Why Millennials Should Choose an Islamic Home Finance Provider
Did you know that around 95% of home buyers under the age of 44 used a mortgage in 2024? For many younger buyers, entering the housing market is the biggest financial decision they’ve ever made.
The National Association of REALTORS® 2024 Trends report found that Millennials are the largest group of home buyers.
If you’re a Millennial seeking Islamic home financing, home financing in Islamic banking, or specifically looking for options that respect your values as an Islamic homebuyer, you’re certainly not alone. Now might be the perfect time to explore mortgage alternatives like halal, riba‑free Islamic financing.
Homeownership can be a big step, but it can provide you with increased stability and help you build toward the future.
5 Reasons Why Muslim Millennials Should Buy a Home
The homebuying journey isn’t easy, but Millennials are increasingly making the leap to own their own properties. It is a huge investment — most likely the largest one you’ll make — so, it’s not something to take lightly. Here are some reasons it may be in your best interest to buy a home.
1. Owning Your Space Can Support Your Long-Term Goals
It’s true that many Muslim Millennials (young adults born between 1981 and 1996) are marrying, buying homes, and starting families later in life. However, for older Millennials, that “later in life” window is now.
Rather than buying a house so you can keep up with your friends or meet a childhood goal, think about how homeownership can provide security in your future. You won’t have to worry about your landlord changing or your property selling out from under you when you own. If your long-term goals are not likely to change location frequently, then homeownership might be right for you.
2. Home Ownership Helps You Avoid Rising Rents
The costs just continue to rise, with monthly rent rising rapidly at an average rate of >5% each year since 2020 and 7.52% YoY in 2025. Few landlords voluntarily decreased their rent. Renters who do experience lower rents usually initiate negotiations. But even with negotiating a lower monthly cost, your payments are ultimately going to your landlord and not towards your own home. And with rising costs, many are considering homeownership because of the stability that owning your own home can provide.
3. Buying a Home Can Support Health & Safety
The National Association of Realtors (NAR) reports that homeowners are happier and healthier than non-owners. While this isn’t a direct correlation, they have drawn conclusions that homeownership is correlated with income and education levels, which are typically associated with better health. Additionally, homeownership means a buyer has a larger financial stake in their home than a renter does.
This usually results in more active involvement in home maintenance, community building, and social activities. A deeper level of involvement leads neighbors to have deeper social ties with each other. And this sense of community turns neighborhoods into better places to reside.
4. Homeowners Can Benefit From Rising Home Values
The good news for current homeowners is that home values continue to rise — even as the market has softened. Zillow predicts home values will rise by .4% by 2026. As a renter, you don’t have equity in the home and can’t benefit from rising value. So, if homeownership matches with your life goals and financial situation, it may be a solid investment.
5. Owning Properties Can Mean Potential for Rental Income
If you’ve been thinking about investing in real estate, you might also think about how you can offset your monthly payments or create a kind of passive income. Some owners will purchase a multi-family home, living in one of the units, and renting out the other units. Another option is purchasing a smaller property that is well under your budget and then eventually purchasing a second property, so you can rent one out.
These options can help you benefit from both homeownership and being a landlord. And this way, you have the opportunity to own your own home, start investing, generate income, and become an on-site property manager.
Where Are Millennials Buying Homes?
In an analysis conducted by data firm Corelogic, when Millennials consider where to purchase a home, they factor in “home affordability, employment opportunities, flexibility to work remotely, local tax rates and preference for open spaces.” NAR reports that “convenience to their job and commuting costs” are top concerns that impact purchasing decisions for Millennials.
