FMBN Launches Non-Interest Mortgage Scheme to Expand Homeownership in Nigeria
The Federal Mortgage Bank of Nigeria (FMBN) has launched a non-interest mortgage product designed to help more Nigerians become homeowners, offering an alternative to conventional interest-based housing loans.
The product, known as Ijarah Muntahia Bittamleek, operates under a lease-to-own arrangement. It allows eligible National Housing Fund (NHF) contributors to occupy a residential property through agreed rental payments and take ownership after fulfilling the terms of the contract.
The Minister of Housing and Urban Development, Muttaqha Rabe-Darma, announced the launch on Tuesday, October 27, 2026, in Kano State.
According to the minister, the initiative aims to expand access to housing finance, particularly for Nigerians who prefer not to use conventional interest-based mortgages because of their financial or ethical convictions.
How FMBN’s Non-Interest Mortgage Works
Under the Ijarah Muntahia Bittamleek model, a property is acquired by the financing institution and leased to an eligible customer. The customer makes agreed rental payments while occupying the property, with ownership transferred at the end of the contract once all stipulated obligations have been fulfilled.
The arrangement provides another option for Nigerians seeking to own homes without using a conventional interest-based mortgage.
FMBN Managing Director and Chief Executive, Shehu Usman-Osidi, said the product was intended to make housing finance more inclusive and provide additional opportunities for eligible NHF contributors.
He explained that the bank wanted to widen the mortgage market and ensure that contributors who prefer non-interest financing are not excluded from opportunities to own homes.
The bank said the product is available to eligible NHF contributors across Nigeria, regardless of their religion or location.
FMBN Seeks to Expand Access to Mortgage Loans
Speaking at the launch, Rabe-Darma said more than six million Nigerians contributed to the National Housing Fund, but the bank had historically granted fewer than 500 individual mortgages annually.
He said the new product would help address the gap between NHF participation and access to mortgage financing.
The launch also marks the first public product introduced under the National Mortgage Industry Policy issued by the Federal Ministry of Housing and Urban Development in July 2026.
Under the policy, FMBN is expected to direct at least 40 per cent of annual NHF collections towards mortgage financing and increase its maximum loan limit from ₦50 million to ₦85 million.
The policy also sets a target of 2,000 mortgages in 2026, rising to 5,000 annually by 2028.
Another objective is to simplify the mortgage application process, with applications expected to be processed within 30 working days under a streamlined eight-document requirement.
These measures are intended to improve access to housing finance and make the process less difficult for eligible applicants.
Informal-Sector Workers Targeted for Greater Access
The housing policy also seeks to increase National Housing Fund membership from six million to 10 million by 2028.
It further targets allocating between 30 and 40 per cent of FMBN’s mortgage bookings to informal-sector workers, including market traders, artisans and transport workers.
Many people in these groups face difficulties accessing conventional mortgages because of irregular income, limited formal employment records and documentation requirements.
Expanding access to mortgage financing for informal-sector workers could help more Nigerians participate in formal housing finance programmes.
However, the effectiveness of this approach will depend on the final eligibility requirements, repayment conditions and the ability of applicants to meet the costs of acquiring a home.
Kano Selected for the Product’s Pilot Implementation
FMBN selected Kano State for the launch because of its commercial importance, large working population and demand for affordable housing.
The bank designated the FMBN housing project in Bichi Local Government Area, developed by AYAB Nigeria Ltd., for the pilot implementation of the scheme.
The launch programme also included plans for the commissioning of the housing estate and the handover of keys to the first beneficiaries.
Kano State Governor Abba Kabir-Yusuf, represented at the event by the Commissioner for Housing Development, Ibrahim Yakubu-Adamu, described the initiative as an important development for Nigeria’s housing finance sector.
The state government expressed support for efforts to improve access to affordable housing.
What the New Mortgage Scheme Means for Nigerians
The introduction of the non-interest mortgage product gives eligible NHF contributors another route to homeownership.
For people who prefer alternatives to conventional interest-based loans, the lease-to-own arrangement could provide a more suitable financing option.
Its broader impact, however, will depend on how accessible the properties are, the total amount beneficiaries must pay, the duration of the agreements and the transparency of the contractual terms.
The bank will also need to ensure that the scheme reaches intended beneficiaries and that the application process remains manageable for people with different income levels.
Although the launch is an important step towards diversifying housing finance in Nigeria, financing alone cannot resolve the country’s housing affordability challenges. Property prices, construction costs, access to serviced land and the supply of affordable homes remain important factors.
The success of the initiative will therefore depend on effective implementation and its ability to translate housing finance into actual homeownership opportunities.
For prospective applicants, the next step is to confirm their eligibility and obtain the official application requirements directly from FMBN before making financial commitments.
