reviewed and processed if possible.
- Guaranteed loan closings without a previously issued guarantee may proceed at the lender’s risk.
- Disbursements on existing construction loans may continue to protect USDA’s interests.
- Rental assistance and loan servicing activities will be extremely limited until the government reopens.
National Flood Insurance Program (NFIP):
During a lapse in government funding:
- The NFIP may be unable to issue new or renewal flood insurance policies.
- Existing policies will remain active until their expiration dates, and claims will continue to be paid while funds last.
- NFIP policies can still be transferred from sellers to buyers during a lapse, and most lending regulators have provided flexibility to support transactions.
Consumers are encouraged to speak with their REALTOR® about private market flood insurance options during the shutdown.
Understanding What’s at Stake
A lapse in the NFIP would leave millions of Americans vulnerable during peak hurricane season and disrupt real estate transactions across more than 20,000 communities nationwide.
- Nearly every U.S. County (98%) has experienced a major flood disaster in the past two decades.
- Just one inch of floodwater can cause an average of $25,000 in damage.
- Without NFIP coverage, families must rely on limited federal disaster aid.
- The National Association of REALTORS® estimates that an extended NFIP lapse could impact 1,400 home sales per day nationwide.
Impact on Maryland
With 3,190 miles of coastline, Maryland ranks 10th in the nation for total shoreline exposure.
- Estimated number of home sales at risk: 452 per month (15 per day)
- Estimated economic impact: $756 million in lost local income annually
If the Shutdown Lasts Two Weeks
A short-term shutdown would likely cause transaction delays rather than cancellations, with most buyers and sellers in non-flood zones able to close on schedule. However, flood-zone sales could stall temporarily due to NFIP’s lapse, and USDA-backed loans may pause until normal operations resume.
Maryland’s real estate industry could experience a short-term slowdown of approximately 150 home sales statewide, based on historical data—representing several million dollars in deferred local income and economic activity.
If the Shutdown Lasts One Month
A month-long shutdown would create a backlog in loan approvals, flood insurance issuance, and property closings, particularly in coastal counties.
- Roughly 450 home sales per month could be delayed or lost.
- More households would turn to private flood insurance, often at higher cost.
- Reduced consumer confidence—especially among the state’s large population of federal employees—could dampen housing demand and local spending.
The resulting economic loss could exceed $60–70 million in local income for that month alone.
If the Shutdown Extends Longer
A prolonged shutdown would have cascading effects across Maryland’s housing market and economy.
- NFIP funding could be depleted, delaying claim payments.
- USDA and FHA loan pipelines could freeze.
- Lenders may tighten credit standards or defer closings in flood-prone regions.
- Local governments could see lower transfer-tax and recordation-fee revenues.
An extended lapse could jeopardize thousands of transactions statewide and cost communities hundreds of millions in local income. Rural and coastal areas would face the most significant challenges.
