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FAQ Videos
  • Why does Guidance Residential sell its contracts to Freddie Mac?

    Q.Why does Guidance Residential sell its contracts to Freddie Mac?

  • What type of partnership is this home financing program based on?

    Q.What type of partnership is this home financing program based on?

  • What questions should I be asking a company providing financial services to Muslims?

    Q.What questions should I be asking a company providing financial services to Muslims?

  • How does Guidance Residential determine the price for facilitating home ownership through their program?

    Q.How does Guidance Residential determine the price for facilitating home ownership through their program?

  • What is the difference between Guidance’s Shariah-compliant home financing program and a mortgage loan?

    Q.What is the difference between Guidance’s Shariah-compliant home financing program and a mortgage loan?

  • How do you determine if a company's products are Shariah-compliant?

    Q.How do you determine if a company's products are Shariah-compliant?

  • Deen TV Interview with Guidance Residential’s CEO

    Deen TV Interview with Guidance Residential’s CEO

  • Why We Do What We Do?

    Q: Why we do what we do?

  • Q: What you should and shouldn’t do when financing your home?

    Q: What you should and shouldn’t do when financing your home?

  • Q1.  What is Guidance Residential?

    Guidance Residential is the largest provider of Shariah-compliant home financing in the U.S. Guidance Residential has provided over $3.5 billion in home financing to American-Muslim homeowners over the last 13 years and the company holds nearly 80% market share in the U.S. Shariah Compliant home financing industry. Headquartered in Reston, Virginia, the company was established in the D.C. Metro area in 2001 and currently the company is operational in 23 states. We are a member of the Guidance Financial Group, an affiliated global financial group, which has pioneered the creation and development of Shariah-compliant investment products for institutional investors and financial intermediaries worldwide, as well as financial products and services that address the unmet needs of millions of Muslim consumers.

  • Q2.  What types of financing does Guidance Residential offer?

    Currently, Guidance Residential provides Shariah-compliant home financing for both primary properties (homes which are occupied by the owner) and non-owner occupied properties.

  • Q3.  What do you mean by Shariah-Compliant Home Financing?

    Shariah Compliant home financing means financing your home in a way that does not violate the principles of Islamic law of financial contracts. There is a set of rules and injunctions from Quran and Sunnah regarding what is permissible and not permissible when it comes to the day to day financial transactions of Muslims. Among the prohibitions are Riba (usury / interest), Gharar (Speculation or contractual uncertainty), Maysir (gambling) etc. When you finance your home with a conventional mortgage, it requires the payment of interest (Riba), which is prohibited in Islam and all monotheistic and even some non-monotheistic faiths. Guidance Residential’s Shariah Compliant home financing program does not involve Riba. The Declining Balance Co-ownership model of Guidance Residential is a participatory financing program, which is based on equity partnership between Guidance and the customer. The following are the unique differentiating factors of Guidance Residential’s program from the conventional mortgage.

    Co-ownership
    Guidance Residential and home buyers each own a percentage of the property as co-owners. Home buyers increase their share over a period of time through a monthly payment that results in a corresponding decrease in Guidance’s share.

    Risk sharing
    Guidance Residential shares the risk with the home buyer in certain instances of loss, including by way of natural disasters, condemnation or eminent domain.

    Riba-free
    The Declining Balance Co-ownership Program, does not involve payment of interest Between a debtor and creditor. It is 100% riba-free.

    No pre-payment penalty
    There is no pre-payment penalty required by Guidance Residential when a home buyer wants to pay ahead of the agreed schedule.

    Capped late payment fees
    In case of late payments, Guidance Residential charges only a capped fee equaling $50 or less, exclusively meant to cover the expenses involved in administering a late payment, rather than the market common 5% penalty.

    Non-recourse commitment
    In the event of payment default, Guidance Residential does not pursue any of the home buyer’s other assets.

  • Q4.  What is the role of Freddie Mac?

    Freddie Mac is a federally mandated institution, which was chartered by Congress in 1970, to provide funds for home financing companies in order to promote and advance the American dream of homeownership.

