Authored by the expert who managed and guided the team behind the Nigeria Property Pack
Everything you need to know before buying real estate is included in our Nigeria Property Pack
Buying your first property in Nigeria requires careful financial planning and understanding the local market dynamics. Most first-time buyers need between ₦50-150 million for a decent property in major cities like Lagos or Abuja, with additional costs for legal fees, documentation, and maintenance.
If you want to go deeper, you can check our pack of documents related to the real estate market in Nigeria, based on reliable facts and data, not opinions or rumors.
First-time property buyers in Nigeria should budget for a 30-40% down payment plus additional costs totaling 15-20% of the property value.
Monthly mortgage payments should not exceed 30% of your net income, and you'll need stable employment or business income for loan approval.
| Budget Component | Percentage of Property Value | Example (₦100M Property) |
|---|---|---|
| Down Payment | 30-40% | ₦30-40 million |
| Legal & Documentation | 5-8% | ₦5-8 million |
| Survey & Inspection | 2-3% | ₦2-3 million |
| Agent Commission | 5-10% | ₦5-10 million |
| Registration & Taxes | 3-5% | ₦3-5 million |
| Total Initial Cost | 45-66% | ₦45-66 million |
How much money do you need saved for a down payment right now?
You need between ₦15-60 million saved for a down payment in Nigeria's major property markets as of September 2025.
In Lagos, the minimum down payment for a decent 2-bedroom apartment ranges from ₦30-40 million, representing 30-40% of property values. Abuja requires similar amounts, while Port Harcourt and other secondary cities may accept ₦15-25 million down payments.
Nigerian banks typically require higher down payments from first-time buyers compared to repeat purchasers. Most lenders demand 30% minimum for new buyers, though some specialized first-time buyer programs accept 25% with additional requirements like mortgage insurance.
Foreign buyers face even stricter requirements, often needing 40-50% down payments. This protects lenders against currency fluctuation risks and reflects the higher perceived risk of non-resident borrowers.
Your down payment should come from verifiable savings, not borrowed funds, as banks scrutinize the source of these payments during approval processes.
What percentage of the purchase price should you put down without draining your emergency fund?
Put down 30-35% of the purchase price while maintaining at least 6 months of living expenses in your emergency fund.
This percentage balances loan approval requirements with financial security. Nigerian banks prefer higher down payments, but stretching to 40-50% could leave you financially vulnerable to unexpected expenses or income disruptions.
Calculate your emergency fund as 6-12 months of total living expenses, including rent, food, utilities, transportation, and debt payments. If putting down 35% would reduce this fund below 6 months of expenses, consider waiting to save more or looking at less expensive properties.
Remember that property ownership brings additional costs beyond mortgage payments. You'll need funds for maintenance, repairs, property taxes, and insurance from day one of ownership.
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How much do you currently earn each month after taxes, and how stable is that income?
Your net monthly income should be at least ₦1.5-2 million to comfortably afford property purchases in Nigeria's major markets.
Banks evaluate income stability over the past 2-3 years when approving mortgages. Salaried employees with consistent pay stubs have easier approval processes than business owners or freelancers, who must provide tax returns, bank statements, and business financial records.
If you're self-employed, banks typically require 3 years of consistent business income and may use conservative estimates of your earnings for qualification purposes. They might average your income over multiple years rather than using your highest earning year.
Multiple income sources can strengthen your application if properly documented. Rental income from existing properties, dividends, or part-time work can count toward qualification, though lenders may only consider 70-80% of variable income sources.
Income in foreign currencies adds complexity but can work in your favor if properly structured. Banks may require currency hedging or additional documentation for USD, EUR, or GBP earnings.
What's the maximum monthly mortgage payment you can afford without exceeding 30-35% of your net income?
Your maximum monthly mortgage payment should stay between ₦450,000-700,000 if you earn ₦1.5-2 million net monthly income.
