Housing policies create conducive environment for housing improvement in a country, particularly for low-income earners in informal settlements as a result of inadequacy in the shelter delivery system and by so doing, appropriate housing finance-strategies for low-income households can be improved. The objective of this paper is to provide an assessment of various strategies which can promote affordable housing for the urban low-income earners through lending finance-institutions. The underlying questions for this paper are the following: What are the lending conditions set by the existing housing finance-institutions? Who is qualified to acquire loan from the existing housing finance institutions? What should be advised as appropriate housing financial strategies to develop affordable housing for low-income earners?

The research was carried out in two sub-wards of Manzese, namely, Uzuri and Kilimani where a sample of 50 households were randomly selected. Some data are from literatures related to the topic. Household interviews were conducted so as to explore challenges and opportunities relating to housing affordability. Various officials were interviewed so as to know the key roles played by housing financial institutions, their considerations and limitations towards eligibility and lending criteria. Also observation and photographing were used so as to have the real situation of accommodation facilities for the low-income earners.

The study revealed how the meager incomes of those people which allow households’ expenditure to satisfy the basic need influence greatly on housing condition. The study discovered that Azania is trustworthy for housing development, but its collateral requirements make it not confortable with the low-income earners. Only, the WAT-SACCOS plays great role in housing development for low-income people, however it is hindered by its weak capital base hence few borrowers are reached. Also, some of the conventional lending strategies may suit the low-income groups if well administered and monitored and others may not.