For many Kenyans, owning a home is a major milestone; a dream rooted deeply in our cultural and financial aspirations. However, the cost of buying property outright can be overwhelming. This is where mortgages come in. A mortgage offers a structured way to finance homeownership over time. How exactly does it work, and what should you consider before taking one? This beginner’s guide to mortgages in Kenya breaks it all down for you.
What is a Mortgage?
A mortgage is a loan provided by a financial institution (usually a mortgage lender or a bank) to help you buy a home or property. The lender pays for the property upfront, and you repay the amount over a specified period with added interest.
In Kenya, mortgages are secured loans, meaning the property you are buying serves as collateral. If you fail to repay the loan, the bank can repossess and sell the property to recover its money.
Types of Mortgages in Kenya
Kenyan financial institutions offer different types of mortgage products depending on your needs:
1. Owner-Occupier Mortgages
These are for individuals buying a home to live in. Most banks offer flexible repayment periods (up to 25 years), subject to your age and income.
Ideal for those buying property to rent out. The expected rental income may influence your loan approval and repayment terms.
3. Equity Release Mortgages
If you already own a property, this option allows you to borrow against its value. It is ideal for renovations, expansion, or other needs.
4. Construction Mortgages
For buyers intending to build rather than buy a ready house. Funds are disbursed in stages as construction progresses.
Mortgage Providers in Kenya
Several institutions offer mortgage services in Kenya, including:
Always compare offers from different institutions, especially interest rates, fees, and terms.
Key Mortgage Terms You Should Know
Understanding the language of mortgages can save you from future surprises. Here are common terms:
Most banks consider your income, credit history, age, and existing debt levels. You must have a regular source of income (employment or business).
You’ll need at least 10%–20% of the property value. The higher your deposit, the lower your mortgage burden.
A pre-approval helps you know how much a bank can lend you based on your financial status. It also gives you stronger bargaining power with sellers.
The property must meet the lender’s valuation standards. Many banks require the property to be free of legal issues and situated in an approved location.
Prepare documents such as:
The bank assesses your documents and the property. Once satisfied, they issue an offer letter outlining loan terms.
After signing, the bank processes payment to the seller and you begin making monthly repayments.
Most lenders in Kenya will allow you to borrow up to 90% of the property's value, depending on your income and risk profile. However, the total mortgage repayment should not exceed 40% of your monthly income.
Use a mortgage calculator (available on most bank websites) to estimate how much you can afford.
Mortgage rates vary depending on the lender, market conditions, and whether the rate is:
As of 2025, mortgage rates in Kenya range between 9% and 13% per annum.
Tips Before Taking a Mortgage
Pros and Cons of Mortgages in Kenya
Buying a home is a significant step, and taking a mortgage can be the bridge to achieving this goal. With the right knowledge, planning, and discipline, a mortgage can turn your dream of homeownership into a reality.
Whether you're buying your first home in Nairobi, building in Kitengela, or investing in Mombasa, understanding how mortgages in Kenya work puts you on the right path.
