The Federal Government has unveiled a non-interest, lease-to-own mortgage scheme for eligible National Housing Fund (NHF) contributors, with Kano State serving as the first location for its rollout.

The initiative, introduced by the Federal Mortgage Bank of Nigeria (FMBN), is designed to expand access to homeownership by providing an alternative to conventional interest-based mortgage financing.

The scheme, known as Ijarah Muntahia Bittamleek, was inaugurated on Tuesday by the Minister of Housing and Urban Development, Dr. Muttaqha Darma, and the FMBN Managing Director, Shehu Osidi.

Under the arrangement, beneficiaries will live in a property and make agreed rental payments over a specified period before acquiring full ownership in accordance with the lease terms.

Darma said more than six million Nigerians contribute to the NHF, but the FMBN has historically recorded fewer than 500 individual mortgage transactions annually. He attributed the limited uptake partly to the reluctance of some contributors to access interest-bearing loans.

He said the new product would give eligible contributors another opportunity to own homes without compromising their financial or ethical principles.

The government emphasised that the scheme is open to qualified NHF contributors regardless of their religious beliefs.

The launch is the first public product introduced under the National Mortgage Industry Policy released in July 2026. The policy requires the FMBN to allocate at least 40 per cent of annual NHF collections to mortgage financing and increase its maximum loan limit from N50 million to N85 million.

It also stipulates that mortgage applications should be processed within 30 working days using eight required documents. The bank is expected to record 2,000 mortgages in 2026 and increase annual transactions to 5,000 by 2028, alongside publishing quarterly mortgage data.

Osidi said the scheme would broaden the range of housing finance options available to Nigerians and promote greater participation in the mortgage market.

He pointed to the expansion of Islamic finance as evidence of the potential for non-interest financial products to support housing development. Global Islamic finance assets stood at $5.98 trillion in 2024, while Nigeria’s Islamic finance industry grew from N2.5 trillion in 2023 to more than N4.4 trillion in 2024.

Kano was selected for the initial launch because of its commercial significance in northern Nigeria and demand for affordable housing and ethical financing options. The bank said the programme would subsequently extend to Lagos, Port Harcourt, Enugu, Ibadan, Maiduguri, Sokoto, Abuja and other urban centres.

For the pilot phase, the FMBN has selected its housing development in Bichi, Kano State, built by AYAB Nig. Ltd. The first beneficiaries are expected to receive their house keys following the launch ceremony.

The government is also targeting an increase in NHF membership from six million to 10 million by 2028. Plans to achieve this include expanding participation through trade unions, cooperatives and employers, as well as introducing a diaspora contribution window that will accept payments in foreign currencies.

To protect mortgage customers, Darma announced plans for a Mortgage Consumer Charter that will outline payment obligations, the conditions for acquiring property ownership and the responsibilities of the Office of the Mortgage Industry Regulatory.

The minister also disclosed that the Federal Government, 19 state governments and eight professional bodies had validated an estimated national housing deficit of 15 million units.

He said a proposal had been submitted to President Bola Ahmed Tinubu to consolidate federal housing, mortgage and related institutions under one ministry to improve coordination and implementation.

The proposed structure would bring together NHF collections, refinancing through the Mortgage Refinance and Investment Fund (MREIF), housing development by the Federal Housing Authority and investments by Family Homes Funds.

The government said the arrangement is intended to coordinate financing and construction activities in support of the Tinubu administration’s Mass Social Housing Scheme, with the goal of expanding housing delivery across local government areas nationwide.