Halal Mortgage (Murabaha) Calculator
Calculate Sharia-compliant home financing payments using the Murabaha (cost-plus) model.
Financed Amount
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Total Profit Paid
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Total Cost
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Monthly Payment
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Understanding Murabaha: Sharia-Compliant Home Financing
Murabaha is one of the most widely used Islamic finance structures for home purchases. In a conventional mortgage, a bank lends money and charges interest (riba) on the outstanding balance. Islam prohibits riba, so Murabaha offers an alternative rooted in trade rather than lending. In a Murabaha transaction, the bank purchases the property directly from the seller at market price. The bank then immediately resells the property to the buyer at a higher price that includes an agreed-upon profit margin. The buyer pays this total amount in fixed monthly installments over the financing term.
How the Murabaha Calculation Works
The financed amount is the property value minus your deposit or down payment. The bank's total profit is calculated as: Financed Amount multiplied by the Profit Rate multiplied by the Term in years. This is a simple profit calculation — unlike conventional interest, it does not compound over time. The total cost you pay equals the financed amount plus the total profit. Your monthly payment is simply the total cost divided by the number of months in the term. This transparency is a core principle of Islamic finance: both parties know the exact cost from the outset.
Key Differences from Conventional Mortgages
In Murabaha, the bank takes actual ownership of the property before selling it to the buyer, making it a genuine sale contract rather than a loan. The profit margin is fixed at the start and does not fluctuate with market rates. There is no compounding of interest on the outstanding balance. The total amount owed is known from day one, providing certainty and predictability. Sharia advisory boards oversee these contracts to ensure compliance with Islamic principles.
Use this calculator to compare different property values, deposit amounts, profit rates, and terms. A larger deposit reduces the financed amount and total profit paid. A shorter term also reduces total profit but increases monthly payments. Experiment with different scenarios to find the balance that works best for your financial situation while maintaining Sharia compliance.
This calculator is for informational purposes only and does not constitute religious, financial, or legal advice. Islamic financing terms and structures vary by provider and jurisdiction. Always consult a qualified Islamic scholar and financial advisor for decisions specific to your situation.