The 2.5% National Housing Fund deduction.
Monthly NHF deduction
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Annual NHF
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Rate
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What the National Housing Fund is for
The National Housing Fund is a scheme run through the Federal Mortgage Bank of Nigeria, designed to pool small monthly contributions from workers and channel them into affordable housing finance. The deal is straightforward. You contribute a slice of your pay, and in return you become eligible to apply for an NHF mortgage, typically at a rate well below what a commercial bank would quote. This calculator does one focused job. It takes your monthly basic salary and works out the contribution, then the annual total. It is aimed at salaried employees trying to understand a line on their payslip, and at anyone weighing up whether to keep contributing now that the rules have loosened.
The headline rate the calculator applies is 2.5 percent, and it is charged on basic salary alone. That is the single most misread part of the scheme, so it is worth stating plainly. Contributions are not based on your full gross pay, only on the basic component. Allowances for housing, transport, and the rest do not count toward the contribution base.
The calculation, and why basic salary is the base
The arithmetic is the simplest on this site. The tool multiplies your monthly basic by the 2.5 percent rate to get the monthly deduction, then multiplies by twelve for the annual figure. Nothing tapers, nothing brackets, it is a flat percentage. The reason basic salary is the base, rather than gross, traces back to how Nigerian payroll is structured. Salaries are commonly split into a basic component plus a set of allowances, and a string of statutory items, the National Housing Fund among them, hang off basic rather than the total package. So an employee with a high basic contributes more than a colleague on the same total pay but a lower basic.
A NGN 200,000 monthly basic
Take the figure the tool loads by default, using the rate this calculator applies. Your monthly basic salary is NGN 200,000. The contribution is 2.5 percent of that, which is NGN 5,000 a month. Over twelve months that totals NGN 60,000 for the year. If your basic were higher or lower, the figure scales in direct proportion, since it is a flat rate. A worker on a NGN 100,000 basic would contribute NGN 2,500 a month, and one on NGN 400,000 would contribute NGN 10,000.
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The chart puts the contribution in proportion, showing how much of basic salary leaves as the National Housing Fund deduction.
Voluntary now, but still a tax break
A meaningful change worth understanding is that compliance is now voluntary for private-sector employees rather than compulsory. For years the deduction was mandatory across formal employment. Under the current position the calculator reflects, a private-sector worker can opt out. That raises a real decision. The contribution is small, and it keeps the door open to a below-market NHF mortgage, which for someone planning to buy a home can be worth far more than the deductions cost. On the other hand, the fund has a long reputation for slow withdrawals and a clunky loan process, so some workers prefer to keep the money and finance housing another way. There is one more point in its favour. The contribution counts as a deductible relief for personal income tax, so it trims your chargeable income and slightly reduces the PAYE you pay. Because the 2025 reform is reshaping reliefs and the Federal Inland Revenue Service is being reorganised into the Nigeria Revenue Service, confirm the current treatment with the FIRS and the Federal Mortgage Bank before deciding.
Can I get my National Housing Fund money back if I never take a mortgage?
In principle yes. Contributors who do not take an NHF loan can apply to be refunded their contributions, usually with some interest added, on retirement or at age 60, or earlier in certain circumstances. In practice the refund process has a reputation for delay, so treat any payout as a long-term claim rather than accessible savings, and keep your contribution records.
Does the 2.5 percent come out on top of my pension?
Yes, they are separate deductions on different bases. Pension is 8 percent for the employee on emolument, which is basic plus housing and transport, while the National Housing Fund is 2.5 percent on basic alone. Both can appear on the same payslip and both are deductible reliefs for income tax. This tool isolates the National Housing Fund figure, so use the pension calculator alongside it to see the combined effect on your take-home.