    For properties financed by Guidance Residential’s Co-ownership Program, we use funds alongside the homebuyer to purchase the property. Then in a separate step, we sell our co-ownership stake to Freddie Mac and at that stage Freddie Mac becomes an investor.

    With our Shariah Supervisory Board’s approval, this collaborative effort allows Guidance Residential to sell all or part of its ownership to Freddie Mac as an investor, alongside the homeowner, with the result that all terms agreed upon in the co-ownership agreement remain unchanged throughout the duration of the contract.

    Guidance Residential worked with Freddie Mac and 18 law firms for 3 years to come up with this unique legal structure that does not involve the sale of debt and is compliant with Islamic Legal Jurisprudence. We are the only organization in the U.S. allowed to deliver the Declining Balance Co-ownership structure to Freddie Mac, and we are very proud of this accomplishment.

  • Q5.  How does this program work?

    Guidance Residential and the homebuyer engage in a co-ownership venture where each owns a percentage of the home, in proportion to the equity they each contributed. Homebuyers are required to make monthly payments to Guidance Residential over a predetermined period of time in order to completely buy out Guidance Residential’s shares in the property, and own the property outright. The monthly payment consists of two portions; (1) an amount for the acquisition of a portion of Guidance Residential’s ownership interest (Acquisition Payment) and (2) the other for the exclusive use of the entire property that includes Guidance’s share (Profit Payment). The Acquisition Payment serves in buying Guidance Residential’s shares of ownership over the predetermined period of time and the Profit Payment is akin to rent or use of property of another.

    For instance, if you are looking to buy a $300,000 home and you have $30,000 of your own money to contribute towards the purchase of the home, Guidance will contribute the remaining $270,000 in funds to purchase the home together. Guidance will purchase the property along with you and we will form a co-ownership agreement stating that we both own the property together. Then we set up a 15, 20, or 30-year contract in which you make a monthly payment to Guidance Residential. A portion of that payment will go towards buying out Guidance Residential’s interest. The other portion of the monthly payment is for the exclusive use of the property. The utilization fee that we charge you will decrease every month as our ownership in the property decreases and the portion that goes to buying Guidance’s ownership out will increase by that same amount so that the monthly payment stays constant.

    In accordance with the terms of the co-ownership agreement, you can sell the property at any time and any profit from that sale will be 100% yours. For instance, if after 5 years, you sell this property for $350,000, that extra $50,000 will be all yours.

  • Q6.  What are your Rates?

    You can check our current rates here - https://www.guidanceresidential.com/rates

  • Q7.  How is it different from regular loans?

    Our Shariah compliant home financing program does not constitute a debtor and creditor loan arrangement. Lending money to profit from any commercial or investment activity including the financing of real estate is not an acceptable method for commerce according to Islam. Therefore, our home financing program has been modeled on the Islamic financing concept known as ‘Musharakah Mutanaqisa’ or ‘Diminishing Partnership’. The relationship between Guidance Residential and the home buyer is that of co-owners in a property and not that of a borrower-lender. The initial financing provided by Guidance Residential is applied to acquire an interest in the property and not to provide a loan.

    Watch our FAQ video: What is the difference between Guidance’s Shariah-compliant home financing program and a mortgage loan?

  • Q8.  Is it more expensive?

    At Guidance Residential, our objective is to not just offer Shariah compliant home financing, but also to provide it at a competitive pricing. For your reference, we have a table of rates on our website, which will give you a comparison of our rates with 4 conventional mortgage institutions on a weekly basis. Click here to check our rates .

    Watch our FAQ video: How does Guidance Residential determine the price for facilitating home ownership through their program?

  • Q9.  How do you make a profit in order to stay in business?

    At Guidance Residential, we make it a point to provide our customers the lowest cost pricing structure possible. That said, our profit rate is solely determined by market conditions and is not randomly decided. Please feel free to contact us and learn more about our pricing and payment programs. We make profits in the servicing of contracts as well in the origination.

