Journal of Investment and Management 2021; 10(4): 66-73 http://www.sciencepublishinggroup.com/j/jim doi: 10.11648/j.jim.20211004.13 ISSN: 2328-7713 (Print); ISSN: 2328-7721 (Online) Cost of Financing on Affordability of Housing in Nakuru East and Nakuru West Sub-counties, Nakuru County, Kenya Stella Cheraisi Korir, Patrick Kibati, John Kipkorir Tanui School of Business and Economics, Kabarak University, Nakuru, Kenya Email address: To cite this article: Stella Cheraisi Korir, Patrick Kibati, John Kipkorir Tanui. Cost of Financing on Affordability of Housing in Nakuru East and Nakuru West Sub-counties, Nakuru County, Kenya. Journal of Investment and Management. Vol. 10, No. 4, 2021, pp. 66-73. doi: 10.11648/j.jim.20211004.13 Received: September 28, 2021; Accepted: November 4, 2021; Published: November 12, 2021 Abstract: Access to affordable and decent housing remains a dream to many households, especially in developing nations. In Kenya, the housing need has been identified as one of the most agent area that needs attention. In fact, the government has put affordable housing as one of the big four agenda for the Nation. This study examined the relationship between cost of financing and affordability of housing in Nakuru East and Nakuru West Sub-Counties. Data was collected from 384 households sampled from the 11 wards in the two sub-counties. Stratified random sampling was used to ensure adequate representation of every ward in the sample. Data was collected through self-administered structured questionnaires and interviews. A pilot test was conducted prior to the actual study, incorporating reliability and validly tests. The study achieved a response rate of more than 87%. Findings from analysis revealed that cost of finance is significant determinant of affordability of housing. The study recommends that the government and other stakeholders in the housing sector should consider subsidizing cost of building materials, land, and cost of professional services, mortgage facilities as well as water and electricity. The government can partner with financial institutions as well as private investment organizations to offer more affordable housing solutions to the general public. Keywords: Cost of Financing, Affordability of Housing, Nakuru County 1. Introduction Housing remains an important issue both to individuals and to governments. The issue cuts across all social setups and locations. While traditionally, home development was easier, especially where land was majorly ancestral, with increased population and rural urban migration, most households now have to acquire land for home [25]. Housing affordability remains one of the most important aspects of housing, whether the house is rented or owned. To the government, affordable housing demand has led to development of policies on house allowances and subsidies, housing benefits and mortgage regulations [1]. Globally, literature indicates that housing unaffordability affects 2.6% of all households across the world and whereby owner occupation unaffordability was 1.2% and unaffordability in private renting was 7.9% [16]. UN Habitat reported that affordability of housing is a big challenge to most households, especially in developing nations [23]. This is particularly true when the cost compromises the occupants’ enjoyment of other human rights. While noting lack of a universally acceptable conceptualization of affordable housing, [15] nevertheless views affordable housing as the capacity of an individual to purchase a housing unit without restricting demands for other financial resources. This viewpoint is contextually similar to that of UN [13]. Affordable housing should costs not more than 30% of gross household income for low income households [25]. This view point relates to the affordability of housing within the context of low income households. In Kenya, the question of affordable and decent housing is critical to the government to the point the housing has been identified as one of the big four agenda for the government [11]. While the Kenyan government has recognized the problem of housing, especially in urban areas, and has rolled out affordable housing program through the ‘boma yangu’ initiative, the demand for housing is projected to be way beyond what the government can supply [12]. The efforts by