One of the challenges facing Nigeria’s housing sector is the inability of citizens, especially the larger part of the population who work in the informal sector, to access mortgage financing.

This situation has not only widened the housing deficit gap but also dashed the hope of many Nigerians to own property.

Daily Trust reports that UN-Habitat, the arm of the United Nations responsible for promoting socially and environmentally sustainable towns and cities, lists housing as a fundamental human right.

The global body places affordability, sustainability and inclusiveness of the housing sector at the core of the urbanisation drive,  as a way of ensuring access to adequate housing for all.

However, the journey to owning a home in Nigeria can be fraught with challenges, especially for low and middle-income earners. These include factors like high property costs, limited access to affordable financing and bureaucratic hurdles.

The home rental segment greatly impacted by inflationary trends, makes the situation worse, with reports indicating that more than 80 per cent of Nigerians spend roughly 50 per cent of their income on rent.

It is against this backdrop that the Federal Mortgage Bank of Nigeria (FMBN) was created to address the situation. Mandated by the FMBN Act 82 (1993) to serve as the apex mortgage institution in Nigeria, the bank has since then assumed the role of Nigerians’ best chance at affordable housing.

Primarily, the bank was empowered to administer and manage the National Housing Fund (NHF), a contributory savings scheme established in 1992 under the National Housing Fund Act (1992).

The primary objective of the NHF is to provide affordable housing finance to Nigerians, especially those who struggle to access housing loans from traditional financial institutions.

The motivation behind the scheme was the urgent need to combat Nigeria’s growing housing deficit, which was aggravated by the lack of affordable financing options for home ownership.

Prior to the establishment of the NHF, the housing finance ecosystem in Nigeria was practically non-existent, with the few available commercial players showing limited and their loans largely inaccessible to the average Nigerian. High interest rates, stringent loan conditions, and short repayment terms made mortgages unattainable for most Nigerians, particularly those in the low-income bracket.

Further checks by the Daily Trust show that unknown to many Nigerians, the FMBN has introduced a number of mortgage loan products which can be accessed by both the formal and the informal sectors.

These products include the Rent-to-Own Scheme, the Cooperative Housing Development Loan, and the newly introduced Diaspora Mortgage Scheme, amongst others.

 Rental assistance loan

Among the new offerings introduced by the FMBN is the Rental Assistance Loan aimed at providing financial relief to individuals and families struggling with the high costs of rent.

According to the FMBN, it acknowledges the reality of the housing ecosystem that not everyone will become homeowners.

A recent housing report found that at least 80 per cent of Nigerians lived in rented accommodation and spent 50 per cent of their income on house rent.

Even for those who have the desire to become homeowners, a lot of assistance is required in the present in the form of rental payment, especially considering inflationary trends in the home rental segment.

Although the Rental Assistance Loan is a newly introduced product, and yet to hit the market, it is aimed at providing financial relief to individuals and families struggling with the high cost of rent.

It is a micro-housing loan product meticulously designed to alleviate the financial burden of rental payments for eligible Nigerians.

The product has been thoughtfully crafted to ensure accessibility, affordability and flexibility, making it a viable solution for many who have found it challenging to secure housing finance through other traditional financial arrangements.

Currently open to informal sector contributors to the NHF Scheme who have been consistent over a period of six months, the Rental Assistance Loan offers a maximum loan amount of N2 million which is subject to the beneficiary’s affordability.

Rent-to-own

The FMBN Rent-to-Own scheme is an innovative housing solution that allows Nigerians to live in FMBN-funded properties as tenants while gradually paying towards ownership.

This product is designed to ease the burden of large upfront payments typically required to purchase a home.

Under this scheme, tenants make affordable monthly, quarterly or annual rent payments, with a portion of the rent contributing towards the purchase of the property. Over time, as the tenant pays off the balance, the home fully becomes theirs.

With an interest of 7 per cent of the price of the property annually, this approach makes homeownership more accessible, especially for low and middle-income earners who may struggle with traditional mortgage requirements. Also, no equity contribution is required from the subscriber before moving into the property.

Home renovation loan

The FMBN Home Renovation Loan (HRL), according to the bank has become one of its most successful products. It is aimed at helping existing homeowners improve or expand their homes.

This product offers up to N1 million at a single-digit interest rate, with a repayment period of up to five years. The loan is specifically designed for individuals who already own a property but need financial assistance to make renovations, repairs, or upgrades.

The Home Renovation Loan provides an affordable alternative to high-interest loans, enabling homeowners to enhance their living conditions without overextending their finances. This product is ideal for families needing to upgrade their living conditions without taking on large, high-interest loans.

Cooperative housing dev’t loan

The Cooperative Housing Development Loan (CHDL) is a collective financing solution that enables cooperative societies to obtain funds for constructing houses for their members.

Under this scheme, a cooperative society finds land, identifies a developer, designs their own estate and then approaches the bank for construction finance.

Once the homes are completed, FMBN then goes ahead to provide mortgage loans to individual members of the cooperative at 6% interest rate to enable them to offtake the homes.

This product leverages the strength of group savings and collective bargaining, making it easier for members to access affordable housing finance.

The loan can cover the cost of land acquisition, site development, and construction, providing a comprehensive solution for cooperative societies aiming to deliver housing projects for their members

Individual construction loan

The FMBN Individual Construction Loan is designed for Nigerians who already own titled land and wish to build their homes.

This loan provides up to N50 million, depending on the applicant’s income and repayment capacity, with an interest rate of 7 per cent per annum.

The loan covers the cost of building materials, labour and other construction-related expenses. The repayment period is up to 15 years, depending on the applicant’s age and income. This product empowers individuals to construct their dream homes without the need for large upfront capital, providing a flexible financing option for self-build projects.

Diaspora NHF mortgage loan

The Diaspora NHF Mortgage Loan is tailored for Nigerians living abroad who wish to own property in Nigeria. While it is yet to be fully operational, the bank has finalised modalities with other parties like the Nigerians in Diaspora Commission (NiDCOM) and the Central Bank of Nigeria (CBN) on technical issues.

This product will allow Nigerians in the diaspora to access mortgage loans for purchasing, building or renovating homes in Nigeria. Like the NHF Mortgage Loan, it offers up to N50 million at a competitive interest rate of 9 per cent per annum.

The loan is repayable over a period of up to 10 years, making it a convenient option for diaspora Nigerians to invest in real estate back home, thereby contributing to the development of the Nigerian housing sector as well as reducing the country’s housing deficit.