  • Q10.  How does Guidance handle Late Fees? And if you do pay late fees - where does that money go? Some Islamic banks don’t want to receive late fees and instead send any such fees to charity - Is there a basis in Islam? What does that fee structure look like?

    Most conventional financial institutions use late fees to make profit. We refrain from doing that. However, we do collect a late payment fee that covers the expenses involved in additional administrative fees resulting from the breach by the customer regarding her/his obligation to pay on time. This is in compliance with Shariah law. The fee is currently set at $50 per late payment and has been approved by our Shariah Supervisory Board. To determine the fee amount, Guidance worked with a renowned mortgage benchmarking data provider, to conduct a study designed to estimate the cost of collecting late payments. This study was done very early on and we haven’t raised the price since then. This shows our commitment in serving our customers in the best way possible.

  • Q11.  What happens if I am in a financial distress and I’m not able to make my monthly payments? How would Guidance Residential handle it?

    In the unfortunate event that a customer experiences difficulties in making the monthly payments, a specialized team will be responsible for contacting the customer and discussing the situation. The team’s objective is to work out a satisfactory arrangement for both parties involved.

  • Q12.  What makes your program Halal?

    The unique thing about Guidance Residential is that we brought together seven of the leading scholars in the world on Islamic Finance. These scholars are all widely known for their expertise in Islamic Legal Jurisprudence in financial transactions and they come from across the globe. The Scholars help us offer a product that is both Shariah complaint and work within each individual states’ home protection laws. Our Shariah Supervisory Board has authored numerous fatwas on various aspects including one on the overall structure.

  • Q13.  People think that Islamic Banking is for Muslims only - is this true? Do you have non-Muslim customers?

    Yes. We encourage all to participate in our program and reach out to all. Our program is for everyone to benefit from regardless of their faith. We have many non-Muslim customers, who have chosen to finance with us after seeing the benefits and justice of the riba-free structure. Usury is forbidden in all major faiths, and we welcome anyone to finance their homes with our usury free, participatory and equity based home financing program.

  • Q14. There are a lot of Islamic Jargon out there in regards to loans — how are you educating the community on this?

    Educating the community has been and continues to be a challenge but we are committed to this important opportunity and obligation. We do online webinars with industry experts and travel the country educating our community in Islamic finance. If you are interested in having someone come out to your neighborhood, please contact us at info@guidanceresidential.com

  • Q15.  Can I purchase a home with less than 20% down?

    Yes. We let our customers make a down payment as little as 5% for primary homes and 15% for investment properties.

  • Q16.  Do I have to escrow my taxes and insurance?

    If you are putting down at least 20%, generally you have the option to not escrow your taxes and insurance, although other terms and conditions may apply. If you are putting less than 20% down, you have to escrow taxes and insurance.

  • Q17.  Does my realtor or property seller need to know anything special about the Diminishing Musharaka Program?

    Not necessarily. Our contract is structured in a Strict Shariah Compliant way, and we have also worked with 18 legal firms and have gone through a rigorous process. We have been originating contracts in the U.S. since 2002.

  • Q18.  Can I refinance my current conventional mortgage with Guidance Residential?

    Absolutely! And we highly encourage our customers to do so early to get out of a Riba based mortgage as soon as possible. You can start the refinance process online https://www.guidanceresidential.com/prequalify or contact your local Account Executive at 1-866- 484-3262.

  • Q19.  In the U.S., interest paid on a primary home is tax deductible. Is the Profit Payment I pay Guidance Residential tax deductible as well?

    You will be issued a Form 1098 for tax purposes. The Program has been designed so that you do not lose any income tax benefits and our Shariah Supervisory Board has issued a fatwa on the subject. Please check with your tax advisor for your tax treatment.

  • Q20.  Why do I have to pay for the LLC fee?

    Guidance Residential’s program is built on the Shariah concept of Declining Balance Co-ownership. The LLC is created for the purpose of creating this partnership and serves to protect both the customer and Guidance Residential from liabilities that could arise. The majority of the cost associated with setting up and maintaining the LLC is paid by Guidance Residential and the customer pays $18.75 per month.

