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The short answer
The National Housing Fund deduction is 2.5% of an employee's monthly income, remitted to the Federal Mortgage Bank of Nigeria (FMBN). Since the Business Facilitation Act amended the NHF Act in February 2023, contribution is compulsory only for public-sector employees earning the national minimum wage or more and for the self-employed; private-sector employees may contribute voluntarily, and their employer then deducts and remits for them.
What changed in 2023
Under the NHF Act 1992 as originally framed, private employers were expected to deduct NHF from their staff. Section 45 of the Business Facilitation (Miscellaneous Provisions) Act 2022, signed in February 2023, changed that. Templars' April 2023 note on the amendment summarises the position now:
| Who | NHF position after the 2023 amendment |
|---|---|
| Public-sector employees earning the national minimum wage or more | Compulsory |
| Self-employed persons | Compulsory |
| Private-sector employees | Voluntary, at 2.5% of monthly income |
So a private company is no longer obliged to deduct NHF from every employee. If an employee chooses to contribute, the employer deducts and remits under section 9 of the Act, as before. Many private payrolls still carry the line from earlier years; review it rather than leaving it on by default.
When a private employer should still deduct
- An employee asks in writing to contribute, usually because they want to apply for an NHF mortgage loan later.
- A collective agreement or company policy commits the employer to running the scheme for staff who opt in.
- The employer is a public body, or is treated as part of the public sector.
Keep each employee's written opt-in or opt-out on file. That record answers any later question about why a deduction was or was not made.
The steps for an employer
LawCare Nigeria's October 2024 overview of the scheme describes the registration forms. Confirm current procedures with FMBN, as channels may have moved online.
- Register the employer with FMBN using Form NHF1 to obtain an employer number.
- Register each contributing employee with Form NHF2 to obtain their participation number. LawCare gives 21 as the minimum age.
- Calculate the deduction: 2.5% of the employee's monthly income. LawCare's overview uses basic monthly salary as the base; confirm the base with FMBN for your pay structure.
- Deduct and remit to FMBN through the channel it specifies, and keep the remittance evidence with your payroll records.
- Show it on the payslip so the employee can reconcile it with their FMBN statement.
Is NHF tax-deductible?
We did not confirm how NHF contributions are treated under the Nigeria Tax Act 2025 in the sources we read, so ask your state tax authority before deducting it from taxable income in your PAYE calculation.
Opt-ins, opt-outs and staff who move
Because private-sector contribution is now a choice, treat it like any other voluntary deduction. Ask new hires at onboarding whether they want to contribute and record the answer. If an existing employee asks to stop, take the request in writing, confirm the month from which the deduction ends, and make sure everything already deducted up to that point has reached FMBN. If they later want to restart, record that too.
The NHF number belongs to the contributor, not the employer, so an employee who changes jobs keeps the same participation number and gives it to the new employer if they continue. When someone leaves, give them a statement of what you deducted and remitted during their employment. That single page saves a lot of trouble if they later apply for a loan or a refund and find gaps in their FMBN record.
What contributors get back
Templars notes that section 20 of the NHF Act lets a contributor who has not taken an NHF housing loan claim a refund at age 60 or on retirement, with interest at a rate the Minister prescribes; the claim is made within three months. LawCare's overview describes NHF mortgage loans at a fixed 6%. Loan terms, eligibility and limits are FMBN's to set, so check its current product pages before an employee relies on them.
Penalties
LawCare's overview cites section 20 penalties for employers who fail to deduct or remit, including a fine of ₦50,000. For a private employer the main risk now is different: deducting from staff and then not remitting. Money deducted from salary is held for the employee, and failing to pass it on is treated seriously.
What to check first
- Are you public or private sector? Private employers deduct only for staff who opt in.
- Is there a written opt-in for each employee you deduct from?
- Do you have an FMBN employer number and participation numbers for contributors?
- Are deductions reaching FMBN, and can you prove it?
NHF sits alongside NSITF and ITF; see NHF, NSITF and ITF and the first payroll checklist. For the separate ITF rules, read ITF registration.
Where Pryme fits
Pryme payroll lets you set deductions per employee, so NHF applies only to the people who opted in. The Finance agent can prepare the remittance list each month for a person to approve.
Questions people ask
Is NHF compulsory for private sector workers?
No, not since the 2023 amendment by the Business Facilitation Act. Private-sector employees may contribute voluntarily at 2.5%; it remains compulsory for public-sector staff on minimum wage or more and the self-employed.
How much is NHF deduction?
2.5% of monthly income. For example, ₦5,000 a month on a ₦200,000 basic salary.
How do I register my company for NHF?
Register with the Federal Mortgage Bank of Nigeria using Form NHF1 for an employer number, and register contributing staff with Form NHF2.
Can I get my NHF contribution back?
A contributor who has not taken an NHF loan can claim a refund at 60 or on retirement, with interest at a rate the Minister sets, according to Templars' summary of the Act.
Sources
- Templars: Amendment of the National Housing Fund Act and contribution into the NHF (Apr 2023) · accessed Oct 2026
- LawCare Nigeria: Overview of the National Housing Fund scheme in Nigeria (17 Oct 2024) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.