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Analysis of a performance guarantee-backed mortgage model pilot and its market impact - A case study of Unity Homes
June 11th, 2026
This case study analyses Unity Homes’ innovative mortgage structure, its impact on Unity’s target market and applicability to the wider Kenya’s housing market.
Traditionally reliant on cash buyers due to the high cost of construction finance, Unity Homes used to typically sell to investor buyers who had ready cash available to finance the construction of the units, and excluded a large segment of potential buyers who required mortgage financing.
To address this, Unity Homes piloted a performance guarantee-backed mortgage model, supported by FSD Kenya. This mechanism allowed banks to release the mortgage value during construction, de-risking the financing process and enabling developers to accept mortgages without waiting for legal registration.
The results have been transformative: mortgage sales have grown from less than 2% of total sales to 30% of revenue in 2025, with $7.1 million in approved mortgages and a pipeline of over 170 applicants. Buyer demographics show that most borrowers are middle-income professionals aged 40–50, with women representing 65% of uptake, and an average mortgage value of KSh 7 million. This pilot demonstrates the potential of alternative financing structures to expand mortgage uptake, deepen financial inclusion, and bridge Kenya’s housing deficit.
The success factors include timely delivery capacity, strong developer balance sheet, targeted mortgage marketing and customer support capacity, and government/DFI-backed subsidies for the mortgage interest rate. Challenges remain in legal delays, geo-referencing requirements, and the replicability of performance guarantees (as a developer with strong developer balance sheet and low debt to equity ratio are pre-requisite to attract a bank to issue performance guarantees, and the concessional fixed rate mortgage financing may be depleted).
The pilot was tested with average unit prices of KShs 7 million, and average loan to value at 85%. Given the proof of concept, the same mechanism can now be replicated to lower cost units, as long as the developer balance sheet and track record are there. Unity Homes units are EDGE certified and the location at Tatu City provides a mixed use ecosystem with employment and educational opportunities nearby.
While the case study shows an innovative mechanism to unlock financing, the key barrier is a lack of access to affordable construction financing for the private sector. As long as this barrier is present, it will be very hard for private sector to engage in delivery of affordable housing at scale. Additionally, legal and other fees related to transferring units remain high and should be addressed as a policy issue.