  • Q21.  How do you determine your profit?

    In order to appeal to both investors and customers, Guidance Residential benchmarks its profit rate to the prevailing market rates.

  • Q22.  Why choose Guidance Residential over other companies who claim to be Shariah compliant?

    Our program has been designed and certified by an independent Shariah Supervisory Board comprised of world renowned scholars led by Mufti Taqi Usmani. Guidance is the ONLY Shariah Compliant Home Finance provider that has an independent Shariah Board consisting of AAOIFI Scholars. In addition, our home financing program has been endorsed by AMJA (Assembly of Muslims Jurists of America) as a sound contract to fulfill the home financing needs of Muslims in America.

  • Q23.  Is it not the same like interest, just we name it as profit?

    Interest is charged on a loan, and profit is charged for a tangible good or service. At Guidance Residential the contract is not a loan contract, but an equity partnership contract regarding a real asset, which is the home.

  • Q24.  Where do the funds from Guidance Residential come from?

    For properties financed by Guidance Residential’s co-ownership program, we use our own funds alongside the homebuyer to purchase the property. Then in a separate step, we sell our co-ownership stake to Freddie Mac and at that stage Freddie Mac becomes an investor for the portion that we own.

    Watch our FAQ video: Why does Guidance Residential sell its contracts to Freddie Mac?

  • Q25.  If it is Islamic, then why do you need credit scores?

    In the early days of Islam, investors would inquire about a potential partner’s history of doing business before entering in a contract with that partner to determine if the partner is able to fulfill the trust (amanah) of the financial transaction (in modern jargon, financial industry calls it ‘credit worthiness’). In current business practice of our time, the credit score serves as a standardized method of determining that worthiness.

  • Q26.  How much time it would take to approve the file?

    It takes a minimum of 7 business days to approve a file from the day the customer submits all needed documentation for approval, to include full income and assets documentation.

  • Q1.  Why does Guidance Residential sell its contracts to Freddie Mac?
    Why does Guidance Residential sell its contracts to Freddie Mac?
  • Q2.  What type of partnership is this home financing program based on?
    What type of partnership is this home financing program based on?
  • Q3.  What questions should I be asking a company providing financial services to Muslims?
    What questions should I be asking a company providing financial services to Muslims?
  • Q4.  How does Guidance Residential determine the price for facilitating home ownership through their program?
    How does Guidance Residential determine the price for facilitating home ownership through their program?
  • Q5.  What is the difference between Guidance’s Shariah-compliant home financing program and a mortgage loan?
    What is the difference between Guidance’s Shariah-compliant home financing program and a mortgage loan?
  • Q6.  How do you determine if a company's products are Shariah-compliant?
    How do you determine if a company's products are Shariah-compliant?
  • Q7.  Deen TV Interview with Guidance Residential’s CEO
    Deen TV Interview with Guidance Residential’s CEO
  • Q8.  Why we do what we do?
    Why We Do What We Do?
  • Q9.  What you should and shouldn’t do when financing your home?
    Q: What you should and shouldn’t do when financing your home?
  • Q10.  What is Guidance Residential?

    Guidance Residential is the largest provider of Shariah-compliant home financing in the U.S. Guidance Residential has provided over $3.5 billion in home financing to American-Muslim homeowners over the last 13 years and the company holds nearly 80% market share in the U.S. Shariah Compliant home financing industry. Headquartered in Reston, Virginia, the company was established in the D.C. Metro area in 2001 and currently the company is operational in 23 states. We are a member of the Guidance Financial Group, an affiliated global financial group, which has pioneered the creation and development of Shariah-compliant investment products for institutional investors and financial intermediaries worldwide, as well as financial products and services that address the unmet needs of millions of Muslim consumers.

  • Q11.  What types of financing does Guidance Residential offer?

    Currently, Guidance Residential provides Shariah-compliant home financing for both primary properties (homes which are occupied by the owner) and non-owner occupied properties.

