The National Housing Fund, explained for employers.

1. What the National Housing Fund is

The National Housing Fund (NHF) was established by the National Housing Fund Act of 1992 to create a pool of long-term, low-interest capital that Nigerian workers can borrow against to own a home. It is administered by the Federal Mortgage Bank of Nigeria (FMBN).

In practice, NHF works like a mandatory savings and mortgage-access scheme: employees contribute a small percentage of their salary every month, and in return become eligible for an NHF mortgage loan at a below-market interest rate once they have contributed for a minimum qualifying period.

2. Who must contribute

The NHF Act requires every Nigerian employee earning the national minimum wage or above, working for an employer with a registered establishment, to contribute to the Fund. Employers are responsible for deducting the contribution from salary and remitting it, together with the employee's identifying details, to FMBN.

Employees earning below the minimum wage threshold, and self-employed individuals who are not on a formal payroll, are not required to contribute, though voluntary participation is possible through FMBN's other savings products.

3. The contribution rate

The statutory rate is 2.5% of an employee's monthly basic salary. This is an employee contribution, deducted from pay, not an additional cost the employer bears on top of salary, unlike the employer's share of pension contributions.

The employer's obligation is administrative: deduct the 2.5% correctly every month, and remit it to FMBN along with a schedule identifying each contributing employee, typically by the last working day of the month following the deduction.

4. What employees get in return

• Access to an NHF mortgage loan, generally at a lower interest rate than commercial mortgage products, to buy, build, or renovate a residential property.
• Loan amounts and terms are based on the contributor's income and contribution history, subject to FMBN's lending criteria.
• Contributions remain the employee's asset. If they never take out a loan, accumulated contributions plus interest are refundable at retirement, or to next of kin in the event of death.

5. Remittance and penalties

Employers must remit NHF deductions to FMBN promptly and keep accurate records of each employee's contribution history, since this history determines loan eligibility later. Failure to register with FMBN or to remit deducted contributions is a breach of the NHF Act and can expose an employer to penalties and back-payment demands from FMBN.

6. How Wadata HR handles NHF for you

Wadata HR calculates the 2.5% NHF deduction automatically for every eligible worker on every payroll run, alongside PAYE, pension, and NSITF. Each payslip shows the deduction clearly, and payroll reports include the figures your finance team needs to remit to FMBN on schedule.