The National Housing Fund (NHF) scheme was established by Act 3 of 1992 to enable Nigerians in all sectors of the economy, particularly those within the low and medium income levels who cannot afford commercial housing loans, such as civil servants, traders, artisans, and commercial drivers etc., to own houses.
The Act stipulates that funding of the scheme will come from mandatory contribution of 2.5 percent of monthly income of Nigerians earning N3000 and above per annum, in both public and private sectors; commercial and merchant banks to invest 10 percent of their loans and advances portfolio; insurance companies to invest 20 percent of non-life and 40 percent life funds in the housing sector, with 50 percent of these directly in NHF and; financial contributions of the Federal Government.
The pool of funds created by these becomes available to any contributor to borrow from, after contributing for a minimum of six months.
The aims and objectives of the fund include: Mobilisation of fund for the provision of houses for Nigerians at affordable prices; Ensuring constant supply of loan to Nigerians for the purpose of building, purchasing and improving of residential houses; Providing incentives for the capital market to invest in property development and; Encouraging the development of specific programs that would ensure effective financing of housing development, in particular low cost housing for low income workers.
Others are: Providing proper policy control over the allocation of resources and fund between the housing sector and other sectors of the Nigerian economy and; Providing long term loan to mortgage institutions for on-lending to contributions to the fund.
Any intending beneficiary must be registered contributor and up to date with his/her contributions.
Benefits available to contributors include: Housing loan of up to 90 percent of the cost of the house; Interest on loans remains fixed throughout the life of the mortgage at 6 percent per annum; Long period of repayment of up to 30 years; Contributions can serve as additional old age security; Refunds with 2 percent interest on retirement and; Maximum loan of N15 million can be borrowed.
To be eligible for the NHF loan, a contributor interested in obtaining NHF loan must apply through a registered and duly accredited mortgage loan originator, e.g. a Primary Mortgage Bank (PMB), who packages and forwards the application to FMBN. Applicants are required to provide satisfactory evidence of regular income. Deducted monthly contributions must be remitted to FMBN promptly, and at least 6 months contributions should be made.
Documents required to process NHF loan include: Completed application form; Photocopy of title documents; Current valuation report on the proposed house to buy or bills of quantities (BOQ) for the house to build and; Three years tax clearance certificate. Others are: Evidence of NHF participation; Copy of pay slips for the previous three months and; Equity contribution or personal stake of 30 percent, 20 percent or 10 percent depending on the loan amount applied for.
NHF loan cannot be used to purchase piece of land to build a house. A prospective applicant who wishes to obtain a loan to build a house is expected to have his/her land as well as an acceptance title to the land prior to the application for NHF loan.
Contributors can apply as an individual for NHF loan to develop a land or buy directly from government consort estate or private estate developer. A contributor can only obtain NHF loan facility once in a life time. The only collateral needed for NHF loan is the property in question. No other collateral is required to secure the loan.