  • Q12.  What do you mean by Shariah-Compliant Home Financing?

    Shariah Compliant home financing means financing your home in a way that does not violate the principles of Islamic law of financial contracts. There is a set of rules and injunctions from Quran and Sunnah regarding what is permissible and not permissible when it comes to the day to day financial transactions of Muslims. Among the prohibitions are Riba (usury / interest), Gharar (Speculation or contractual uncertainty), Maysir (gambling) etc. When you finance your home with a conventional mortgage, it requires the payment of interest (Riba), which is prohibited in Islam and all monotheistic and even some non-monotheistic faiths. Guidance Residential’s Shariah Compliant home financing program does not involve Riba. The Declining Balance Co-ownership model of Guidance Residential is a participatory financing program, which is based on equity partnership between Guidance and the customer. The following are the unique differentiating factors of Guidance Residential’s program from the conventional mortgage.

    Co-ownership
    Guidance Residential and home buyers each own a percentage of the property as co-owners. Home buyers increase their share over a period of time through a monthly payment that results in a corresponding decrease in Guidance’s share.

    Risk sharing
    Guidance Residential shares the risk with the home buyer in certain instances of loss, including by way of natural disasters, condemnation or eminent domain.

    Riba-free
    The Declining Balance Co-ownership Program, does not involve payment of interest Between a debtor and creditor. It is 100% riba-free.

    No pre-payment penalty
    There is no pre-payment penalty required by Guidance Residential when a home buyer wants to pay ahead of the agreed schedule.

    Capped late payment fees
    In case of late payments, Guidance Residential charges only a capped fee equaling $50 or less, exclusively meant to cover the expenses involved in administering a late payment, rather than the market common 5% penalty.

    Non-recourse commitment
    In the event of payment default, Guidance Residential does not pursue any of the home buyer’s other assets.

  • Q13.  What is the role of Freddie Mac?

    Freddie Mac is a federally mandated institution, which was chartered by Congress in 1970, to provide funds for home financing companies in order to promote and advance the American dream of homeownership.

    For properties financed by Guidance Residential’s Co-ownership Program, we use funds alongside the homebuyer to purchase the property. Then in a separate step, we sell our co-ownership stake to Freddie Mac and at that stage Freddie Mac becomes an investor.

    With our Shariah Supervisory Board’s approval, this collaborative effort allows Guidance Residential to sell all or part of its ownership to Freddie Mac as an investor, alongside the homeowner, with the result that all terms agreed upon in the co-ownership agreement remain unchanged throughout the duration of the contract.

    Guidance Residential worked with Freddie Mac and 18 law firms for 3 years to come up with this unique legal structure that does not involve the sale of debt and is compliant with Islamic Legal Jurisprudence. We are the only organization in the U.S. allowed to deliver the Declining Balance Co-ownership structure to Freddie Mac, and we are very proud of this accomplishment.

  • Q14.  How does this program work?

    Guidance Residential and the homebuyer engage in a co-ownership venture where each owns a percentage of the home, in proportion to the equity they each contributed. Homebuyers are required to make monthly payments to Guidance Residential over a predetermined period of time in order to completely buy out Guidance Residential’s shares in the property, and own the property outright. The monthly payment consists of two portions; (1) an amount for the acquisition of a portion of Guidance Residential’s ownership interest (Acquisition Payment) and (2) the other for the exclusive use of the entire property that includes Guidance’s share (Profit Payment). The Acquisition Payment serves in buying Guidance Residential’s shares of ownership over the predetermined period of time and the Profit Payment is akin to rent or use of property of another.

    For instance, if you are looking to buy a $300,000 home and you have $30,000 of your own money to contribute towards the purchase of the home, Guidance will contribute the remaining $270,000 in funds to purchase the home together. Guidance will purchase the property along with you and we will form a co-ownership agreement stating that we both own the property together. Then we set up a 15, 20, or 30-year contract in which you make a monthly payment to Guidance Residential. A portion of that payment will go towards buying out Guidance Residential’s interest. The other portion of the monthly payment is for the exclusive use of the property. The utilization fee that we charge you will decrease every month as our ownership in the property decreases and the portion that goes to buying Guidance’s ownership out will increase by that same amount so that the monthly payment stays constant.

