How Halal Home Financing Works
In a Diminishing Musharakah model, you and the financier co-purchase the property. You pay monthly rent for the financier's share while gradually buying them out. Over time, you own 100% of the home.
In a Murabaha model, the financier buys the property and immediately sells it to you at a pre-agreed higher price. You repay in fixed installments with no floating interest rate risk.
Frequently Asked Questions
What is a halal mortgage?
A halal mortgage avoids interest (Riba) by using alternative structures such as Diminishing Musharakah (co-ownership) or Murabaha (cost-plus sale). The financier and buyer share ownership or the financier buys the property and resells it at an agreed markup.
Are halal mortgages more expensive?
Rates are competitive with conventional mortgages. While the structure differs, the monthly payment and total cost are often comparable. Always compare offers from multiple providers.
Is there a down payment requirement?
Most halal mortgage providers require a 10-20% down payment, similar to conventional lenders. Some programs cater to first-time buyers with lower requirements.
How do I find a halal mortgage in my state?
Use our matching service to connect with AAOIFI-certified halal mortgage providers in your area. We verify every provider's Shariah compliance board.