Top Mortgage Options for Real Estate Investment in Nigeria

The growth of Nigeria’s real estate industry has become visible, and for many people, purchasing a home or investing in property has become important and a priority. But the mortgage system is one of the most complicated hurdles awaiting hopeful future homeowners and real estate investors in Nigeria. The Nigerian mortgage market is still complex and relatively fledgling compared to more established markets. Since mortgage rates in Nigeria are not stable and mortgage loan programs are constantly changing, knowing which mortgage type is most suitable for real estate investment is paramount to anyone looking to make a move.

In 2024, loans for housing to the tune of N71.5 billion were processed by the Federal Mortgage Bank of Nigeria (FMBN), almost two times the N39.7 billion that were processed in 2023. The result is an 80% increase YOY, which shows an unprecedented growth in the home financing sector in Nigeria and making property investments of all types very attractive.

But the landscape is complicated. Governor Yemi Cardoso’s Central Bank of Nigeria (CBN) has so far raised the monetary policy rate (MPR) by 750 basis points, from 18.75% to 26.25%, and this has drastically transformed the landscape for mortgage rates in Nigeria and the investment calculus. This has been reflected in current lending conditions, as the Lending Rate in Nigeria dropped to 17.96 per cent in March 2025, down from 18.35 per cent in February, which suggests that an aggressive Rate increase approach could be stabilized.

In this post, we will break down the best mortgage options for property investment in Nigeria, how mortgages work in Nigerian banks, the mortgage loan process in Nigeria and other important things you need to know to finance your dream home or property investment. Be it your first purchase of real estate in Nigeria or if you are a seasoned real estate investor, we’ve got you covered.

 

The Nigerian Mortgage Market: Growth and Challenges

In recent years, the Nigerian real estate market has experienced significant expansion. The building and real estate industry accounted for over 7% of Nigeria’s Gross Domestic Product, NBS reports for 2022. There is generally a very high demand for residential and commercial properties, especially in Lagos, Abuja and Port Harcourt, but most Nigerians do not have access to home financing.

Over the past ten years, there has been increasing access to home financing options in Nigeria’s mortgage market, including loans from Nigerian banks, mortgage products, and government-supported schemes. But despite the growth, mortgages are still hard to come by for most Nigerians. For many, high interest rates, a lack of access to long-term financing, and complicated application processes continue to be a barrier.

 

What to Expect from Mortgage Financing in Nigeria

As in most developed economies, mortgage rates in Nigeria tend to be higher. Mortgage interest rates in Nigeria presently vary between 15% to 20% based on the mortgage lending institution, thus home financing is relatively costly for an average Nigerian. This has stimulated the increasing demand for more accessible and affordable alternative home loan plans for Nigerians of all income levels.

Though the real estate boom is still concentrated in Lagos, other areas have started to see some movement in home buying and developers and financial institutions are being squeezed to meet the varied demands of the mortgage market.

 

Top Mortgage Options in Nigeria

1. Primary Mortgage Banks (PMBs)

Primary Mortgage Banks (PMBs) are defined as “those banks engaged primarily in granting loans for purchasing homes and mortgages”. In Nigeria, people who want to finance their homes often turn to these institutions.

PMBs usually have the most competitive mortgage rates in Nigeria, which are between 15% to 18% per annum. Other popular PMBs in Nigeria are FBN Mortgage Bank, Stanbic IBTC Homes, and Imperial Homes Mortgage Bank. These organizations provide flexible loan repayment policies between 5 and 25 years, making them an ideal option for long-term investors and home buyers.

 

Features of PMBs:

- Competitive interest mortgage rates (15%-18%)

- In long repayment periods (between 5 to 25 years)

- Provide home loan solutions for Nigeria for first-time home buyers and seasoned investors

 

2. Commercial Banks Offering Mortgage Products

Access Bank, GTBank, Zenith Bank and First Bank, commercial banks in Nigeria, also provide mortgage financing. These banks charge interest rates of between 16% to 20% on mortgages and have loan requirements that are not as flexible. They might ask for a bigger down payment or a higher income to obtain financing, so these are more adapted for people with solid incomes.