    In accordance with the terms of the co-ownership agreement, you can sell the property at any time and any profit from that sale will be 100% yours. For instance, if after 5 years, you sell this property for $350,000, that extra $50,000 will be all yours.

  • Q15.  What are your Rates?

    You can check our current rates here - https://www.guidanceresidential.com/rates

  • Q16.  How is it different from regular loans?

    Our Shariah compliant home financing program does not constitute a debtor and creditor loan arrangement. Lending money to profit from any commercial or investment activity including the financing of real estate is not an acceptable method for commerce according to Islam. Therefore, our home financing program has been modeled on the Islamic financing concept known as ‘Musharakah Mutanaqisa’ or ‘Diminishing Partnership’. The relationship between Guidance Residential and the home buyer is that of co-owners in a property and not that of a borrower-lender. The initial financing provided by Guidance Residential is applied to acquire an interest in the property and not to provide a loan.

    Watch our FAQ video: What is the difference between Guidance’s Shariah-compliant home financing program and a mortgage loan?

  • Q17.  Is it more expensive?

    At Guidance Residential, our objective is to not just offer Shariah compliant home financing, but also to provide it at a competitive pricing. For your reference, we have a table of rates on our website, which will give you a comparison of our rates with 4 conventional mortgage institutions on a weekly basis. Click here to check our rates .

    Watch our FAQ video: How does Guidance Residential determine the price for facilitating home ownership through their program?

  • Q18.  How do you make a profit in order to stay in business?

    At Guidance Residential, we make it a point to provide our customers the lowest cost pricing structure possible. That said, our profit rate is solely determined by market conditions and is not randomly decided. Please feel free to contact us and learn more about our pricing and payment programs. We make profits in the servicing of contracts as well in the origination.

  • Q19.  How does Guidance handle Late Fees? And if you do pay late fees - where does that money go? Some Islamic banks don’t want to receive late fees and instead send any such fees to charity - Is there a basis in Islam? What does that fee structure look like?

    Most conventional financial institutions use late fees to make profit. We refrain from doing that. However, we do collect a late payment fee that covers the expenses involved in additional administrative fees resulting from the breach by the customer regarding her/his obligation to pay on time. This is in compliance with Shariah law. The fee is currently set at $50 per late payment and has been approved by our Shariah Supervisory Board. To determine the fee amount, Guidance worked with a renowned mortgage benchmarking data provider, to conduct a study designed to estimate the cost of collecting late payments. This study was done very early on and we haven’t raised the price since then. This shows our commitment in serving our customers in the best way possible.

  • Q20.  What happens if I am in a financial distress and I’m not able to make my monthly payments? How would Guidance Residential handle it?

    In the unfortunate event that a customer experiences difficulties in making the monthly payments, a specialized team will be responsible for contacting the customer and discussing the situation. The team’s objective is to work out a satisfactory arrangement for both parties involved.

  • Q21.  What makes your program Halal?

    The unique thing about Guidance Residential is that we brought together seven of the leading scholars in the world on Islamic Finance. These scholars are all widely known for their expertise in Islamic Legal Jurisprudence in financial transactions and they come from across the globe. The Scholars help us offer a product that is both Shariah complaint and work within each individual states’ home protection laws. Our Shariah Supervisory Board has authored numerous fatwas on various aspects including one on the overall structure.

  • Q22.  People think that Islamic Banking is for Muslims only - is this true? Do you have non-Muslim customers?

    Yes. We encourage all to participate in our program and reach out to all. Our program is for everyone to benefit from regardless of their faith. We have many non-Muslim customers, who have chosen to finance with us after seeing the benefits and justice of the riba-free structure. Usury is forbidden in all major faiths, and we welcome anyone to finance their homes with our usury free, participatory and equity based home financing program.

