NHF means the National Housing Fund, a home-ownership scheme run by the Federal Mortgage Bank of Nigeria (FMBN). Contributors pay 2.5% of their monthly basic salary, which the employer deducts and remits, and in return can apply for low-interest NHF mortgage loans.
Is it compulsory in 2026? For public-sector staff earning the minimum wage or more, yes. For private-sector staff, it's optional since February 2023: each employee chooses.
1. What NHF means
The National Housing Fund (NHF) was set up by the National Housing Fund Act of 1992 to build a pool of long-term, low-interest money that Nigerian workers can borrow from to own a home. It is run by the Federal Mortgage Bank of Nigeria (FMBN).
It works like a savings and mortgage-access scheme: contributors pay a small part of their salary every month, and after contributing for a qualifying period they can apply for an NHF mortgage loan at a below-market interest rate.
2. Is NHF compulsory? Who must contribute in 2026
The rules changed in February 2023, when section 45 of the Business Facilitation (Miscellaneous Provisions) Act 2022 rewrote section 4 of the NHF Act. They still apply in 2026:
| Who | NHF in 2026 |
|---|---|
| Public-sector employees earning the minimum wage or more | Compulsory |
| Private-sector employees earning the minimum wage or more | Optional: the employee chooses |
| Self-employed people earning the equivalent of the minimum wage or more | Compulsory |
| Anyone earning below the minimum wage | Not covered |
For a private employer, that means asking each employee whether they want to contribute, recording the answer, and deducting only for those who say yes.
3. The NHF rate: 2.5% of basic salary
The rate is 2.5% of the employee's monthly basic salary. The 2023 amendment words it as 2.5% of "monthly income", but basic salary remains the usual practice. Check with FMBN if your payroll doesn't separate basic salary.
| Monthly basic salary | NHF deduction (2.5%) |
|---|---|
| ₦100,000 | ₦2,500 |
| ₦150,000 | ₦3,750 |
| ₦300,000 | ₦7,500 |
It is an employee contribution, deducted from pay, not an extra cost to the employer, unlike the employer's share of pension. It also reduces the employee's PAYE: under the Nigeria Tax Act 2025, NHF contributions are deducted before income tax is worked out.
WadataHR records each employee's NHF choice and number, deducts 2.5% only for those who contribute and earn at least the minimum wage, and prepares the NHF schedule every month. Free for up to 5 staff.
4. How employers deduct and remit NHF
- Ask and record: for private-sector staff, record each employee's choice to contribute, and their NHF number if they have one.
- Deduct every month: 2.5% of basic salary for each contributing employee, shown on the payslip.
- Remit with a schedule: pay the total to FMBN with a schedule of names, NHF numbers and amounts within one month of the deduction, as section 9(2) of the NHF Act requires.
- Keep the history: each employee's contribution record decides their future loan eligibility.
FMBN issues circulars on registration and remittance from time to time. Confirm current procedures with FMBN or your adviser before relying on a specific deadline or penalty figure.
5. What employees get in return
- Access to an NHF mortgage loan, generally at a lower interest rate than commercial mortgages, to buy, build or renovate a home.
- Loan amounts and terms depend on the contributor's income and contribution history, subject to FMBN's lending criteria.
- Contributions remain the employee's asset. If they never take a loan, contributions plus interest are refundable at retirement, or to next of kin on death.
6. Penalties for not remitting
Under section 20 of the NHF Act, failing to deduct, or deducting and not remitting, is an offence: the company faces a fine, and the staff responsible face a fine or imprisonment. Paying the penalty doesn't remove the duty to remit what was owed.
NHF questions employers ask
What does NHF mean?
NHF stands for the National Housing Fund, a scheme created by the National Housing Fund Act of 1992 and run by the Federal Mortgage Bank of Nigeria (FMBN). Contributors pay 2.5% of their monthly basic salary into the Fund and become eligible for low-interest NHF mortgage loans to buy, build or renovate a home.
Is NHF contribution compulsory in Nigeria?
Not for private-sector staff. Since February 2023, the Business Facilitation (Miscellaneous Provisions) Act 2022 lets private-sector employees earning the national minimum wage or more choose whether to contribute. It remains compulsory for public-sector employees, and for self-employed people earning the minimum wage or more. When a private-sector employee chooses to contribute, the employer deducts it and remits it to the Federal Mortgage Bank of Nigeria (FMBN).
Is NHF 2.5% of basic salary or gross salary?
In practice, basic salary: 2.5% of the employee's monthly basic salary, not gross pay. On a ₦100,000 basic salary, the deduction is ₦2,500. The 2023 amendment words the rate as 2.5% of "monthly income", so check with FMBN if your payroll doesn't separate basic salary.
What is the NHF deduction in Nigeria?
A monthly 2.5% deduction from the basic salary of each employee who contributes, which the employer remits to FMBN with a schedule identifying each employee. It is an employee contribution, not an extra cost on top of salary, and it reduces the employee's taxable income for PAYE under the Nigeria Tax Act 2025.
What is the current NHF rate?
2.5%, set by the National Housing Fund Act of 1992 and kept by the 2023 amendment. The employer deducts it from the pay of each contributing employee and remits it to FMBN.
How does an employer remit NHF to FMBN?
Deduct 2.5% of each contributing employee's basic salary every payroll run, then remit the total to FMBN with a schedule of names and amounts within one month of the deduction, as section 9(2) of the NHF Act requires. Keep each employee's contribution history: it determines their mortgage eligibility.
Related guides and tools
NHF, PAYE, pension and NSITF on every payslip.
WadataHR works out every deduction correctly, gives staff proper payslips, and prepares the schedules for each authority. Free for up to 5 staff.
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