A mortgage without interest—often structured as a Sharia-compliant or halal mortgage—is considered halal (permissible), as it avoids riba (interest/usury). These arrangements involve the bank buying the property and selling it back at a profit (Murabaha) or leasing it (Ijara). Conversely, conventional mortgages with interest are considered haram.
With an Islamic halal mortgage, the bank buys the property for you and either charges you rent until you fully own it, or sells it back to you at a higher price. You will have a plan to pay it back in instalments, but there will be no interest involved.
The scholars are unanimously agreed that every loan involving interest or any kind of benefit is haraam.
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.
Why are conventional mortgages haram in Islam? 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.
Islam forbids both receiving and paying interest (riba). Many of us can end up accumulating interest through our bank accounts even if we don't want it, so what should we do with it? Since it is not permissible to use riba for one's own benefit, we should donate it to charity.
Beyond religious edicts, the question of “is mortgage haram mufti menk?” sheds light on broader socio-economic concerns. Renowned scholars like Mufti Menk emphasize the societal pitfalls of interest-based systems. Mortgages, as instruments of riba, perpetuate wealth disparity.
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.
Meet StrideUp's halal Home Purchase Plan
StrideUp's Home Purchase Plan (HPP) is our shariah-certified alternative to a mortgage. Instead of lending with interest, we buy the home with you. You pay fair rent on the share you do not yet own, and gradually increase your ownership until the home is fully yours. Get started.
There is nothing inherently wrong with a mortgage islamically as per the Qur'anic verse, and the Prophet ﷺ himself took a mortgage when lending from a Jewish trader in Medina. However, in modern-day vernacular, the word “mortgage” has become synonymous with the act of borrowing money from a bank to pay for a house.
Islam allows only one kind of loan and that is qard-el-hassan (literally good loan) whereby the lender does not charge any interest or additional amount over the money lent.
An example of this is the hadith that claims consuming a dirham of interest is worse than committing zina 33 times.
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.
Yes, you can get a 0% interest loan, commonly found as promotional offers for cars, furniture, or credit cards, but they usually have strict terms like a high credit score requirement and a limited time period, with high retroactive interest or fees if you miss payments or don't pay in full by the deadline. True 0% APR loans are different from "deferred interest" offers where all accrued interest is charged if the balance isn't cleared by the end of the promo. Always read the fine print for details on fees, timelines, and what happens if you're late.
At the heart of Islamic finance is the prohibition of riba which simply means any guaranteed interest on loans. In conventional mortgages, financial institutions lend money with the expectation of being repaid with added interest over time.
A home purchase plan offers you a Shariah-compliant alternative to a mainstream mortgage, with competitive rates and an ethical approach. Commonly known as an 'Islamic Mortgage', you can use it just like a conventional mortgage to buy or refinance your home.
Despite Islamic banks being prohibited from giving or taking interest, they are able to generate profit through a number of Shari'ah-compliant means: Ijara is when banks buy an asset, such as a car, and lease it to the customer. Ownership remains with the bank until the lease is paid off by the customer.
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.
In Islamic finance, riba refers to interest charged on loans or deposits. Religious practice forbids riba, even at low interest rates, as both illegal and unethical or usurious. Islamic banking has provided several workarounds to accommodate financial transactions without charging explicit interest.
Quite simply, interest is considered illegal, unethical, and usurious. This is because Muslims believe that wealth should be generated through legitimate trade and that money should be used in a productive way.
Islamic Mortgages and Banks
In Islamic finance, the concept of ribā (usury or interest) is strictly prohibited, as it is considered sinful, exploitative and unjust. Therefore, halāl loans offer alternative structures that are supposed to comply with Islamic law.
He studied Jurisprudence and Sharia in Madinah. He specialised post grad in the Hanafi school of thought in Darul Uloom Kantharia in Gujarat, India. Menk has been identified as a Deobandi as well as a Salafi.
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.
Buying a house with a conventional interest-bearing mortgage is not halal, but some Shariah-compliant financial institutions provide halal mortgages.