INFONAVIT stands for Instituto del Fondo Nacional de la Vivienda para los Trabajadores, meaning "Institute of the National Housing Fund for Workers." It is a Mexican government institution that provides affordable housing financing to formal-sector workers through employer contributions.
How INFONAVIT Works
Every employer in Mexico must contribute 5% of each employee's daily integrated salary to INFONAVIT on a bimonthly basis. These contributions accumulate in individual employee accounts. Workers can use their accumulated balance to obtain mortgage loans, make down payments, or remodel their homes. If an employee never uses the funds for housing, the balance is added to their retirement savings.
Employee Housing Credits
Employees earn points based on their salary, age, and contribution history. Once they accumulate enough points, they can apply for a housing credit. INFONAVIT loans can be combined with bank mortgages for larger amounts. When an employee has an active housing credit, the employer must make additional payroll deductions to service the loan.
EOR Relevance
An EOR in Mexico manages INFONAVIT contributions and any employee loan deductions through payroll. Failure to make INFONAVIT contributions on time results in surcharges, fines, and potential legal action from the institute.