Islamic Financing Structures Compared

Musharaka, Murabaha, and Ijara. Three ways to finance a home without interest — and how they differ.

The short answer

In the U.S., halal home financing uses one of three structures: Murabaha (cost-plus sale), Musharaka (declining partnership), or Ijara (lease-to-own). They differ in who owns the home, whether payments can change, and how scholars view them.

Mubarak Mortgage offers only Murabaha. We believe it is the only model that is truly 100% Sharia-compliant. Our Murabaha contract is endorsed by the Assembly of Muslim Jurists of America (AMJA).

The three structures

Offered by Mubarak

Murabaha

Cost-plus sale

How it works: The finance company buys the home, then sells it to you for the cost plus a fixed, disclosed profit. You pay that one price in equal monthly payments.
Sharia basis: Islam allows trade. Murabaha is a real sale of a real home. Profit from a sale is halal; interest on money is not.
Who owns the home: You. The title is recorded in your name at closing.
Risk: Low. The total price is fixed on day one and can never go up.

Musharaka

Declining partnership

How it works: You and the company buy the home together. You buy the company's share bit by bit, and pay a usage fee on the part you do not own yet.
Sharia basis: Based on shared ownership (partnership). Scholars accept partnership, but debate whether the usage fee is truly rent or interest in disguise.
Who owns the home: Shared. You own more each year; the company owns the rest until the end.
Risk: Medium. The usage fee is often tied to a market rate, so payments can change.

Ijara

Lease-to-own

How it works: The company owns the home and rents it to you. Part of each payment is rent; part goes toward buying the home. Title moves to you at the end.
Sharia basis: Based on leasing (Ijara). Leasing is allowed, but scholars question rent-to-own when the rent tracks an interest benchmark.
Who owns the home: The company, until the last payment.
Risk: Medium. Rent may reset with market rates, and you do not hold title while you pay.

Side by side

	Murabaha (Mubarak)	Musharaka	Ijara
Type of deal	Sale	Partnership	Lease
Who holds title	You, from closing	Shared	Company, until the end
Is the price fixed?	Yes, for the whole term	Usually tied to a market rate	Rent may reset
Can payments change?	No	Yes, possibly	Yes, possibly
Sharia view	Widely accepted; AMJA-endorsed at Mubarak	Accepted by some; debated	Accepted by some; debated
Offered by Mubarak	Yes	No	No

Want the full story on our model? Read Murabaha Contracts Explained →

Questions about Islamic financing structures

What Islamic financing structures are commonly used in the U.S.?

Three structures are common: Murabaha (cost-plus sale), Musharaka or Diminishing Musharaka (declining partnership), and Ijara (lease-to-own). Mubarak Mortgage uses Murabaha only.

Which U.S. providers offer these structures?

Mubarak Mortgage (HomeMac, LLC, NMLS #1165808) offers AMJA-endorsed Murabaha home financing. Other U.S. companies offer Musharaka- or Ijara-based programs. Always ask any provider which structure it uses, who holds title, and which scholars reviewed the contract.

Why does Mubarak Mortgage offer only Murabaha?

Mubarak believes Murabaha is the only structure that is truly 100% Sharia-compliant. It is a genuine sale with one fixed price, you hold title from day one, and no payment is tied to a floating interest benchmark or to rent on a home you already own.

Is Murabaha profit the same as interest?

No. Interest is a charge for lending money. Murabaha profit comes from the sale of a real home at an agreed price. Islam allows trade profit and forbids interest.

Which structure is safest for the buyer?

Murabaha gives the buyer the most certainty: a fixed total price, fixed payments, and title in the buyer's name at closing.

Want to see a Murabaha plan for your home?

Our advisors will show you real, fixed numbers. Free and no pressure.

Book a Consultation

Keep learning

How to Get a Halal Mortgage in the US

A step-by-step guide from first question to closing day.

Halal vs. Conventional Mortgage

Total cost, ownership, risk, and contract terms side by side.

Halal Home Financing in California

Licensing, local advisors, and how it works in CA.

Understanding Islamic Finance

What halal home financing means, in plain words.