October 3, 2025 — The federal government has shut down and the National Flood Insurance Program (NFIP) has lapsed, pausing new and most renewal flood policies. Existing, in-force policies remain active. The Wall Street Journal+2AP News+2
Key Takeaways
- No new NFIP policies & many renewals paused until Congress reauthorizes the program. This can delay home closings in FEMA flood zones where flood insurance is required. AP News+1
- Existing NFIP policies stay in force (with the usual grace window) and valid claims can still be paid while funds remain available. independentagent.com+1
- Housing impact is real: FHA/VA/USDA lending and transactions in flood zones may hit bottlenecks; industry groups are warning buyers and sellers. Investopedia+2nahb.org+2
- Private flood can sometimes bridge the gap—but availability and pricing vary by risk and lender acceptance. Noticias Spectrum
What exactly just happened?
Congress didn’t pass funding in time, triggering a federal shutdown. One fallout: NFIP’s authorization expired at 11:59 p.m. ET on September 30, 2025. When the NFIP lapses, FEMA and Write-Your-Own (WYO) carriers cannot issue new policies and most renewals stall until reauthorization. The Wall Street Journal+1
“During an NFIP lapse, new policies can’t be issued and many renewals are paused—putting flood-zone home sales at risk.” AP News
What still works during the lapse?
- Your active policy continues until its expiration; typical grace periods still apply. independentagent.com+1
- Claims on valid, active policies can still be processed and paid as long as FEMA has funds on hand. independentagent.com
- Some time-sensitive edge cases (e.g., certain renewals if premium was received before the lapse) may be honored under existing guidance. Check your specific situation. njlm.org
Why buyers, sellers, and lenders should care
Many federally backed mortgages require flood insurance for homes in FEMA Special Flood Hazard Areas. If a buyer can’t get a required policy, the closing may delay or fall through. During past lapses, thousands of transactions were impacted daily. Industry groups and local associations are already warning of slowdowns. AP News+1
Can private flood insurance save my closing?
Sometimes, yes. Private flood insurers may still quote and bind coverage, and some lenders will accept those policies if they meet federal equivalency standards. But availability, pricing, and turnaround vary by location and risk; some high-risk properties have limited options. Get quotes now and confirm lender acceptance in writing. Noticias Spectrum
What you should do right now
Homeowners
- Check your renewal date. If your NFIP renewal is within 30–45 days, contact us immediately to explore options. independentagent.com
- Document mitigation. Elevation certificates, photos, flood vents, prior claims status—all help underwriting when markets reopen (and can help with private flood now).
Buyers / Sellers / Agents
- Ask early: “Is this property in a FEMA flood zone?” If yes, start the flood-insurance conversation Day 1. Investopedia
- Run a private flood check while NFIP is paused; make sure your lender accepts the carrier/form. Noticias Spectrum
- Build time into contracts or add a clause acknowledging federal shutdown/insurance contingencies (consult your attorney/agent).
Lenders
- Update closing checklists to include private-flood acceptability criteria and documentation.
- Proactive borrower communication avoids last-minute surprises. (Industry bodies are signaling potential delays already.) nahb.org+1
Will Congress fix this soon?
A short-term NFIP reauthorization bill has been introduced to avoid prolonged disruption, but timing is uncertain during a shutdown. Plan for delays; hope for a quick fix. Representative Troy Carter
“Policy lapses are policy risks—build resilience into your closing timeline.”
Streetsmart’s POV (and how we can help)
We’re actively:
- Screening properties for flood-zone status and lender requirements.
- Stacking quotes (private flood where feasible) and documenting lender acceptance.
- Coordinating closings to navigate grace periods and renewal nuances once NFIP is reauthorized.
- Advising existing clients on claims steps so nothing pauses your recovery if you’re impacted by a flood event.
Need help now? Contact Streetsmart and mention “NFIP lapse check.” We’ll triage your case and provide next steps within the same business day.
Quick Explainer: NFIP Paused During the Shutdown
Sometimes it’s easier to see it than read it. In this short video, our team breaks down exactly what the NFIP lapse means for homeowners, buyers, and lenders—and what steps you should take right now to protect your property.
Press play below to get the highlights before diving deeper into the details:
FAQ
Are existing NFIP policies still valid?
Yes. In-force policies stay active; claims can be paid while FEMA has funds available. independentagent.com
Can I renew my NFIP policy during the lapse?
Many renewals are paused unless a premium was received before the lapse; cases vary. Talk to your agent ASAP. njlm.org
Will my loan still close?
If flood insurance is required and you can’t secure it, closing can be delayed. Private flood may help if accepted by your lender. Investopedia
Sources to watch (live situation)
- AP / ABC News (AP wire): NFIP lapse timing & scope. AP News+1
- WSJ: Federal shutdown status & sector impacts (including housing). The Wall Street Journal
- NAHB / Florida Realtors: On-the-ground housing market effects. nahb.org+1
- Independent Insurance Agents (Big I): What continues during a lapse (claims, grace). independentagent.com
- NJ League of Municipalities: Practical NFIP guidance during lapse. njlm.org