  • Q23. There are a lot of Islamic Jargon out there in regards to loans — how are you educating the community on this?

    Educating the community has been and continues to be a challenge but we are committed to this important opportunity and obligation. We do online webinars with industry experts and travel the country educating our community in Islamic finance. If you are interested in having someone come out to your neighborhood, please contact us at info@guidanceresidential.com

  • Q24.  Can I purchase a home with less than 20% down?

    Yes. We let our customers make a down payment as little as 5% for primary homes and 15% for investment properties.

  • Q25.  Do I have to escrow my taxes and insurance?

    If you are putting down at least 20%, generally you have the option to not escrow your taxes and insurance, although other terms and conditions may apply. If you are putting less than 20% down, you have to escrow taxes and insurance.

  • Q26.  Does my realtor or property seller need to know anything special about the Diminishing Musharaka Program?

    Not necessarily. Our contract is structured in a Strict Shariah Compliant way, and we have also worked with 18 legal firms and have gone through a rigorous process. We have been originating contracts in the U.S. since 2002.

  • Q27.  Can I refinance my current conventional mortgage with Guidance Residential?

    Absolutely! And we highly encourage our customers to do so early to get out of a Riba based mortgage as soon as possible. You can start the refinance process online https://www.guidanceresidential.com/prequalify or contact your local Account Executive at 1-866- 484-3262.

  • Q28.  In the U.S., interest paid on a primary home is tax deductible. Is the Profit Payment I pay Guidance Residential tax deductible as well?

    You will be issued a Form 1098 for tax purposes. The Program has been designed so that you do not lose any income tax benefits and our Shariah Supervisory Board has issued a fatwa on the subject. Please check with your tax advisor for your tax treatment.

  • Q29.  Why do I have to pay for the LLC fee?

    Guidance Residential’s program is built on the Shariah concept of Declining Balance Co-ownership. The LLC is created for the purpose of creating this partnership and serves to protect both the customer and Guidance Residential from liabilities that could arise. The majority of the cost associated with setting up and maintaining the LLC is paid by Guidance Residential and the customer pays $18.75 per month.

  • Q30.  How do you determine your profit?

    In order to appeal to both investors and customers, Guidance Residential benchmarks its profit rate to the prevailing market rates.

  • Q31.  Why choose Guidance Residential over other companies who claim to be Shariah compliant?

    Our program has been designed and certified by an independent Shariah Supervisory Board comprised of world renowned scholars led by Mufti Taqi Usmani. Guidance is the ONLY Shariah Compliant Home Finance provider that has an independent Shariah Board consisting of AAOIFI Scholars. In addition, our home financing program has been endorsed by AMJA (Assembly of Muslims Jurists of America) as a sound contract to fulfill the home financing needs of Muslims in America.

  • Q32.  Is it not the same like interest, just we name it as profit?

    Interest is charged on a loan, and profit is charged for a tangible good or service. At Guidance Residential the contract is not a loan contract, but an equity partnership contract regarding a real asset, which is the home.

  • Q33.  Where do the funds from Guidance Residential come from?

    For properties financed by Guidance Residential’s co-ownership program, we use our own funds alongside the homebuyer to purchase the property. Then in a separate step, we sell our co-ownership stake to Freddie Mac and at that stage Freddie Mac becomes an investor for the portion that we own.

    Watch our FAQ video: Why does Guidance Residential sell its contracts to Freddie Mac?

  • Q34.  If it is Islamic, then why do you need credit scores?

    In the early days of Islam, investors would inquire about a potential partner’s history of doing business before entering in a contract with that partner to determine if the partner is able to fulfill the trust (amanah) of the financial transaction (in modern jargon, financial industry calls it ‘credit worthiness’). In current business practice of our time, the credit score serves as a standardized method of determining that worthiness.

  • Q35.  How much time it would take to approve the file?

    It takes a minimum of 7 business days to approve a file from the day the customer submits all needed documentation for approval, to include full income and assets documentation.

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