Muslims generally avoid traditional mortgages because they involve riba (interest/usury), which is strictly prohibited in Islamic law. However, many Muslims utilize specialized Islamic home financing products, such as Diminishing Musharaka (co-ownership) or Ijara (leasing), which are structured to be Sharia-compliant and avoid interest.
Traditional mortgages are seen as haram (forbidden) under Islamic law, which means that many Muslims prefer to use a halal (permissible under law) alternative when buying a home.
The main issue with traditional mortgages is riba (interest). The Qur'an strictly forbids earning or paying interest because it enables one party to profit without sharing risk or effort. In a typical mortgage: The bank lends money to the buyer.
Islamic rules forbid earning interest from savings and charging interest on loans and mortgages. Under Islam, being in debt is not encouraged.
According to Sharia (Islamic) law, charging interest is seen as 'usury,' an illegal practice of employing unreasonably high rates that, in turn, creates financial enslavement.
Islam forbids both receiving and paying interest (riba).
Of the 2.6 million adult Muslims living in the UK, 49% are homeowners and 4 in 5 of these homeowners have a home finance product.
Whether you're the house buyer or a lending bank, earning or paying interest (otherwise known as riba) is considered haram (not allowed under Islamic law). The Islamic faith doesn't believe that banks should be able to profit on someone's need for a loan to help purchase assets.
The 7 major sins in Islam, often called the "seven great destructive sins," are derived from a Hadith and include: associating partners with Allah (Shirk), practicing magic, unjustly killing a soul, consuming usury (riba), eating an orphan's wealth, fleeing from battle, and slandering chaste, believing women. Avoiding these sins requires sincere repentance and turning to Allah.
An interest-free alternative to traditional loans
Our Halal Loans adhere to the principles of Sharia Law. Instead of interest, borrowers pay an origination fee set based on the amount borrowed. The fee is subtracted from the amount of the loan.
For Muslim Americans who seek to align their home financing with Islamic principles, Halal or Islamic mortgages offer a faith-based alternative to conventional loans—one that avoids ribâ (interest), which is prohibited in Islam.
O you who have believed, when you contract a debt for a specified term, write it down. And let a scribe write [it] between you in justice. Let no scribe refuse to write as God (God is translated as Allah in Arabic.) Allāh has taught him.
A halal mortgage or Islamic Mortgage is any type of Shariah-compliant financing used to purchase a home. It is characterized and distinguished from a conventional mortgage primarily by the absence of interest / riba.
Islamic mortgages offer Muslims a way to buy homes while complying with Shariah guidelines. These financial products avoid interest (riba) by using different ownership and payment structures than traditional mortgages. As of 2024, several companies in the US provide Islamic home financing.
When it comes to the question of whether Muslims pay interest on mortgages, the answer is a clear no. The concept of Riba (interest) is not permitted in Islam, so conventional loans aren't an option. Instead, we offer a completely different way to buy a home that's built on partnership, not debt.
The "777 rule" in Islam refers to a parenting guideline, derived from Hadith, that divides a child's upbringing into three seven-year stages: 0-7 years (play/master) for fun and building trust, 7-14 years (teach/slave) for education and discipline, and 14-21 years (befriend/advisor) for friendship and guidance as they become adults, emphasizing kindness and gradual transition from being a 'master' to a 'slave' (under guidance) to an 'advisor'.
Millions of Muslims in the United States face that question. A set of Islamic principles—based on the goal of providing economic justice for all—prohibits Muslims from paying or receiving interest during financial transactions. Some Jewish and Christian groups face a similar prohibition.
Islamic mortgages are mortgages that are compliant with Sharia law. Also known as 'halal mortgages', they differ from traditional home loans in that you don't pay interest as this is forbidden under Sharia law. Making money from money goes against Islamic finance beliefs.
Similar condemnations are found in religious texts from Buddhism, Judaism (ribbit in Hebrew), Christianity, and Islam (riba in Arabic). At times, many states from ancient Greece to ancient Rome have outlawed loans with any interest.
Any loan given by Islamic banks must be interest-free. This is because in Islam, usury (charging interest) is seen as fundamentally unjust and unfair.
Halal mortgages offer Muslim homebuyers the opportunity to purchase a home without compromising their faith. Guidance Residential utilizes a co-ownership model where both the buyer and the financier share ownership of the property, and the buyer gradually acquires full ownership through monthly payments.
Loans are permitted in Islam if the interest that is paid is linked to the profit or loss obtained by the investment. The concept of profit acts as a symbol in Islam of equal sharing of profits, losses, and risks.