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The recent decision by the Federal Mortgage Bank of Nigeria (FMBN) to raise the maximum National Housing Fund (NHF) loan amount from ₦15 million to ₦50 million has generated excitement among contributors, however affordability concerns remain.
The decision, announced during the 46th Kaduna International Trade Fair, is aimed at expanding access to affordable housing, particularly for high-income earners in the private sector.
Shehu Usman Osidi, FMBN’s Managing Director, had emphasised the bank’s commitment to bridging Nigeria’s housing deficit by evolving its mortgage products to cater for all income brackets—low, middle, and high earners.
According to him, the increase was driven by growing demand from high-income contributors, who have historically been underserved by the scheme.
Despite the optimism, concerns linger over the affordability of mortgages for low-and middle-income Nigerians, who make up the bulk of the population.
While FMBN offers single-digit interest rates of 6-7%, critics argue that the N50 million threshold may still be out of reach for many, given rising inflation and stagnant
Many see this policy shift as a major step towards improving homeownership in Nigeria, but industry experts caution that affordability remains a significant obstacle.
Ajayi Taiwo, a real estate expert, noted that a key misconception had emerged following the announcement.
He noted that many NHF contributors now assume they are automatically entitled to a ₦50 million loan, but the reality is more complex.
“The new ceiling does not guarantee automatic access to the full amount. Instead, it merely expands the upper limit that qualified applicants can apply for, provided they meet stringent eligibility requirements.
“Before this review, the NHF mortgage loan had an upper limit of ₦15 million, and even then, applicants had to meet specific conditions.
“One of the primary requirements remains the equity contribution, where borrowers must provide part of the loan amount upfront”, Taiwo added.
He further stated that the structure of this requirement has not changed: loans up to ₦5 million require no equity contribution, while those above ₦5 million require a 10% down payment.
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“In addition to the equity contribution, two critical factors influence loan eligibility—property value and affordability.
“Borrowers cannot apply for more than the actual cost of the house they wish to purchase, regardless of the new ceiling.
“Affordability, on the other hand, is a key determinant, as mortgage repayments are directly tied to income levels, meaning only those with high enough salaries can sustain monthly payments”, he explained.
The NHF mortgage loan is designed to provide Nigerians with long-term, low-interest financing for home purchases, repayable over 30 years at a 6% interest rate.
Abdulmalik Mahdi, another real estate analyst, highlighted affordability as the most significant barrier.
“At a 6% interest rate, a 30-year mortgage of ₦50 million would require a monthly repayment of approximately ₦300,000.
“To qualify, an applicant would need a minimum monthly salary of at least ₦800,000 an amount that far exceeds the earnings of most Nigerian civil servants and middle-class workers”, he stated.
For an ₦800,000 salary earner, for instance, and based on financial advisors recommendations that loan repayments should not exceed 30–40% of monthly income to maintain a sustainable budget, the ideal repayment range falls between ₦240,000 (30% of ₦800,000) and ₦320,000 (40% of ₦800,000).
With the required monthly repayment for a ₦50 million loan over 30 years at 6% interest calculated at ₦299,775, it fits within this recommended range.
This suggests that an ₦800,000 salary earner could reasonably afford the loan, provided they have minimal additional financial obligations.
Therefore, a monthly repayment of approximately ₦300,000 would ensure full loan repayment within the 30-year period while maintaining financial stability for the borrower.
However, any additional expenses, financial commitments, or economic downturns could still pose a challenge to affordability.
Festus Adebayo, Executive Director, Housing Development Advocacy Network, emphasised this reality, noting that even high-ranking public officials may not earn enough to qualify for such a loan.
He questioned how fresh graduates, who theoretically have 30 years to repay, could afford the scheme when many earn ₦200,000 or less.
“How many young graduates are earning N200, 000?”, he asked.
For a salary earner making ₦200,000 should ideally allocate between ₦60,000 and ₦80,000 for loan repayments.
Repayment amount of ₦80,000 for instance, is too low to cover even the interest portion of the loan.
This means that at ₦80,000 per month, the debt would never be fully repaid, as the outstanding balance would keep growing instead of reducing.
To make any progress on repaying a ₦50 million loan at 6% interest, the monthly repayment must at least cover the interest portion, which is ₦250,000 per month (₦50 million × 0.005). Since ₦80,000 is far below this, the loan would not be feasible at this rate.
However, with a required repayment of ₦299,775, the loan remains far beyond the reach of such individuals.
A civil servant earning the national minimum wage of ₦70,000 would be in an even more dire situation, as it would take 60 years assuming they dedicated their entire salary to repay the loan.
The affordability gap raises concerns about the true impact of the loan increase on housing accessibility.
Some industry experts have even joked that the new ceiling appears more suited for governors under the “Renewed Hope” program, as even some top government officials might struggle to meet repayment conditions.
One analyst, speaking anonymously, remarked that the ₦50 million loan limit, coupled with its repayment terms, seems unrealistic for the average Nigerian worker.
In light of these challenges, experts suggest alternative approaches to make housing more accessible. One proposal involves adopting cost-effective building materials such as wooden walls, plastic sheet roofs, and cement screed floors. Another suggestion is to reduce finishing costs by eliminating expensive tiles in kitchens, toilets, and bedrooms, ultimately lowering the overall cost of housing. More importantly, analysts stress that the government must play an active role in addressing affordability by introducing subsidies or innovative financing models tailored to low- and middle-income earners.
While the increase in the NHF loan ceiling may be seen as a step in the right direction, it does little to address the fundamental issue of affordability. Without policies that support lower-income Nigerians, the dream of homeownership will remain elusive for millions, leaving the housing crisis unresolved.
