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USA ISLAMIC MORTGAGE WITH NO INTEREST (RIBA)

USA ISLAMIC MORTGAGE WITH NO INTEREST (RIBA)

What in an American sharia compliant home loan?

An Islamic mortgage with no interest (Riba-free) in the USA is a financial product structured to help Muslims purchase homes in compliance with Sharia law, this halal home loan is designed to avoid Riba (usury or interest), which is strictly prohibited in Islam.

Instead of lending money and charging interest in the USA, the lender and borrower engage in asset-based contracts that tie financing to real property ownership.

Are Islamic home loans existing in the USA ?

Yes — Islamic home loans do exist in the USA, mainly in areas where there are larger Muslim populations and greater demand for Shariah-compliant financing. Instead of charging interest, these home loans are structured using models such as Murabaha (cost-plus sale), Ijara (lease-to-own), or Musharakah (partnership).

They are most commonly available in states with significant Muslim communities, such as:

  • Illinois (particularly in Chicago and its suburbs)
  • Michigan (notably Dearborn, Detroit, and surrounding areas)
  • New York (especially New York City and nearby boroughs)
  • California (including Los Angeles, San Francisco Bay Area, and San Diego)
  • Texas (particularly Houston and Dallas)
  • New Jersey (around Paterson, Jersey City, and Newark)
  • Virginia (notably Northern Virginia, close to Washington D.C.)
  • Minnesota (Minneapolis–St. Paul area)

These states and cities have seen the strongest demand for Islamic home loans because of their larger, established Muslim communities and supportive legal and financial environments.

How can I access to sharia compliant home loans in the Usa in terms of eligibility ?

Here’s a list of the main eligibility criteria you’ll need to access a Sharia-compliant home loan in the USA:

✅ Eligibility Criteria for Sharia-Compliant Home Loans (USA)

  1. Residency Status
    • Must be a U.S. citizen or permanent resident (Green Card holder).
    • Some lenders may accept long-term visa holders on a case-by-case basis.
  2. Income Verification
    • Proof of stable employment or business income (pay stubs, tax returns, bank statements).
    • Minimum income thresholds vary by lender.
  3. Credit History
    • A credit check is usually required.
    • Many Islamic lenders are more flexible than conventional banks, but a reasonable credit score improves approval chances.
  4. Down Payment
    • Typically 5%–20% of the home’s purchase price.
    • The percentage depends on the type of Sharia-compliant contract (Murabaha, Ijara, Musharakah).
  5. Property Type
    • Generally limited to primary residences.
    • Some lenders may allow investment or second homes, but with stricter terms.
  6. Sharia Compliance Agreement
    • Borrower must agree that the financing follows Sharia principles (no Riba, no speculative practices, asset-backed).
    • The property cannot be linked to prohibited activities (alcohol, gambling, etc.).
  7. Affordability Check
    • Monthly payments must not exceed a certain percentage of income (similar to debt-to-income ratio in conventional loans).
Which banks or alternative lenders propose Islamic mortgages including home Ijara in the USA ?

Here’s a list of USA-based Sharia-compliant mortgage providers with their eligibility criteria simplified:

🏠 Sharia-Compliant Home Loan Providers in the USA

  1. UIF (University Islamic Financial / UIF Corporation)
    • Down payment: typically 5–20%
    • Proof of income and employment required
    • Credit history reviewed (flexible in some cases)
    • Available for U.S. citizens and permanent residents
  2. Guidance Residential
    • Uses Declining Balance Co-Ownership (Musharakah) model
    • Down payment: minimum 5%
    • Income and credit score considered
    • Primary residence financing only
    • Must comply with Sharia rules (no Riba, gharar, or prohibited uses)
  3. La Riba (American Finance House – LARIBA)
    • Down payment: usually 10–20%
    • Proof of ability to repay (income verification)
    • Credit history checked
    • Available for U.S. citizens and permanent residents
    • Financing tied to home purchase price, not “money rental”
  4. Devon Bank (Faith-Based Financing Division)
    • Offers Murabaha & Ijara contracts
    • Down payment required (varies by product, generally 10–20%)
    • Income and employment verification
    • Works with Muslims and non-Muslims seeking ethical loans
    • Subject to U.S. lending regulations
  5. Ijara Community Development Corp (IjaraCDC)
    • Specializes in Ijara wa Iqtina (lease-to-own)
    • Down payment: 5–20% depending on borrower profile
    • Proof of stable income and ability to pay
    • Citizenship or permanent residency usually required
    • Sharia Board oversight ensures compliance

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