Making a down payment on a house in Nigeria is one of the biggest hurdles most Nigerians face. Studies show that over 60% of Nigerians struggle to accumulate the necessary funds for a down payment. 

This is due to rising property prices and limited financial resources. However, saving for a down payment can become an achievable goal. 

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In this article, you get to learn 9 realistic tips on how to save for a down payment to buy a house in Nigeria.

Down Payment: What it is

Down payment also known as Initial deposit refers to the upfront payment you make when buying a house. Most lenders require you to put down a certain amount of cash upfront. 

It’s usually 5% to 20%. Your mortgage covers the rest of the payments remaining after the down payment.

The first down payment is referred to as Earnest Money. The rest paid to close the property purchase is called Remainder. 

In most cases, down payment is not refundable. This depends on the property selling agency policy

How to Save for a Down Payment on a House in Nigeria

Saving for a house is like saving for the future. You need to know how to effectively save up in order to make that dream house a reality. 

Here’s a list of how to save for a down payment on a house in Nigeria:

• Know the kind of house

• Personal savings

• Taking advantage of government schemes

• Selling off assets

• Borrowing from family and friends
• Taking a loan

1. Evaluate your Financial Situation

Check out your current financial situation. Observe if there are some financial habits, or situations to address. This might include clearing some debts or catching up on late payments. 

Also, you evaluate your income, expenses, and debt to determine how much house you can afford. It also determines what the down payment and closing costs will be.

2. Know the Kind of House You Want to Buy

It is important to know the type of property you want to buy. This will help you determine the required cost of buying the house. You also get to know the saving system to utilize in achieving this. 

If the house is expensive, it will take a longer time to save up. It will definitely require a larger percentage of the purchase fee as down payment. 

However, if the house is affordable, the fees will be less. 

3. Personal Savings

Personal savings is the commonest way of saving for a down payment on a house in Nigeria. You may have enough money to cover the down payment of a house.

This depends on how long you have been saving. Automating your savings also makes you stay consistent to your saving plan. This helps increase your savings.

This is alternatively the best option. It doesn’t involve taking loans or borrowing. However, it might take a longer time to save up especially if the budget is high.

4. Cut Down Your Expenses

You might consider cutting back on your expenses. This is a great way of freeing up money for your savings goal.  You can cut down expenses on;

• Recurring subscriptions
• Cable and streaming
• Entertainment
• Travel

5. Take Advantage of Government Schemes

There are so many government schemes that can help you save for a down payment. One of such schemes is the National Housing Fund (NHF). The NHF allows contributors to save towards owning a house. 

Once you’ve saved up to a certain amount, you can apply for a loan to buy a house or land. Other schemes include Lagos HOMS and the Federal Mortgage Bank of Nigeria (FMBN) housing loans.

6. Selling Off Assets

Selling of assets is another way you save for a down payment. These assets can be cars, jewellery or other valuable items. You can sell them to raise the funds needed for a down payment. 

This option may not be ideal if you don’t have any valuable assets or if the items you have aren’t worth enough to cover the down payment.

7. Borrowing from Family and Friends

You can consider the option of borrowing from family and friends. You can use the funds to make a down payment on a house you want. 

However, it’s important to have a written agreement in place. This outlines the terms of the loan, such as repayment schedule and interest rates. 

 8. Take a Loan

You can consider taking a loan to fund the down payment on a house. There are various loan options available for you if you are saving up for a down payment. There can be personal loans or home equity loans.

There are different financing institutions that give out loans for buying a house. These include banks, cooperative societies, mortgage institutions and so many others.

However, bear it in mind that taking out a loan will result in debt. You will have to make monthly payments towards paying off the loan.

9. Multiple Source of Income

Adding more income to your budget can also accelerate your savings progress. Some ideas to increase your income include:

• Getting a promotion at your job.
• Changing jobs for a higher-paying position.
• Take on side hustles.
• Start a small business. 
• Sell items around the house for extra money.
• Look for passive income opportunities.

Conclusion

There are different ways to plan and save up for down payment on a house you are interested in acquiring. However, you have to be determined about it. 

Do not be in a rush. Explore your financing options and ask a lot of questions to be well informed. This enables you to weigh your options and choose what works best for you.

If you are looking to purchase a home as an individual or family, check out Win Realty. This guides in making the best decision when it concerns buying a house in Nigeria.