These Are the Markets Where It’s Cheaper to Buy vs. Rent
Typically, it’s more expensive to buy than rent in big cities. According to research from Construction Coverage, only 32 out of 343 US cities offer more affordable buying options than rentals. The top 10 cheapest cities for homebuyers include:
- Detroit, MI
- Jackson, MS
- Cleaveland, OH
- Birmingham, AL
- Montgomery, AL
- Baltimore, MD
- Memphis, TN
- Shreveport, LA
- Toledo, OH
- Akron, OH
The ten cheapest counties for home buyers include:
- Suffolk County, NY
- Hinds County, MS
- Pitkin County, CO
- Danville City, VA
- Lauderdale County, MS
- Kleberg County, TX
- Chaves County, NM
- McCracken County, KY
- Montgomery County, KS
- Montgomery County, AL
6 Ways Millennials Are Making Homeownership Happen
Millennials are typically at a point in their lives when their careers are growing and they’re paying off as much student loans and debt as possible. Especially during the pandemic, Americans have paused costs, resulting in 45% reporting that they were able to build up a nest egg according to a New York Life survey.
These extra savings and more are how Mmillennials are making homeownership possible.
1. They’re making more money.
A Pew Research study found that household income rates of this bunch were two to four times higher than that of other age groups. This financial standing allows Millennials the ability to buy a home for the first time.
2. They’re getting help from their families.
Millennials have tended to stay living with their parents longer than the generations before them. While they might not love the impact on their social life, Millennials recognize the financial benefit of living with family. However, the number still at home is dwindling as the generation ages. According to this Pew Research study, only 18% of adults aged 25-34 lived with their parents in 2023 (down from 52% in 2020).
3. They’re growing their savings.
Many Americans hold off on unnecessary purchases when the economy is shaky, including during government shutdowns or increased tariffs. Rising inflation can also make you wary of what you spend your hard-earned money on. This cautious spending allows for an increase in savings, which can go towards an initial payment towards a home.
4. They’re buying homes in more affordable locations.
Millennials are moving out of the city in larger numbers. A recent Zillow study shows that 47% of Millennial homeowners live in the suburbs, as opposed to urban and rural areas.
5. They’re opting for houses with smaller footprints.
As Millennials have started to buy homes, a pattern has emerged: They aren’t interested in their parents’ big homes. According to a Clever survey, Millennial homebuyers say 1,700 square feet is enough space. For reference, boomers — who might even be downsizing — say they’re looking for a place that’s around 1,900 square feet. NAR also reported that younger Millennials are more likely to look for and purchase older homes.
6. They’re working with non-banks.
The things this generation loves about the internet are also true of the online mortgage industry. They love simple user experiences, quick digital communication, and on-demand service for when they’re ready to buy. It’s no wonder why all of the top 10 lenders were non-banks in 2025.
Why? Because traditional mortgages aren’t the most ethical solution for home finance.
When choosing Guidance Residential for home financing, you partner with us as co-owners (rather than owing a bank). We aren’t even a subsidiary of a bank. We also ensure you are not taking part in riba, or interest, which is prohibited in Islamic law and Abrahamic faiths. And we share in your investment without profiting at your expense if something goes wrong.
>> Learn more about Islamic finance
Why Choose a Shariah‑Compliant Home Finance Provider?
Whether you’re exploring Islamic home financing for the first time or seeking a more ethical alternative to conventional loans, working with a provider grounded in Islamic finance principles offers Muslim Millennials – as well as homebuyers of other faiths – several key advantages:
- No riba (interest): Payments are structured around partnership, not profit from debt or hardship.
- Asset-backed financing: Your financing is tied to real property and not abstract financial products.
- Shared risk and responsibility: You’re not alone — losses (like in the event of a natural disaster or eminent domain) are shared based on ownership share.
- Transparent terms: No hidden fees, compounding penalties, or surprise rate changes.
To purchase a home, we establish a co-ownership commitment agreement with you via a limited liability company, or LLC which offers consumer protections that align with ethical rules for Islamic finance. In this diminishing partnership, the homeowner agrees to pay a usage fee for the portion of the property they don’t yet own, which lessens as their stake in the property grows.
Getting Started With Islamic Home Financing
Guidance Residential’s co-ownership model of Islamic home financing remains the #1 U.S. Islamic home financing provider, with more than 40,000 families assisted over more than 20 years.
Learn more about Islamic finance, or get started on your homeownership journey today!
Your Guidance Residential Account Executive is here to help with any questions. Looking to refinance or purchase? Have a friend or family member who is looking for a home? Call 1.866.Guidance, or start an application today.
Originally published in February 2016, last updated in October 2025.
