A residential home loan is for a property with 1–4 units meant for personal or family use.

No. Five or more units are commercial, and this FAQ does not cover that.

Because Islam forbids interest (Riba) and also avoids unfair deals where one side takes most of the risk.

It’s a way to buy a home without charging interest on money. Instead, it uses a different structure like rent-to-own or co-ownership.

No. These programs can be offered to any qualified buyer.

“Ijara” means rent. For home buying, it means rent-to-own.

It means rent with ownership (rent-to-own).

> Normal mortgage: you borrow money and pay it back with interest.

> Ijara: a Trust owns the home and leases it to you.

A Trust (which you are the beneficiary of) holds the title (ownership) during the lease period.

You pay monthly rent to the Trust. Part of what you pay helps you move toward ownership over time.

Common terms are 10, 15, 20, or 30 years.

You are allowed to buy, but you are not forced to buy.

The title can transfer to you for $1.00 at the end of the lease.

Legally you are a tenant, but you act like a homeowner: - you handle maintenance - you can remodel, decorate, landscape - you can sell the home or refinance anytime.

Yes. The structure can follow U.S. consumer lending and disclosure rules.

Musharaka means sharing. It’s a co-ownership partnership where your ownership grows over time.

> You and an investment company buy the home together

> You pay monthly amounts that include rent plus buying more ownership

> Over time, the company’s share goes down and yours goes up

Musharaka is a co-ownership where you share in the profit and loss of the property, so you would share 50% of the profit with the lender.

Murabaha is an installment sale: - the financier buys the home - sells it to you at a marked-up price - you pay that price over time.

Because it may create two transfers of title, which can mean transfer taxes more than once.

In many Murabaha contracts, you still owe the full agreed price even if you pay early.

Residential properties with 1–4 units.

Yes

Sometimes as low as 3% depending on the program and situation.

Yes, with the right qualifying documents.

Yes. Often 20–25% down and may require cash reserves (like 6–12 months).

Some programs allow up to 10. Some portfolio programs may allow more.

Sometimes yes.

Loan sizes are available up to the limits set by Fannie Mae/FHA/VA/USDA for each particular zip code.

It is often called an “initial payment” instead of “down payment.

0% down is available for VA/USDA loans.

Sometimes, in special cases using down payment assistance programs.

You will be required to obtain mortgage insurance which will be removed once you reach 78% loan to value.

No. - Rent = payment to use a home - Interest = payment to use money

It should be mutually agreed.

Yes. It can help with clear disclosures and comparisons.

Yes most of the time. The Trust may pay them and include them in your monthly payment.

If required by law, the interest may be paid. Many scholars say to donate it to charity.

Yes.

In the Ijara structure, the customer keeps 100% of the profit. Musharaka you share 50/50 of the profits. Murabaha you receive 100% of the profit after you pay the lenders profit off first.

In some structures you will be responsible for the entire loss if an agreement can’t be worked out. In others you will share 50/50 in the loss.

A simple flow can be: 1) Trust transfers title to customer 2) Customer sells to new buyer 3) Buyer pays customer 4) Customer settles the remaining amount with the Trust.

Yes, but some use alternatives instead of standard PMI.

Because investors need to reduce risk, especially when down payments are small.

You may pay the real cost of collections. Any extra is often donated to charity.

ACH is an electronic payment from a U.S. checking account.

Often yes.

Some programs include an admin fee (example: $20/month).

Yes, in many cases if qualified.

Not always. A replacement can involve moving the title into a Trust.

What documents do W-2 workers need?

> Last 2 years W-2s and federal tax returns

> Last 2 months pay stubs

> Last 2 months bank statements

> Copy of ID and work authorization

> Purchase agreement (if available)

All of the above, plus:

> Last 2 years business + personal tax returns

> Last 2 months business bank statements

> CPA letter.

Yes. Include all pages, even blank ones.

Scan is better. Faxing IDs can be hard to read.

Yes: - Do not staple - Use single-sided copies

A Trust is a legal “container” that can own property.

It helps: - hold title safely - make rent-to-own structures work - avoid certain title problems

Sometimes, yes.

Sometimes, yes, because the Trust owns the home.

Look for: - qualified Sharia scholars - a written approval (fatwa) - names and credentials you can verify

Names, signatures, and the scholars’ qualifications.

Yes. Some providers require an NDA first.

No. The structure is different: - interest is on money - rent is for use of a home

Not if the structure is truly: - rent-to-own (Ijara) - co-ownership (Musharaka) - installment sale (Murabaha)

Because U.S. laws require clear disclosures so buyers can compare costs.

1. You pick the home

2. You pay the initial payment

3. A Trust holds title

4. You pay monthly rent

5. Taxes/insurance will usually be included

6. Title transfers to you at the end