Most of these banks offer mortgage loans for home financing in Nigeria, for instance, home construction loans, home purchase loans, as well as refinance home loans. They also provide subsidized loans to low and middle-income earners via the Nigeria Mortgage Refinance Company (NMRC).

 

Features of Commercial Banks:

- High mortgage rates (16%-20%)

- More stringent requirements to obtain a loan

- Subsidized loans by the government through the NMRC

- Good for those who are more stable with their income.

 

3. Government Mortgage Programs

In Nigeria, when government home loan programs are made available, they could serve as a critical key for a first-time home buyer’s financial situation or home buyers without reasonable chances of recourse to commercial financing. The Federal Mortgage Bank of Nigeria (FMBN) is one of the most significant government interventions.

The FMBN provides affordable mortgages via the National Housing Fund (NHF), which aims to make housing finance available to Nigerians at low market-related costs. Through the NHF program, borrowers would be eligible for loans with interest rates as low as 6% to 10% in contrast to conventional banks and PMBs. Longer repayment schedules – up to 30 years – are also permitted under these programs.

The requirements to qualify for government mortgage programs tend to be strict, such as consistent contributions to the NHF and good credit.

 

Features of Government Programs:

- Reduced interest rates by 6%-10%.

- Long loan terms (as long as 30 years)

- Emphasis on first-time home-buyers and low-income earners

- Accessible via the FMBN and the NHF

 

4. Real Estate Developers’ Mortgage Schemes

With the rising need for homes, most real estate developers began to implement their financing plans for potential homebuyers. These developers offer mortgage facilities in conjunction with financial institutions to allow buyers to purchase homes in instalments while living in them.

As a general rule, they don’t require large amounts of money down and allow immediate occupancy. These payments are set according to the income of the buyer and are to be paid monthly for a period of 10 to 15 years.

 

Features of Developer Mortgage Schemes:

- Flexible payment plans

- Small down payment needed

- Provides a direct means to home ownership with developers in Nigeria’s real estate market

 

The Mortgage Loan Process in Nigeria

1. Eligibility Check and Documentation

The first step in the mortgage loan application process in Nigeria is the eligibility check with the lender, which is often a state government, bank or PMB. They’ll also consider your income, credit score, and savings to determine your eligibility for a mortgage loan.

You’ll need to provide things like:

- Proof of identity

- Proof of income

- Bank statements

- Proof of employment

- Proof of savings or down payment (usually between 10%-30% of property value)

 

2. Loan Application and Approval

If you are deemed eligible, then you may continue on to the application. They will value you according to the property value and your credit. After the application is approved, the lender forwards a loan offer outlining the interest rate, repayment period and amount of loan.

 

3. Disbursement and Repayment

After you’ve accepted the loan offer, the mortgage lender will disburse funds to you or the seller if you’re buying a property, based on the type of loan. Payment typically starts immediately after funds are disbursed, and you will make monthly payments for a specified repayment term of typically 5-25 years.

 

Main Takeaways

In Nigeria, there is a need for patience and much knowledge to proceed with mortgages. Of importance to remember are the conclusions:

- Interest Rates Matter: In Nigeria, Mortgage rates are between 6% – 20%. But while making the decisions, always compare PMBs and Commercial Bank as well as government schemes.

- Eligibility Considerations: The loan will be based on your income, credit and savings. Get your documentation ready before you apply.

- First-time Homebuyers Have Options: Nigerian first-time homebuyers are provided with options such as subsidized-rate and term, government-backed mortgages, through the National Housing Fund (NHF).

- Lagos Real Estate Boom: About the Lagos real estate, it should be pointed out that the city is still in a process of rapid growth, which has kept the demand for home financing products as well.

Whether your goal is to buy a home in Nigeria, fund your dream house, or enter into real estate investing, understanding the mortgage loan process in Nigeria will help you have options and any one of those become possibilities within the Nigerian property market.