The 30% rule protects you from becoming house-poor, leaving adequate funds for other expenses, savings, and unexpected costs. Nigerian financial advisors recommend staying closer to 25-30% rather than stretching to 35%, given the country's economic volatility.
This calculation should include principal, interest, property taxes, insurance, and homeowners association fees where applicable. Many buyers forget to factor in property taxes and insurance, which can add ₦100,000-300,000 monthly to your housing costs.
Consider inflation and potential interest rate changes when calculating affordability. Nigerian mortgage rates can fluctuate significantly, and variable-rate loans expose you to payment increases over time.
If you're stretching to afford a property, consider starting with a smaller property and upgrading later, rather than overextending yourself initially.
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How much existing debt do you have, and what are your monthly payments?
Banks in Nigeria typically reject mortgage applications if total debt payments exceed 40-45% of your gross monthly income.
Calculate all existing monthly debt obligations including credit cards, personal loans, car loans, student loans, and any other financing arrangements. Even small monthly payments can impact your mortgage qualification significantly.
Credit card debt receives particular scrutiny from Nigerian lenders. High credit card balances suggest financial stress and poor money management, even if you make minimum payments consistently.
Consider paying down high-interest debt before applying for a mortgage. Eliminating a ₦50,000 monthly credit card payment could increase your mortgage qualification by ₦8-12 million in total borrowing capacity.
Some buyers strategically pay off car loans or personal loans early to improve their debt-to-income ratios before applying for mortgages.
What is your current credit score, and how will it impact your mortgage rate?
Nigerian credit scores range from 300-850, with scores above 650 qualifying for the best mortgage rates available.
| Credit Score Range | Mortgage Rate Impact | Typical Interest Rate |
|---|---|---|
| 750-850 (Excellent) | Best available rates | 15-18% annual |
| 650-749 (Good) | Standard rates | 18-22% annual |
| 550-649 (Fair) | Higher rates, stricter terms | 22-26% annual |
| 450-549 (Poor) | Very limited options | 26-30% annual |
| Below 450 (Very Poor) | Likely rejection | Not typically approved |
Check your credit report through CRC Credit Bureau or XDS Credit Bureau at least 6 months before applying for a mortgage. This gives you time to correct errors, pay down balances, and improve your score.
A 100-point credit score improvement can reduce your interest rate by 2-4 percentage points, saving hundreds of thousands of naira over the loan term.
What are the average property prices in your target neighborhood or city?
As of September 2025, average property prices vary dramatically across Nigerian cities and neighborhoods.
| Location | 2-Bedroom Apartment | 3-Bedroom House |
|---|---|---|
| Lagos Island (Victoria Island) | ₦120-200 million | ₦250-400 million |
| Lagos Mainland (Ikeja) | ₦60-100 million | ₦150-250 million |
| Abuja (Maitama/Asokoro) | ₦100-180 million | ₦200-350 million |
| Abuja (Gwarinpa/Kubwa) | ₦40-80 million | ₦100-180 million |
| Port Harcourt (GRA) | ₦50-90 million | ₦120-200 million |
| Kano/Kaduna | ₦25-50 million | ₦60-120 million |
Premium neighborhoods in Lagos and Abuja command the highest prices, with waterfront properties and those in diplomatic zones reaching ₦500 million or more for luxury units.
Emerging areas like Lekki Phase 2, Ajah, or newer Abuja districts offer better value but may lack complete infrastructure development.
What are the typical property taxes, HOA fees, and insurance costs annually?
Annual property-related costs typically add 3-8% of your property's value to your yearly expenses.
Property taxes in Nigeria vary by state, ranging from 0.375% to 1% of assessed property value annually. Lagos charges approximately 0.375% for owner-occupied residential properties, while Abuja levies around 0.5-1% depending on the district.
Homeowners association fees in gated communities or apartment complexes range from ₦50,000-500,000 annually, depending on amenities and services provided. Premium developments with 24-hour security, generators, water treatment, and recreation facilities charge higher fees.
