Making Home Ownership a reality: A practical guide for first-time buyers

For many Kenyans, home ownership is a lifelong dream, but also a journey filled with uncertainty, myths, and financial fear.

Elijah Tole, Business Development Manager – Mortgage, at Absa Bank Kenya, broke down one of the most misunderstood parts of that journey: how to safely and effectively use mortgages to enter real estate, especially as a first-time buyer.

He spoke during the 5th Abojani Economic Empowerment Conference 2025 held on November 22 at the Radisson Blu Hotel.

Elijah began by reframing mortgages in a way most people never consider: a mortgage is not just a loan, it is also a layer of protection. Many first-time buyers believe paying cash is faster and cheaper. But Elijah noted that cash purchases can sometimes leave buyers exposed to hidden risks: inflated prices, incomplete titles, and potentially rogue developers.

How to Buy a House in Kenya

Through a mortgage, however, the buyer shares the risk with the bank. And banks do not release funds until the following checks are done:

• Lawyers verify the authenticity of titles and ownership
• Valuers confirm the real market value, so the buyer does not overpay
• Insurance is automatically structured to protect both the borrower and the asset
• Due diligence partners vet the project or developer

Also read: From Consumers to Wealth Builders: A call towards an Ownership Economy in Africa

One of the biggest barriers for first-time homeowners is the onboarding cost, typically around 8% of the property value. This includes legal fees, valuation fees, stamp duty, and insurance.

What does the 8% onboarding cost look like in reality? If you are buying a home worth KSh 5,000,000, you need to plan for roughly KSh 400,000 upfront to cover:

• Stamp Duty: 4% for urban areas (KSh 200,000)
• Legal Fees, Valuation, & Insurance: Approx. 4% (KSh 200,000)

Tip: As Elijah noted, check if your bank can bundle these onboarding fees directly into your KMRC loan package.

Elijah said planning for this cost early makes the difference between a smooth experience and financial strain. And this is where financial institutions come in. Here are some tips:

1. Start with the bank, not the house

Many Kenyans do the opposite, they shop for a home first, get excited, pay a deposit, and only then discover that they do not qualify for financing. Elijah emphasized that your first stop should always be the bank. Let the bank assess your income and give you a realistic budget before you start shopping. Through a pre-assessment, institutions like Absa help buyers determine:

• How much they qualify for
• What price range to focus on
• How much deposit is needed
• Whether the onboarding costs can be financed

This clarity protects buyers from false starts.

A significant advantage Elijah highlighted is the role of the Kenya Mortgage Refinance Company (KMRC), which offers long-term mortgage financing at affordable, fixed single-digit interest rates.

Key benefits include:

• Interest rate capped at 9.5%
• Tenure of up to 25 years
• Loans up to KSh 10.5 million
• Eligible property value capped at KSh 15 million

This structure is designed to open homeownership for the average Kenyan earning a stable income. Elijah explained that KMRC backed mortgages are especially powerful for first-time buyers with tight budgets because the bank can finance both the property and the onboarding costs, provided the home value falls within the approved range.

This significantly lowers the financial pressure that often makes mortgages feel out of reach.

Why age matters: The earlier you start, the better

Although it is never too late to buy a home, Elijah encouraged young adults to begin conversations about homeownership by their early 30s.

Reasons being:

• Younger buyers have longer repayment periods
• They qualify for more favourable instalments
• They have more time to buffer against income shocks
• They can build equity earlier and use the home as collateral for future financing

Homeownership, he noted, is not an overnight accomplishment  but part of long-term financial planning.

Elijah outlined several considerations that first-time buyers should evaluate before settling on a mortgage package:

•  Interest rates – Is the rate fixed or variable?
•  Tenure – How long do you want to repay?
•  Onboarding cost financing – Can the bank cover part of the 8% costs?
•  Developer credibility – Will the seller accept a bank-funded process?
• Turnaround time – How long will approval take?
• Flexibility for lump-sum repayments – Can you reduce your tenure or instalments over time?

He emphasized that a good mortgage is not just about the rate – it is about the entire ecosystem of support.

Off-Plan purchases

While some Kenyans prefer off-plan projects due to favourable pricing and flexible payment plans, the segment is also notorious for fraud, delays, and incomplete projects.

Elijah explained how banks can facilitate safer off-plan purchases:

• The bank assesses the developer’s track record
• Collateral arrangements are put in place
• Up to 90% of the property cost can be financed during construction
• If the developer fails to deliver, deposits are safeguarded
• The buyer remains protected throughout the construction period

This structure ensures that off-plan buyers are not left exposed.

Mortgage protection in hard times

The fear of losing income is one of the top reasons people avoid mortgages. Elijah addressed this concern. If income is disrupted, buyers have several options:

1. Mortgage protection insurance

This optional cover (costing as low as 0.15%) can pay instalments for 6–9 months or up to KSh 3 million, depending on the package.

2. Recalculating monthly instalments

If a customer was making extra payments, the bank can restructure instalments to match the new income level.

3. Time before foreclosure

Auctioning a home does not happen overnight. The foreclosure process can take 6–12 months, giving homeowners time to:

• Sell the house themselves
• Reinstate payments
• Refinance
• Restructure the loan

The key is early communication with the bank.

Ready to plan your path to homeownership? Don’t shop for houses blindly. Learn how to map your cash flow, build a deposit fund, and qualify for financing by joining the next Abojani Personal Finance & Investing Masterclass here.

#Home Ownership

Follow for More