Calculate halal home financing with no riba (interest). Supports Murabaha, Diminishing Musharakah, and Ijarah modes across 8 currencies.
Murabaha — The bank purchases the property and sells it to you at a pre-agreed marked-up price, payable in fixed installments. The profit is disclosed upfront and does not compound.
Diminishing Musharakah — You and the bank jointly own the property. You gradually purchase the bank's share while paying rent on the portion still owned by the bank, until full ownership transfers to you.
Ijarah (Lease-to-Own) — The bank buys the property and leases it to you for an agreed term. You pay rent throughout the period, and ownership transfers to you at the end.
Results are estimates for planning purposes only. Actual terms, profit rates, and conditions vary by financial institution and country. Please consult a certified Islamic finance advisor or your bank before making any financial decision.
Decision Support
Compare structures, not just the monthly figure
Murabaha's fixed, non-compounding profit is the most transparent structure to compare across banks. Musharakah's declining-balance rent typically front-loads higher payments that reduce over time — check the full schedule, not just month one.
"Effective profit %" is your real comparison figure
Different banks structure the same underlying cost differently — comparing the effective profit percentage is a fairer way to compare offers than comparing monthly payments alone.
Confirm Sharia certification independently
Islamic finance products vary in how strictly they're structured — check the certifying Sharia board's credentials rather than assuming any product labeled "Islamic" meets your own standard.
Islamic mortgages are Sharia-compliant alternatives to conventional home loans. They avoid riba (interest), which is prohibited in Islam, and instead use trade, leasing, or partnership structures to facilitate home ownership.
Murabaha
The bank buys the property outright and sells it to the buyer at a higher price, with the profit margin agreed upfront. The buyer repays in equal installments over the agreed period. Because the price is fixed at the start, there is no compounding — making it one of the most transparent Islamic finance structures.
Diminishing Musharakah
This is the most common Islamic mortgage structure in Pakistan, the UK, and Malaysia. The bank and buyer co-own the property from day one. The buyer pays monthly rent (for the bank's share) plus a portion to buy out the bank's equity. As the bank's ownership shrinks, the rent component decreases — making payments more equitable over time.
Ijarah (lease-to-own)
The bank purchases the property and leases it to the buyer for a fixed term. Monthly rent is paid throughout the period. At the end of the contract, ownership is transferred to the buyer via a separate gift or sale agreement at a nominal value. Ijarah is widely used in GCC countries and Malaysia.
Common Mistakes
Assuming all Islamic mortgages work the same way
Murabaha, Musharakah, and Ijarah have genuinely different payment structures and risk profiles — don't compare a monthly figure from one structure directly against another without understanding what's driving the difference.
Entering a down payment outside 0-100%
A down payment can't exceed the property value or be negative — this calculator validates that range, but always double-check your own inputs make sense.
Not verifying Sharia compliance independently
This calculator estimates the numbers for planning purposes — the actual product's Sharia compliance should be verified with a certified advisor, not assumed from the structure name alone.
Ignoring the effective profit percentage
A lower monthly payment from a longer term can still mean a higher effective profit percentage over the life of the financing — check both figures before choosing a term.
References
🏛️ AAOIFI
Accounting and Auditing Organization for Islamic Financial Institutions — Sharia standards for Islamic finance products — aaoifi.com
📄 Your bank's Sharia board certification
For verified compliance details on a specific product, check the certifying Sharia board's documentation directly.
Last updated: 15 July 2026 · Estimates for planning purposes only — actual terms vary by institution and country.
Frequently asked questions
In a Murabaha arrangement, the bank purchases the property on your behalf and resells it to you at a higher, pre-agreed price payable in installments. The profit margin is fixed upfront and does not compound, making it fully Sharia-compliant.
In Diminishing Musharakah, you and the bank co-own the property. You make regular payments to buy out the bank's share gradually, while also paying rent on the portion still owned by the bank. Over time your ownership increases until you own 100% of the property.
Ijarah is a lease-to-own arrangement. The bank buys the property and leases it to you for a fixed term. At the end of the lease period, ownership transfers to you. You pay rent instead of interest, and the rent amount is agreed upfront — no surprises.
Islamic mortgages can have slightly higher total costs in some markets due to the bank's additional transactional steps. However, the total profit paid is fixed and transparent from the start — unlike conventional loans where interest compounds over time and can balloon unpredictably.
This calculator supports PKR (Pakistani Rupee), USD (US Dollar), AED (UAE Dirham), GBP (British Pound), SAR (Saudi Riyal), BDT (Bangladeshi Taka), INR (Indian Rupee), and MYR (Malaysian Ringgit).
Minimum down payment requirements vary by country and institution, typically ranging from 10% to 30%. In Pakistan, Islamic banks generally require 20–30%. You can adjust the down payment percentage in this calculator to see its direct impact on your monthly installment.