Islamic Mortgage Calculator (Halal Home Financing)
Compare Shariah-compliant home financing options including Murabaha, Ijara, and Diminishing Musharakah. Calculate monthly payments, total costs, and understand Islamic mortgage alternatives.
Select Financing Type
How it works: The bank purchases the property and sells it to you at a marked-up price. The total cost is fixed upfront and paid in installments. There is no interest - the profit margin is disclosed and agreed upon at the start.
Financing Summary
Financing Amount
$320,000.00
Monthly Payment
$2,533.33
Total Payment
$760,000.00
Total Profit
$440,000.00
20.0%
Down Payment
25
Years
5.50%
Rate
Islamic vs Conventional Financing
| Feature | Islamic Financing | Conventional Mortgage |
|---|---|---|
| Interest (Riba) | ✗ No Interest | ✓ Interest-based |
| Profit/Cost Disclosure | ✓ Transparent | Variable |
| Risk Sharing | ✓ Shared Risk | ✗ Customer Bears Risk |
| Asset-Backed | ✓ Real Asset | Varies |
| Late Payment Penalty | Charity/None | Additional Interest |
Understanding Islamic Home Financing
Islamic mortgages are Shariah-compliant alternatives to conventional mortgages that avoid interest (riba). Instead, they use profit-sharing, leasing, or cost-plus structures to help Muslims purchase homes while staying within Islamic guidelines.
🏠 Murabaha
The bank buys the property and sells it to you at an agreed markup. You pay in fixed installments over the term. The total cost is known upfront - no surprises.
🔑 Ijara
You lease the property from the bank while gradually acquiring it. Rent payments reflect the bank's ownership share. At the end, you own the home outright.
🤝 Musharakah
You and the bank are partners. You pay rent for the bank's share and buy additional portions over time. As your ownership grows, your rent decreases.
Important Disclaimer
This calculator provides estimates for educational purposes only. Actual financing terms, rates, and structures vary by provider and are subject to approval. Always consult with a qualified Islamic finance advisor and ensure any product you choose has been certified by a recognized Shariah board.
Frequently Asked Questions
What is an Islamic mortgage?
An Islamic mortgage (also called halal mortgage or Shariah-compliant home financing) is a way to purchase a home without paying or receiving interest (riba), which is prohibited in Islam. Instead of lending money at interest, Islamic banks use profit-sharing, leasing, or cost-plus structures that comply with Islamic law.
Is Islamic mortgage more expensive than conventional?
Islamic mortgages are often competitive with conventional mortgages, though they may sometimes be slightly more expensive due to the additional structures and compliance requirements involved. However, the difference has narrowed significantly as the Islamic finance industry has grown. Many Muslims find the peace of mind from Shariah compliance worth any small additional cost.
What's the difference between Murabaha, Ijara, and Musharakah?
Murabaha: The bank buys the property and sells it to you at a fixed markup. Total cost is known upfront.
Ijara: You lease the property from the bank while gradually buying it. Similar to rent-to-own.
Musharakah: You and the bank co-own the property. You pay rent on their share and buy more ownership over time.
Where can I get an Islamic mortgage in the UK?
Several UK banks and financial institutions offer Islamic home financing, including Al Rayan Bank, Gatehouse Bank, and some products from major banks like HSBC (in certain regions). Always verify that any product is certified by a recognized Shariah board before proceeding.
Where can I get an Islamic mortgage in the USA?
In the United States, Islamic home financing is offered by institutions like Guidance Residential, UIF Corporation, and Devon Bank. Some credit unions and community banks also offer Shariah-compliant options. Availability may vary by state, so research providers in your area.
What is riba and why is it prohibited?
Riba (ربا) means interest or usury in Arabic. It is prohibited in Islam based on verses in the Quran and teachings of the Prophet Muhammad (PBUH). The prohibition aims to prevent exploitation and ensure fairness in financial transactions. Islamic finance uses profit-sharing and asset-backed structures as ethical alternatives to interest-based lending.
Key Principles of Islamic Home Financing
❌ Riba (Interest)
Charging or paying interest is strictly prohibited. Islamic mortgages use profit or rent instead, based on actual asset transactions.
❌ Gharar (Uncertainty)
Excessive uncertainty in contracts is prohibited. Islamic mortgages have clear, transparent terms with known costs and obligations.
✓ Asset-Backed
Islamic financing must be backed by real assets. The bank has genuine ownership stake in the property, sharing both risk and reward.
✓ Risk Sharing
Both parties share the risk of the transaction. If property values fall, both the bank and customer are affected proportionally.
Tips for Choosing an Islamic Mortgage Provider
- ✓ Shariah Certification: Ensure the product is certified by a recognized, independent Shariah board.
- ✓ Compare Rates: Get quotes from multiple Islamic finance providers and compare with conventional options.
- ✓ Understand the Structure: Know whether you're getting Murabaha, Ijara, or Musharakah and how it works.
- ✓ Read the Contract: Islamic contracts may differ from conventional ones. Have a scholar or advisor review if needed.
- ✓ Check Reviews: Research customer experiences with the provider's service and support.