There is a mortgage revolution ongoing in Nigeria, and it is helping thousands turn rent into ownership.
Owning a home is a dream that has been out of reach for many in Nigeria, but now change is coming. Through the efforts of the federal government, a mortgage is now accessible to even the low income earner, as long as they earn steady income. The Ministry of Finance Incorporated Real Estate Investment Fund has already created 1000 new home owners, and that is just the beginning. There is a Mortgage revolution going on, and here is everything you need to know about it.
What Is A Mortgage?
A mortgage is a loan taken out to buy a house. Here is how it works: Mr. Charles sees a house he likes. It costs 20 Million. Mr. Charles goes to his bank to obtain a loan. Rather than give the money to Mr. Charles, the bank pays the seller (or developer), and Mr. Charles takes the keys. Mr. Charles then repays the bank over a period of time; lets say 20 years. He also pays a small interest. Sound good?
So Why Has This Not Been Working In Nigeria?
Mortgages and mortgage homes have never really been a thing in Nigeria for a plethora of reasons which we will only highlight below:
High interest rates: most banks and mortgage institutions charge as high as 20% on the loan. This is just impossible if you are not a multimillionaire.
Shaky real estate market: the real estate market in Nigeria is still developing, and as a result many banks see it as high risk. An estate can be here today, and tomorrow it has been demolished.
Low interest among the populace; knowing that mortgages are out of reach for them, the people have just not been interested in mortgages.
What Has Changed Recently with Mortgage Homes?
The Federal Government has intervened. It has created something called the Ministry of Finance Incorporated Real Estate Investment Fund; which is a managed fund created to provide money to mortgage banks and primary mortgage institutions at single-digit interest rates. This fund acts as a financial backbone, dramatically lowering the cost of capital for lenders. The critical trickle-down effect? These lenders can now offer mortgages to you, the borrower, at interest rates between 7% and 10%, a historic shift from the prohibitive 18-25% of the past.
This government-backed initiative is the engine of the current revolution. By de-risking the market and injecting affordable liquidity, it has made mortgages a viable product for the first time for millions of steady-income earners.
How Can I Own a Home Through Mortgage in Nigeria?
Here Is A Step-by-Step Guide to owning mortgage homes:
Now that the landscape is favorable, how do you navigate the process? Here is your practical roadmap from dreamer to homeowner.
Step 1: Eligibility & Preparation – Get “Mortgage-Ready”
Before you look at a single house, look at your finances. Lenders will scrutinize:
Steady Income: You must be a confirmed, permanent employee or a documented business owner with regular cash flow for at least two years.
Credit History: Obtain your credit report from the Credit Bureau of Nigeria. A clean record is paramount.
Down Payment: Be prepared to pay between 10% and 30% of the property’s value upfront. Start saving aggressively.
Debt-to-Income Ratio: Your existing debt obligations (car loans, etc.) should not consume a large chunk of your monthly income.
Step 2: Find an Accredited Lender & Get Pre-Approved
Don’t just walk into any bank. Seek out institutions actively participating in the new scheme. These include:
Primary Mortgage Banks (PMBs): Like Abbey Mortgage Bank, Infinity Trust Mortgage Bank, Imperial Mortgage Bank, etc.
Commercial Banks with strong mortgage desks.
The Federal Mortgage Bank of Nigeria (FMBN): Especially for those under the National Housing Fund (NHF) scheme.
Approach them for a pre-approval. This involves submitting your income proof, ID, and bank statements. A pre-approval letter tells you how much you can borrow and shows sellers you are a serious buyer.
Step 3: Property Search & Due Diligence
This is the most critical step. Not all properties are “mortgageable.” To protect their investment, lenders will only finance properties with clear title documents (typically a Certificate of Occupancy – C of O). Avoid properties with family land disputes or “Governor’s Consent” still in process.
Focus on new developments from reputable builders who already have agreements with mortgage banks.
Engage a lawyer to verify all documents at the land registry.
Step 4: Formal Application & Valuation
Once you find the right property, submit a formal mortgage application to your chosen lender. They will commission a professional valuation to confirm the property’s market worth matches the purchase price. This protects both you and the bank.
Step 5: Offer Letter & Acceptance
If satisfied, the bank issues a formal mortgage offer letter detailing the loan amount, interest rate, tenure (up to 20-30 years), and monthly repayment schedule. Review it carefully with your lawyer before signing.
Step 6: Legal Perfection & Disbursement
Your lawyer and the bank’s legal team will prepare and execute the necessary agreements, including the Mortgage Deed. The bank will then pay the seller directly, and the property title will be held by the bank as collateral until you make the final payment.
Step 7: Keys & Repayment
You receive the keys to your new home! Now begins the disciplined phase of consistent monthly repayment. Set up a standing order to avoid default. Remember, this is a long-term partnership with your lender.
View Some Estates That You Can Buy Into Using Mortgage Right Now:
Greater Lagos County Apartments
Crucial Tips for Success in Mortgage Homes
1. Join the National Housing Fund (NHF): If you are a registered employee, contributing 2.5% of your monthly salary to the NHF through your employer makes you eligible for the FMBN’s lowest-interest loans (around 6%).
2. Start Small: Consider starting with a 1- or 2-bedroom apartment. You can “step up” later in life using the equity in your first home.
3. Budget for Hidden Costs: Account for legal fees, valuation fees, insurance, and registration taxes, which can add 5-10% to your upfront cost.
4. Beware of Estates: Ensure any private estate has government-approved infrastructure and isn’t on disputed land.
Conclusion:
The Door is Now Open: The narrative that homeownership is only for the rich or those with massive cash savings is being rewritten in Nigeria with mortgage homes. The mortgage revolution, powered by strategic government intervention, has dismantled the biggest barrier: cost. While challenges like title verification and developer credibility remain, the path is clearer and more accessible than ever before.
By becoming financially disciplined, doing your due diligence, and partnering with accredited institutions, you can stop paying rent that builds your landlord’s equity and start paying a mortgage that builds your own. The keys to your dream mortgage homes are no longer a fantasy; they are a financial plan away. Start your journey today.
