Up to Sh4 Million in Loans Available for Rural Homebuilders Under New Government Plan

The Kenyan government is set to introduce a new loan scheme offering up to Sh4 million to individuals seeking to build affordable homes in rural areas. 

This initiative marks a major expansion of the Affordable Housing Fund, following the recent approval of new regulations by Parliament aimed at widening the reach of the national housing programme. The Affordable Housing Regulations, 2025—spearheaded by Cabinet Secretary Alice Wahome—are designed to respond to the growing need for accessible housing outside major urban centres. 

The new rules are a step towards realising the constitutional right to adequate shelter for all Kenyans, by extending support to those in rural areas who have often been left out of previous housing efforts. Under the new regulations, eligible applicants must be contributors to the Affordable Housing Fund and must not have previously benefitted from it. 

To qualify for the loan, applicants are required to provide proof of land ownership, obtain relevant building approvals from county governments, and submit detailed construction and valuation plans prepared by registered professionals. These strict requirements are intended to ensure responsible use of the fund and support sustainable development.

The application process also includes a financial assessment. The Board overseeing the Fund will evaluate each applicant’s ability to repay the loan, taking into account their savings history and overall financial standing. In addition, successful applicants will be required to take out life insurance and place a legal charge on the property in favour of the Board—measures designed to secure the loan and protect the Fund’s long-term stability.

The Affordable Housing Fund is financed through a mandatory levy of 1.5 per cent on gross salaries and incomes, matched by employers. This structure is expected to raise sufficient capital to support both urban and rural housing projects. Cabinet Secretary Wahome has acknowledged that the new regulations may pose challenges, particularly for small businesses that contribute to the Fund. 

However, she notes that the policy could also drive growth in the real estate and construction sectors by creating employment and stimulating local economies.

“The resultant effect may include an increase in the cost of business,” she said, “but the regulations will also create employment opportunities for firms in the real estate sector and related industries.”