In short: employees contribute 2.5% of their basic salary each month. The employer deducts it from pay and remits it to the Federal Mortgage Bank of Nigeria, which manages the fund. It is taken off before PAYE is worked out.
What the National Housing Fund is
The National Housing Fund was set up by the National Housing Fund Act to give Nigerian workers access to affordable, long-term housing loans. Contributions are pooled and managed by the Federal Mortgage Bank of Nigeria (FMBN), and lent out through approved primary mortgage banks.
How much, and on what
The contribution is 2.5% of the employee’s monthly basic salary, not of the full gross pay. Someone on a basic salary of ₦250,000 contributes ₦6,250 a month.
The employer’s part
- Register the company and its staff with the Federal Mortgage Bank of Nigeria.
- Deduct 2.5% of basic salary from each contributing employee every month.
- Remit the contributions to the FMBN with the list of staff and amounts, and keep the records.
- Show the deduction on each payslip.
How it affects PAYE
NHF contributions are taken off before income tax is worked out, so they reduce the tax each person pays. In the example in our PAYE guide, NHF takes ₦75,000 off a year’s taxable income.
What staff get from it
- Housing loans: contributors can apply, through a primary mortgage bank, for an NHF mortgage at a lower interest rate and over a longer term than a typical commercial loan, subject to the fund’s conditions.
- A refund: contributions are refundable with interest, for example at retirement, under the fund’s rules.
Keeping it right every month
In Keelsum’s payroll, NHF is switched on for each person who contributes, worked out on their basic salary, taken off before PAYE, shown on their payslip and posted to your books as a liability until it is paid.
This guide is general information as we understand the rules in 2026, not legal or tax advice. The fund’s rules can change: check with the Federal Mortgage Bank of Nigeria or your adviser.