Property insurance costs ₦200,000-800,000 annually for comprehensive coverage including fire, theft, and natural disasters. Mortgage lenders require insurance coverage equal to the loan amount.
Service charge for apartment complexes adds another ₦100,000-1,000,000 annually for maintenance of common areas, elevators, generators, and shared utilities.
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We did some research and made this infographic to help you quickly compare rental yields of the major cities in Nigeria versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
How much will you spend on maintenance, repairs, and utilities monthly?
Budget ₦200,000-600,000 monthly for maintenance, repairs, and utilities on a typical residential property in Nigeria.
Utilities including electricity, water, waste collection, and security typically cost ₦150,000-400,000 monthly in major cities. Electricity costs vary dramatically based on your distribution company and whether you rely on grid power or generators.
Maintenance and repairs should be budgeted at 1-3% of property value annually, or roughly ₦80,000-250,000 monthly for a ₦100 million property. Nigerian properties require more frequent maintenance due to climate conditions, power fluctuations, and infrastructure challenges.
Generator maintenance, fuel costs, and water tank cleaning add significant expenses that buyers often underestimate. Budget an additional ₦50,000-150,000 monthly for these essential services.
Gated communities often provide some utilities and maintenance through service charges, potentially reducing individual costs but adding mandatory monthly fees.
What upfront costs will you face besides the down payment?
Expect upfront costs of 15-20% of the property value on top of your down payment.
- Legal fees and documentation: 3-5% of property value for lawyer fees, due diligence, and contract preparation
- Survey and property inspection: 1-2% for professional surveying, structural inspection, and title verification
- Registration and government fees: 2-3% for Certificate of Occupancy, Governor's Consent, and deed registration
- Real estate agent commission: 5-10% of property value, sometimes split between buyer and seller
- Bank charges and valuation: 1-2% for mortgage processing, property valuation, and loan origination fees
- Insurance premiums: First year's insurance payment upfront
- Mortgage insurance: Required by some lenders, typically 0.5-1% of loan amount annually
These costs are largely unavoidable and should be factored into your total budget from the beginning of your property search.
How long do you plan to stay, and does renting make more sense short-term?
If you plan to stay less than 5-7 years, renting often makes more financial sense than buying in Nigeria's current market.
Transaction costs for buying and selling property in Nigeria range from 20-30% of property value when combined. These high costs mean you need significant property appreciation or rental savings to break even on a purchase.
Rental yields in Nigerian cities average 4-8% annually, meaning it takes 12-25 years for rental savings alone to justify purchase costs. Factor in maintenance, taxes, and transaction costs, and the break-even period extends further.
Consider buying if you value stability, want to build equity, or plan to rent out the property for additional income. Many buyers in Nigeria purchase property as much for investment potential as for personal residence.
Renting provides flexibility to change neighborhoods, upgrade or downsize easily, and avoid maintenance responsibilities - significant advantages in Nigeria's evolving urban landscape.
What mortgage options are available to first-time buyers, and how do rates compare?
First-time buyers in Nigeria can access mortgages from commercial banks, mortgage banks, and government programs with rates ranging from 15-30% annually as of September 2025.
| Lender Type | Interest Rate Range | Maximum Loan Term |
|---|---|---|
| Commercial Banks | 18-25% annual | 15-20 years |
| Mortgage Banks | 15-22% annual | 20-25 years |
| Federal Mortgage Bank | 15-18% annual | 25-30 years |
| NHF (National Housing Fund) | 10-12% annual | 30 years |
| Cooperative Societies | 12-20% annual | 10-15 years |
The National Housing Fund offers the most attractive rates for eligible contributors, requiring regular monthly contributions before you can access loans. Most formal sector employees contribute 2.5% of their salary to qualify.
Federal Mortgage Bank of Nigeria provides competitive rates but has strict qualification requirements and limited funding availability.
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Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
First-time property buyers in Nigeria need substantial upfront capital and stable income to navigate the market successfully.
Careful budgeting for all costs beyond the purchase price is essential for long-term financial stability as a property owner.