FMBN Unveils New Mortgage Products for Informal Sector and Nigerians in Diaspora
The Federal Mortgage Bank of Nigeria (FMBN) is actively broadening access to homeownership for a wider spectrum of the Nigerian population. Recognizing the distinct financial circumstances of individuals in the informal sector and Nigerians residing abroad, the FMBN has recently launched and is in the final stages of implementing innovative mortgage products specifically designed to meet their needs.
Detailed Look at These New Initiatives:
I. Mortgage Products for the Informal Sector:
Nigeria's informal sector comprises a substantial portion of its workforce, often characterized by a lack of the traditional, verifiable income documentation required for conventional mortgage loans. To address this, FMBN has introduced several products tailored for self-employed individuals and daily wage earners:
Rent Assistance Loan: This product helps individuals in the informal sector manage their rent payments, serving as a potential pathway towards future homeownership.
Home Improvement Loan: Designed for existing homeowners within the informal sector, this loan facilitates the renovation or improvement of their current residences, thereby enhancing living conditions.
Informal Sector Cooperative Housing Scheme: This initiative encourages cooperative societies within the informal sector to register as bona fide contributors to the National Housing Fund (NHF). This eligibility then allows their members to access affordable loans for building, purchasing, or renovating homes. This structured approach helps aggregate contributions and provides a more streamlined access point to mortgage financing.
Micro-Housing Loans: The FMBN has expanded its product portfolio to include micro-housing loans, specifically catering to smaller housing projects and improvements for informal sector operators.
Non-Interest NHF Mortgage Loan: Responding to the growing demand for ethical and faith-based financial models, FMBN is introducing a non-interest mortgage option. This provides a Sharia-compliant alternative for Nigerians who prefer such financing structures, utilizing a "Rent-to-Own" model where FMBN retains ownership until the loan is fully repaid.
Key Features for Informal Sector Participants:
These products aim to integrate the informal sector into the National Housing Fund (NHF) scheme, making them eligible for loans at highly concessionary rates (e.g., as low as 6% interest rate for standard NHF mortgage loans, with terms extending up to 30 years). The Rent Assistance Loan specifically carries an interest rate of 9% with a 10-month repayment period and a maximum loan amount of N2,000,000, subject to affordability.
FMBN intends to leverage existing cooperative societies and trade/market associations to effectively reach and onboard this segment of the population.
II. Mortgage Products for Nigerians in the Diaspora:
Recognizing the significant annual remittances from Nigerians abroad (exceeding $20 billion) and their strong desire to invest in properties back home, the FMBN, in collaboration with the Nigerians in Diaspora Commission (NiDCOM), is launching a dedicated Diaspora Mortgage Product.
NHF Diaspora Mortgage Loan: This landmark product enables Nigerians living abroad to contribute to the National Housing Fund (NHF) Scheme from their current locations. Upon meeting the requirements, they can access mortgage financing to own homes in Nigeria.
Contribution Requirements: Diaspora contributors are generally required to make consistent monthly contributions for a minimum period (e.g., 6, 9, or 12 months depending on income category). For instance, basic contributors (earning below $1,000 monthly) contribute $100 for 12 months, while premium contributors (earning $2,000 and above monthly) contribute $200 for 6 months.
Loan Access: Qualified contributors can access mortgage loans of up to N50 million. While contributions are in USD, loan repayment will typically be denominated in Naira to manage exchange rate fluctuations, as per current guidelines.
Equity Contribution: Applicants may be required to make an equity contribution (e.g., 30% for the diaspora mortgage loan, though it can vary for other NHF loans).
Interest Rate and Tenor: The diaspora loans are expected to have affordable single-digit interest rates (e.g., 9%) and a maximum tenor of up to 10 years, while standard NHF loans can extend up to 30 years.
Implementation Strategy: The product's launch and initial implementation are proposed to commence in key diaspora hubs such as the United Kingdom (UK) and the United States of America (USA), owing to the substantial Nigerian populations in these countries.
Diaspora City Project: The Federal Ministry of Housing and Urban Development, in partnership with NiDCOM and the Federal Housing Authority (FHA), is also developing "Diaspora City" projects, such as one planned for Maitama 2, FCT. These projects are specifically designed to offer various housing types tailored for Nigerians in the diaspora.
Overall Impact and FMBN's Strategic Vision:
These new product offerings align with FMBN's overarching strategy to:
Deepen Homeownership: Substantially reduce Nigeria's housing deficit and enhance access to affordable homeownership across all income segments.
Promote Financial Inclusion: Ensure that no Nigerian, irrespective of their employment status or location, is excluded from accessing vital housing finance.
Boost Housing Sector Investment: Attract new capital inflows into the housing sector, particularly from diaspora remittances, thereby stimulating economic activity and job creation.
Strengthen Institutional Capacity: The FMBN has also been undergoing internal reforms, including clearing a backlog of unaudited accounts and recording financial surpluses, aimed at bolstering its capacity and attracting further investments. Between May 2023 and early 2025, the bank disbursed over N11.75 billion in NHF mortgage loans to 1,285 beneficiaries and N15.06 billion for Rent-to-Own programs to 1,140 Nigerians.
These comprehensive initiatives are poised to make a significant and positive contribution to Nigeria's housing sector, providing tangible benefits and opportunities for millions of Nigerians aspiring to homeownership.
I'm Aisha shehu
Talksocialtalka News
