Islamic Mortgage -
No Interest. Full Ownership.
Sharia-compliant home financing that replaces interest with a transparent, fixed-price sale. AMJA-certified Murabaha structure with title in your name from day one.
What Is an Islamic Mortgage?
An Islamic mortgage (also called a halal mortgage, Islamic home loan, or Sharia-compliant mortgage) is a home financing structure that fully avoids interest (riba). Instead of a conventional loan where a bank lends money and charges compound interest, an Islamic mortgage uses an asset-backed sale. The financing institution purchases the property directly, then sells it to the buyer at a fixed, disclosed total price that never changes. This structure is called Murabaha (cost-plus sale) and is the most common Islamic mortgage structure in the United States.
At Home with Abdi G. (Mubarak Mortgage, NMLS #1165808), we provide AMJA-certified Murabaha financing to Muslim families across Minnesota. Our Islamic mortgage program features no interest, no prepayment penalties, full ownership from day one, and an average funding timeline of 10 days.
How an Islamic Mortgage Works
The Murabaha structure explained in 5 steps
Work with a realtor to find the property you want. Get pre-qualified first to know your buying power.
The financing institution buys the home directly from the seller. This is a real purchase, not a loan.
The institution sells the home to you at a disclosed, fixed total price. The profit margin is transparent and agreed upon before signing.
You receive the property title in your name from day one. You are the legal owner immediately.
Pay the agreed total price in monthly installments. No compounding, no rate changes, no surprises.
Islamic Mortgage vs. Conventional Mortgage
Understanding the structural differences
| Feature | Islamic Mortgage (Murabaha) | Conventional Mortgage |
|---|---|---|
| Structure | Asset sale at fixed markup | Money loan at compound interest |
| Interest (Riba) | None, profit margin disclosed upfront | Interest charged on outstanding balance |
| Total Cost | Fixed from day one, never changes | Varies with rate adjustments (ARM) or amortization |
| Ownership | Full title in buyer's name immediately | Title held with lien until payoff |
| Sharia Compliance | AMJA scholar-certified | Not compliant (involves riba) |
| Prepayment Penalty | None | May apply depending on lender |
| Monthly Payment | Comparable to conventional | Comparable to Islamic |
| Down Payment | As low as 5% | As low as 3% (Conventional) |
Types of Islamic Mortgages Available in the US
Three Sharia-compliant structures for home financing
The most common Islamic mortgage in the US. The institution buys the property and sells it to you at a fixed, disclosed total price. You get full title immediately. This is the structure used by Home with Abdi G.
You and the institution co-own the property. You buy out the institution's share gradually through monthly payments plus a usage fee (rent). Ownership fully transfers once you've purchased all shares.
The institution purchases the property and leases it to you. Monthly lease payments build toward eventual ownership. Title transfers at the end of the lease term.
Who Qualifies for an Islamic Mortgage?
Requirements are similar to conventional financing
Most programs require a minimum credit score of 620. Scores of 680+ unlock the best terms. We offer free credit coaching if you need to improve your score.
Programs start at as little as 3% down. Minnesota DPA programs can cover part or all of your down payment with grants or forgivable second liens.
Most programs cap total monthly debt payments at 43% of gross income. Some programs may allow up to 50% with compensating factors.
Two years of consistent employment or self-employment income. Recent graduates and career changers may qualify with compensating factors.
Islamic Mortgage, Frequently Asked Questions
Is an Islamic mortgage truly interest-free?
Yes. An Islamic mortgage structured as Murabaha does not charge interest. The institution earns a profit through the markup on the sale price, which is fixed and disclosed upfront. There is no compounding, no variable rate, and no interest accrual. The total amount you pay is known before you sign the contract and never increases.
What makes an Islamic mortgage different from a regular mortgage?
A conventional mortgage is a money loan, the bank lends you cash and charges interest on the outstanding balance. An Islamic mortgage is an asset sale, the institution purchases the property and sells it to you at a fixed price. The key differences are: no interest (riba), fixed total cost, immediate ownership, transparent profit disclosure, and Sharia scholar certification.
Are Islamic mortgages available for all property types?
Islamic mortgages are available for single-family homes, condos, townhomes, and multi-family properties (up to 4 units). Both purchase and refinance transactions are eligible. Properties must be owner-occupied for most programs, though investment property options exist in some cases.
Can I refinance my conventional mortgage into an Islamic mortgage?
Yes. Many Muslim homeowners refinance from a conventional interest-based mortgage into an Islamic Murabaha structure. The process is similar to a standard refinance, your current loan is paid off and replaced with a Sharia-compliant contract. You can lower your payment, shorten your term, or simply move to a halal structure.
How do I apply for an Islamic mortgage with Abdi G.?
Start with a free consultation, call (703) 348-0361 or submit a pre-qualification inquiry online. You will need basic financial documents (pay stubs, tax returns, bank statements). Pre-qualification typically takes 24-48 hours with no hard credit pull to start.
Is an Islamic mortgage recognized by US law?
Yes. Islamic mortgages in the US are structured to comply with both Sharia principles and US real estate law. The contracts are legally enforceable, title transfers are recorded normally, and the transaction follows all state and federal lending regulations. You receive full legal ownership documented through your county recorder's office.