Understanding Kenya Mortgage Refinance Company (KMRC) and Affordable Housing Loans

Home ownership in Kenya has historically been out of reach for most citizens, with mortgage interest rates averaging 13–16 percent and less than 30,000 active mortgages in a country of 55 million people. The Kenya Mortgage Refinance Company (KMRC) was established to change this reality by providing long-term, affordable funding to banks and SACCOs, enabling them to offer home loans at rates as low as 10 percent per annum or less. By August 2025, KMRC had disbursed over KES 21.4 billion and facilitated more than 4,500 affordable home loans across 39 counties. This guide explains how KMRC works, who qualifies, which lenders participate, and how you can access an affordable mortgage through this programme.

What Is KMRC and How Does It Work?

KMRC was incorporated on 19th April 2018 by the National Treasury as a specialised wholesale financial institution. Its single purpose is providing long-term, fixed-rate funds to Primary Mortgage Lenders (PMLs) — commercial banks and SACCOs — so they can issue affordable home loans to Kenyans. KMRC does not lend directly to individual borrowers; instead, it refinances mortgages originated by participating lenders.

The mechanism works like this: KMRC lends money to banks and SACCOs at 5 percent per annum. These lenders then on-lend to home buyers at a maximum of 10 percent per annum. This is significantly lower than the typical commercial mortgage rate of 13–16 percent. KMRC raises its funds through bond issuances on the capital markets, backed by the government guarantee and international development finance institutions. The International Finance Corporation (IFC) holds an 11.82 percent stake, and Shelter Afrique Development Bank holds 11.06 percent, providing both capital and technical expertise.

Who Qualifies for a KMRC-Funded Mortgage?

KMRC-funded mortgages are designed for ordinary Kenyans seeking to buy or build affordable homes. The eligibility criteria include:

Income threshold: Borrowers must earn a gross monthly income that qualifies them for affordable housing — generally targeting lower and middle-income earners. Loan limits: The maximum loan amount is KES 10.5 million nationwide (increased from previous limits of KES 8 million in Nairobi and KES 6 million elsewhere). This means KMRC-funded mortgages are suitable for properties priced up to approximately KES 10.5 million, depending on your deposit. Property type: The loan must be for purchasing a residential property — either a house or apartment. Construction loans for building your own home on your land are also eligible through participating lenders. First-time homeowners: While not strictly limited to first-time buyers, the programme prioritises Kenyans who do not already own a home. Citizenship: Borrowers must be Kenyan citizens.

Participating Banks and SACCOs

KMRC works through a network of licensed Primary Mortgage Lenders. Major participating banks include: KCB Bank, Co-operative Bank, Diamond Trust Bank (DTB), HF Group, NCBA, Stanbic Bank Kenya, Absa Bank Kenya, and Credit Bank. Several SACCOs also participate, holding a 7.47 percent stake in KMRC collectively. Microfinance banks hold 0.6 percent. To access a KMRC-funded mortgage, approach any of these participating lenders directly. They assess your creditworthiness using standard mortgage underwriting criteria (income verification, credit history, employment stability) and, if approved, originate the mortgage at the KMRC-subsidised rate.

The Application Process

Step 1 — Choose a participating lender. Visit a bank or SACCO that participates in the KMRC programme. Ask specifically about their "affordable housing mortgage" or "KMRC-funded home loan" product. Step 2 — Pre-qualification. The lender assesses your income, existing debts, employment status, and credit score to determine how much you can borrow. Monthly mortgage repayments should generally not exceed 33 percent of your gross monthly income. Step 3 — Property identification. Find a property within the KMRC loan limit (up to KES 10.5 million). The property must meet the lender's valuation standards and have a clean title. Step 4 — Formal application. Submit a completed mortgage application with supporting documents: national ID, KRA PIN, six months' bank statements, payslips (for employed) or audited accounts (for self-employed), sale agreement, and property valuation report.

Step 5 — Approval and disbursement. The lender processes your application, conducts due diligence, and if approved, disburses funds to the property seller. The lender then submits the mortgage for KMRC refinancing. The entire process typically takes four to eight weeks from application to disbursement.

Affordable Housing Programme and Levy

KMRC operates alongside the government's broader Affordable Housing Programme (AHP), which aims to deliver 250,000 affordable housing units. The Affordable Housing Levy — a 1.5 percent deduction from gross salary matched by the employer — funds this programme. Contributions can be used towards purchasing an AHP unit, with the government offering a KES 2.7 million maximum tax relief on affordable housing contributions. KMRC-funded mortgages can be used to purchase AHP units, creating a comprehensive affordability ecosystem that combines subsidised financing (through KMRC) with subsidised housing supply (through AHP).

Comparing KMRC Mortgages with Commercial Mortgages

The financial advantage of KMRC-funded mortgages is substantial. On a KES 5 million, 20-year mortgage, a KMRC rate of 10 percent results in monthly repayments of approximately KES 48,250, with total interest over the life of the loan at KES 6.58 million. The same loan at a commercial rate of 14 percent costs KES 62,130 monthly, with total interest of KES 9.91 million. That is a saving of KES 13,880 per month and KES 3.33 million over the loan term. These savings make the difference between home ownership being achievable or impossible for many Kenyan families.

Challenges and Future Outlook

Despite significant progress, challenges remain. The KES 10.5 million loan limit excludes many properties in Nairobi's prime and upper-mid market areas. The number of participating lenders, while growing, still does not include all banks and SACCOs. Self-employed borrowers face stricter documentation requirements. However, KMRC's trajectory is positive — disbursements have grown rapidly year over year, with KES 13.9 billion disbursed in the financial year ending December 2024 alone. As more lenders join, loan limits potentially increase, and the affordable housing supply expands through AHP developments, KMRC is steadily making home ownership accessible for ordinary Kenyans.