For many working Muslim Americans, homeownership is more than just the fulfillment of the American dream. It is a major financial investment that must resonate with their faith. This can present a challenge when it comes to choosing a home financing provider.<\/p>\n\n\n\n
Interest, or riba, is strictly prohibited in Islam, and conventional mortgages are based on borrowing money at interest. It’s a dilemma for the Muslim-American home buyer. <\/p>\n\n\n\n
Are interest-free mortgages possible? <\/p>\n\n\n\n
The good news is that yes, it’s possible, and an authentic and competitive alternative is now widely available! <\/p>\n\n\n\n
Observant Muslims who wanted to avoid paying interest once found themselves faced with the choice of trying to justify an interest-based mortgage, buying a home in one lump sum, or paying rent forever.<\/p>\n\n\n\n
Thankfully, this is no longer the case.<\/p>\n\n\n\n
Islamic mortgages are now available. It’s important to note that they do not<\/em> involve a mortgage loan, and the home buyer does not borrow money or pay interest.<\/p>\n\n\n\n A conventional mortgage<\/a> loan cannot be Islamic, because it is based on interest (riba), which is prohibited in Islam like it is in all monotheistic faiths. <\/p>\n\n\n\n However, an alternative to a mortgage is now available. Guidance Residential offers an authentic form of Islamic home financing that is not a loan and it does not involve paying interest. It is a co-ownership program. <\/p>\n\n\n\n Thankfully, these days, Islamic home financing is entirely possible. <\/p>\n\n\n\n Interest-free home financing via Guidance Residential’s Declining Balance Co-Ownership Program<\/a> is based on a partnership between Guidance and the customer. <\/p>\n\n\n\n In this model of Islamic finance<\/a>, Guidance and the homeowner buy the home together as co-owners. Each party owns a percentage of the home in proportion to the equity contributed.<\/p>\n\n\n\n Homebuyers make monthly payments to Guidance Residential over a predetermined period of time to completely buy out Guidance Residential’s shares in the property and become the sole owner. At the same time, they pay Guidance a fee for the benefit of using the company’s share of the home they purchased together. <\/p>\n\n\n\n These fees are competitive with a traditional home mortgage for the sake of simplicity. But the fees paid by Guidance’s customers are entirely different from riba. <\/p>\n\n\n\n 1. Acquisition payment:<\/strong> One part of the monthly payment is allocated for the acquisition of a portion of Guidance Residential’s ownership share. This is called the Acquisition Payment. The Acquisition Payment serves to purchase Guidance Residential’s shares of ownership over the predetermined period of time.<\/p>\n\n\n\n 2. Profit payment:<\/strong> The other part allows the customer to retain the exclusive use of the entire property. The Profit Payment serves to allow the home buyer to use the part of the property owned by Guidance. <\/p>\n\n\n\n For example: If a client wishes to purchase a $300,000 home and can afford an initial investment of $30,000, Guidance will contribute the remaining $270,000 in funds to purchase the home together, forming a co-ownership arrangement.<\/p>\n\n\n\n While the home buyer initially owns a 10% share in the home, they have full use and ownership rights under the law, right from the beginning. <\/p>\n\n\n\n The co-ownership agreement is set up on a 15, 20, or 30-year contract in which monthly payments are made to Guidance Residential. Over that period of time, the homeowner’s share increases and Guidance’s share decreases. <\/p>\n\n\n\n In accordance with the terms of the co-ownership agreement<\/a>, the home buyer can sell the property at any time, and any profits from that sale will belong to them alone. <\/p>\n\n\n\n A company in this space must not only adhere to Islamic financial principles but also apply it in the modern mortgage market. The answer is a shariah-compliant home financing<\/a> company \u2014 Guidance Residential. <\/p>\n\n\n\n When Guidance Residential opened its doors, it quickly became the country’s leading provider of Islamic home financing for the following reasons. <\/p>\n\n\n\n After three years of development, a multi-million dollar research and development budget, and discussions with 18 law firms, Guidance Financial Group (parent company of Guidance Residential and in turn a subsidiary of Capital Guidance) unveiled the Declining Balance Co-Ownership Program that provides a fully riba-free<\/a> home financing option. <\/p>\n\n\n\n Some banks have now begun to offer mortgages with Islamic-sounding names. They may advertise that they offer interest free loans or zero interest loans, but at their foundation, these products are not based on the principles of Islamic finance. In addition, banks earn their income largely from interest on borrowed money — money that they then offer to Muslims as so-called Islamic mortgages.<\/p>\n\n\n\n If a home buyer is looking for an Islamic mortgage, it’s important to check whether the source is a bank or a truly authentic and independent Islamic financier.<\/p>\n\n\n\n As the #1 U.S. Islamic home financing provider, Guidance has now financed over $10 billion to Muslim-American homeowners, serving more than 40,000 families. <\/p>\n\n\n\n Guidance retains the most authoritative Islamic supervisory board in America. The board comprises world-renowned scholars, many of whom currently serve or have served on the board of the industry’s leading standard-setting body, the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). The Chairman of AAOIFI’s shariah board, Justice Muhammad Taqi Usmani, is the long-time Chairman of Guidance’s independent board. <\/p>\n\n\n\n More recently, the Assembly of Muslim Jurists of America (AMJA), an advisory group to the Muslim-American public with experts in Islamic jurisprudence, issued a statement of support of Guidance and its program.<\/p>\n\n\n\n After a review of all Islamic home financing programs that claim to be shariah-compliant, AMJA named Guidance Residential and its Declining Balance Co-Ownership Program as a permissible path to Muslim-Americans in need of home financing. <\/p>\n\n\n\n Since 2002, Guidance has supported many community-based organizations and has quickly become a major corporate sponsor of Muslim-American community initiatives. Guidance has committed millions of dollars in funding for such initiatives. <\/p>\n\n\n\n Guidance Residential has become the #1 U.S. Islamic home financing provider through the dedication of its team, an eye for a quality finance product, and careful adherence to authentic Islamic principles.<\/p>\n\n\n\n A famous teaching by Bukhari states, \u201cA person’s happiness includes a big house, a good neighbor, and a steady mount.\u201d We can all agree that if you add a sound financial partner to the mix, the sky is the limit. <\/p>\n\n\n\n Buying a home is one of the most important decisions you will make. The team at Guidance Residential is here for you, from the first step of pre-qualification or pre-approval, on through to finding the right real estate professional for you and your family \u2014 or refinancing a home you already own. We invite you to explore the home buying process<\/u><\/a> with Guidance Residential today. You can also instantly calculate an estimate specific to your personal situation with our finance calculators<\/u><\/a> online.<\/p>\n\n\n\n Guidance Residential remains the #1 U.S. Islamic home financing provider, with more than 40,000 families assisted over more than 20 years. Learn more<\/u><\/a> about our co-ownership model of Islamic home financing, and get started<\/u><\/a> on your home finance journey today.<\/p>\n\n\n\nHow Interest-Free Home Financing Works<\/strong> <\/h2>\n\n\n\n
The monthly payment consists of two portions: <\/strong><\/h4>\n\n\n\n
Why Guidance Residential Is the #1 U.S. Islamic Home Financing Provider<\/strong> <\/h2>\n\n\n\n
‘Islamic Mortgages’ From Banks Are Not Islamic<\/h4>\n\n\n\n
Guidance Residential Today<\/h3>\n\n\n\n
Learn More About Interest-Free Home Financing<\/strong> <\/h3>\n\n\n\n
Continue Your Homeownership Journey<\/strong><\/h3>\n\n\n\n