RIBA
Usury / Interest
Forbidden by Allah
"Salams. My question is about buying a house. My family is too big for small apartments and I can't afford to pay cash for a house. Can I get a loan from a bank or morgage company?"
I've heard this question many times since I came to Islam. The answer is the same now, as it was when Muhammad ﷺ, recieved the Quran.
1) Buying a house with a conventional mortgage involves paying interest (riba). The Quran is very clear about riba, and so is the prophet ﷺ.
Quran says this about "Riba"
(usury / interest)
Translated to English
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“Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into madness. That is because they say, ‘Trade is just like interest.’ But Allah has permitted trade and has forbidden interest. So, whoever receives an admonition from his Lord and stops may have what is past, and his affair rests with Allah. But whoever returns [to dealing in interest]—those are the companions of the Fire - they are there forever.”
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— [Surah Al-Baqarah 2:275, meaning in English]【ReciteQuran.com/2:275】
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“Allah destroys interest and gives increase for charities. And Allah does not like every sinning disbeliever.”
— [Surah Al-Baqarah 2:276, meaning in English]【ReciteQuran.com/2:276】 -
“O you who have believed, fear Allah and give up what remains [due to you] of interest, if you should be believers. And if you do not, then be informed of a war from Allah and His Messenger...”
— [Surah Al-Baqarah 2:278-279, meaning in English]【ReciteQuran.com/2:278】
This is one of the strongest warnings in the Quran — a war from Allah and His Messenger against those who persist in riba.
2) Hadith on Riba
Prophet Muhammad ﷺ was clear:
The Messenger of Allahﷺ cursed the one who consumes riba, the one who pays it, the one who writes the contract, and the two witnesses to it. He said, "They are all the same.”
— [Sahih Muslim, Hadith 1598]
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“A dirham of riba that a man consumes knowingly, is worse in front of Allah than committing adultery thirty-six times.”
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— [Hadith 21957; graded hasan by al-Albani]
This proves it is not only the lender, but also the borrower, the one who writes it down, even the witnesses ~ are all accountable.
3) The House of Issue Specfically
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Buying a house outright (cash) is HALAL.
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Renting is HALAL.
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Co-ownership or partnerships are HALAL.
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But entering into an interest-based mortgage contract is HARAM.
Some of today's scholars allow alternatives, like Islamic finance models (e.g., murabaha or ijara), where the bank buys the house and sells/leases it to you without interest, though at a higher overall cost. The difference is: no interest clause, but rather a trade or lease agreement.
4) Modern most scholars today cited rulings on buying a house with a (conventional) mortgage from the scholars and bodies you named, side-by-side.
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Conventional interest-loan: not allowed — even when “in need”; seek halal alternatives like tawarruq or borrowing without riba.
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Halal structure: allowed if the bank first buys the house and then resells it to you on deferred payments (a real murabahah with transfer of ownership to the bank before selling to you).
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Shaykh Bin Baz
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Taking a riba loan (including to buy a home) HARAM; both the payer and taker fall under the curse mentioned in the hadith. He repeatedly warned against disguising riba with “tricks.” alathar.net
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If someone already did it - repent; the property itself is not permanently impure and can be kept/sold after repentance.
Al-Azhar / Egypt’s Dār al-Iftāʾ (official fatwa portal)
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Issued English fatwas saying “mortgage is permissible” because they treat it as a murābaḥah-type sale (i.e., a sale with markup for deferment, not a loan with interest). These answers stress “when the commodity comes between the two transactions, there is no riba.” (Note: this reasoning fits Islamic home-purchase plans where the financier owns and sells/leases the asset; it does not justify a plain interest loan.)
European Council for Fatwa & Research (ECFR)
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Detroit, Oct 27–31, 1999 — Resolution 2/4: riba is haram; however, for Muslims living in non-Muslim countries the Council permits buying a primary residence with a bank mortgage if strict conditions are met:
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it is for your own residence,
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If you don’t own another suitable home
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You lack surplus funds and no halal alternatives exist locally.
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The ECFR bases this on hajah rising to the level of darurah in such contexts.
Permanent Committee / "Lajnah Da Imah" (KSA)
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Clear prohibition on taking riba-based loans for building/buying a house; housing is not a necessity if renting is reasonably possible.
This ruling is often quoted by scholars, including Shaykh Ibn Baz. -
Points of Agreement
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All agree, Riba is strictly forbidden. (Quran 2:275–279 and hadith cursing the payer, the taker, the scribe, and the witnesses.)
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Where they differ: Muslims in the West might use a conventional mortgage for a first/only home due to need (ECFR says “yes, with conditions”; Ibn Baz, Ibn Uthaymin, Lajnah say, "NO!"
Rent or use halal structures.
Accepted HALAL Alternatives
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Murabaḥah to the purchase orderer (bank buys, then sells to you at markup; title passes appropriately). Shaykh Bin Baz
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Ijarah muntahiyah bi-tamleek (lease-to-own) and diminishing musharakah (shared ownership that you gradually buy out) — endorsed in principle by juristic bodies like the International Islamic Fiqh Academy; plain interest loans remain prohibited. (iifa-aifi.org)
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NOTE: if the “bank” wires money and charges more on the return — it is an interest loan (haram). But if it actually owns the property before selling or leasing it to you — this is a sale or lease the scholars permit. Islam-QA
A Quick Checklist
[to keep everthing halal]
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The financier owns the home before selling/leasing it to you. (Shaykh Bin Baz)
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The contract avoids interest language, and uses sale/lease terms with clear asset ownership and risk transfer. (Islam-QA Muhammad Munajid)
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No default-interest penalties; late fees (if any) go to charity per Sharia board guidance. (Common industry standard.) nurulichsanaan.files.wordpress.com
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Ideally, the product follows Fiqh Academy/AAOIFI-style conditions (murābaḥah/ijārah/mushārakah done properly). iifa-aifi.org
Bottom Line . . .
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Mortgages with interest (conventional loans) = HARAM.
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Islamic financing with no interest = permissible = HALAL.
You ensure it is structured properly and not a disguised mortgage. -
Best solution: Avoid riba, even if it means renting, downsizing, or delaying buying a house — trusting in Allah’s provision.
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