Sharia-compliant home financing designed around your faith
We are proud to be one of the few companies nationwide offering Islamic-compliant lending. Through our exclusive partnership with the Ijara Community Development Corporation, we offer halal financing, which is a groundbreaking solution that offers buyers an Islamic-compliant path to homeownership.
What is halal financing?
Halal financing program provides an alternative to a traditional creditor-debtor mortgage structure. Through our partnership with Ijara Community Development Corporation, the home is placed in a living trust and leased to you while you gradually increase your ownership interest through monthly payments.This asset-based structure can be combined with eligible conventional, FHA, VA, jumbo, and select Non-QM financing programs, giving more borrowers an opportunity to pursue homeownership in a way that aligns with Islamic financial principles. With Halal Financing, buyers use an Ijara-wa-Iqtina structure, also known as lease-to-own. Instead of making traditional mortgage payments, buyers make rent payments through Ijara Community Development Corporation, which allows them to build equity in their home over time. The Corporation also takes care of servicing, insurance, property taxes, and more, ensuring a hassle-free experience.
Highlights
Halal Financing features
Things to consider before getting halal financing
- Limited availability: Halal home financing isn't offered by every lender (but luckily Bank CMG is one of those!)
- Program structure may differ: Instead of paying interest, you'll enter into a financing agreement that follows Islamic finance principles. Be sure you understand how your specific agreement is structured.
- Documentation requirements: Like any home financing program, you'll need to provide documentation to verify your income, assets, credit, and eligibility.
- Property eligibility may apply: Some financing structures or programs may have requirements regarding the type of property that can be financed.
- Closing costs still apply: While the financing structure differs from a traditional mortgage, borrowers should still expect standard closing costs and other home purchase expenses.
Is halal home financing right for you?
Halal home financing may be a good fit if you're looking for a home financing solution that aligns with your faith while still providing access to many of the same home loan options available through traditional financing. It could benefit you if you:
- Want financing that aligns with Islamic financial principles and prefer an alternative to a traditional interest-based mortgage.
- Are buying your first home and want a Shariah-conscious path to homeownership.
- Need conventional, FHA, VA, jumbo, or alternative income qualification options but prefer a halal financing structure.
- Are self-employed or have non-traditional income and may benefit from eligible Non-QM options, such as bank statement or DSCR financing.
- Want to refinance your current home into a halal financing arrangement, if eligible.
How halal financing differs from traditional home loans
The key difference: The underlying loan program determines how you qualify, while the halal financing structure determines how the home is owned and how the transaction is organized. This gives eligible borrowers access to many of the same financing options while using a structure designed to align with Islamic financial principles.
Traditional Financing
With a traditional mortgage, you borrow money directly from a lender to purchase a home. You own the home from day one, while the lender places a lien against the property until the loan is repaid. Your monthly payment includes principal and interest, along with taxes and insurance if they're escrowed.
- You qualify for a home loan.
- The lender provides the loan structure.
- You take ownership of the home at closing.
- You make monthly principal and interest payments to the lender until the loan is paid off.
Halal Home Financing
Halal home financing uses a different legal structure while still allowing you to purchase a home. After you qualify for an eligible loan program, Ijara Community Development Corporation establishes a living trust that purchases and holds title to the property. The trust leases the home to you while you make monthly payments. With each payment, your ownership interest increases until you become the sole owner according to the terms of the agreement.
- You qualify through an eligible loan program (Conventional, FHA, VA, Jumbo, or select Non-QM options).
- Ijara Community Development Corporation establishes a living trust that purchases the home.
- The trust leases the home to you.
- Your monthly payments include both a lease payment and a portion that increases your ownership interest.
- Once the agreement is fulfilled, ownership transfers fully to you.
How it works
1. Apply for home financing
Start by applying with us. We'll review your financial situation and help determine which eligible loan program—such as Conventional, FHA, VA, Jumbo, or select Non-QM financing—is the best fit for your needs.
2. The trust purchases the home
Through our partnership with Ijara Community Development Corporation, an Inter Vivos Revocable Trust (living trust) is established. The trust purchases and holds title to the property.
3. Move into your home
The trust leases the home to you, giving you the right to live in and enjoy the property while you work toward full ownership.
4. Make monthly payments
Your monthly payment includes a lease (rent) portion and a portion that is applied toward purchasing the home. As you make payments, your ownership interest gradually increases.
5. Build owenership over time
Each payment increases your share of ownership in the property while reducing the trust's ownership interest, helping you steadily work toward owning the home outright.
6. Become the sole owner
Once you've satisfied the terms of the agreement and completed the purchase, ownership of the home is transferred from the trust to you, making you the sole owner.
Frequently Asked Questions
We’re here to help! Find answers to your everyday banking questions.
Halal Financing is an Islamic-compliant home financing option designed to help eligible buyers purchase a home without using a traditional interest-based mortgage structure.
No. A traditional mortgage generally creates a creditor-debtor relationship. Halal financing uses a trust and lease-to-own structure designed to align with Islamic financial principles. However, the underlying transaction is still subject to standard lending and underwriting requirements.
No. While payments are structured as rent payments, each payment helps build equity toward ownership.
Bank CMG is one of the few lenders nationwide to offer Islamic-compliant home financing.
Halal Financing may pair with eligible Fannie Mae products, as well as FHA and VA loan programs, and some Non-QM loan programs as well.
An Inter Vivos Revocable Trust, also called a living trust, initially holds title to the property. As you make payments toward the purchase price, your ownership interest increases. The property may ultimately be transferred into your name according to the agreement.
The arrangement is structured around an asset-based lease and purchase agreement rather than a traditional interest-bearing creditor-debtor relationship. Review the program documents carefully to understand how rent, purchase payments, and other charges are calculated.
Once the purchase price and other obligations under the agreement have been satisfied, the property can be transferred from the trust into your name, making you the sole owner.