FAITH-BASED HOME FINANCING.
A clear, faith-based approach to home financing built around the purchase and resale of the property.
Murabaha is a cost-plus sale structure used in Islamic finance. Rather than lending money and charging interest on that loan, Barakah Mortgage acquires the home and then sells it to the homebuyer for the disclosed acquisition cost plus an agreed profit.
The transaction follows a specific sequence: Barakah acquires the property before completing the Murabaha sale to the buyer. The cost, profit and payment terms are disclosed in the financing documents, and the buyer receives title at closing, subject to the applicable financing documents and security interest.
How Murabaha Home Financing Works.
Why must the contracts remain separate?
The arrangements used during Barakah Mortgage’s acquisition of the property and the eventual Murabaha sale to the homebuyer are separate.
The Murabaha sale is completed only after Barakah has acquired the property, preserving the intended purchase-and-resale structure of the transaction.
Does Barakah actually acquire the property, and why does the order matter?
Yes. Barakah Mortgage obtains legal and constructive ownership of the property before completing the Murabaha sale to the homebuyer.
The sequence matters because Murabaha is structured as a purchase and resale: Barakah first acquires the property and only then completes the sale to the buyer. Ownership comes before resale.
How are the cost and profit disclosed?
Transparency is a defining feature of Murabaha.
The transaction documents disclose Barakah Mortgage’s acquisition cost and the agreed profit used to establish the Murabaha sale price, so the buyer understands the economic terms of the sale before completing the transaction.
FAITH-BASED HOME FINANCING.
Murabaha in Four Clear Steps
01
You Select a Home
You identify an eligible property you would like to purchase and begin the financing process with Barakah Mortgage.
02
Barakah Acquires the Property
Before completing the Murabaha sale to you, Barakah Mortgage acquires legal and constructive ownership of the property from the seller. This acquisition occurs before Barakah completes the resale to the homebuyer.
03
Cost and Profit Are Disclosed
Your Murabaha documents disclose Barakah Mortgage's acquisition cost and the agreed profit associated with the sale. Together, these establish the Murabaha sale price, along with the applicable payment terms, so the economics of the transaction are clearly documented before you complete the purchase.
04
Barakah Sells the Home to You
After Barakah acquires the property, the Murabaha sale to you is completed at the agreed cost-plus-profit price. You receive title to the property at closing, subject to the applicable financing documents and security interest, and make the agreed payments according to your contract.
Questions About Murabaha Home Financing
What is Murabaha home financing?
Murabaha is a cost-plus sale structure used in Islamic finance.
In a home financing transaction, the financier acquires the property and then sells it to the homebuyer for its disclosed acquisition cost plus an agreed profit. The homebuyer pays the agreed Murabaha sale price according to the payment terms in the contract.
Is Murabaha a loan?
Murabaha is structured as a sale rather than an interest-bearing loan.
Barakah Mortgage acquires the property and subsequently sells it to the buyer at a disclosed cost-plus-profit price.
Why is profit charged in Murabaha?
Profit is part of the agreed sale price in a Murabaha transaction.
Barakah Mortgage acquires the property and resells it for the acquisition cost plus a disclosed profit. The amount and applicable payment terms are documented as part of the sale.
Who owns the home during a Barakah Murabaha transaction?
Barakah Mortgage acquires legal and constructive ownership of the property before completing the Murabaha resale.
At closing, title transfers to the homebuyer, subject to the applicable financing documents and security interest.
Does Barakah Mortgage continue to own part of my home after closing?
No. Murabaha is not an ongoing co-ownership structure.
Once the Murabaha sale is completed, the homebuyer receives title to the property at closing and pays the agreed sale price according to the financing documents.
How is Murabaha different from a conventional mortgage?
The primary difference is the underlying contractual structure.
A conventional mortgage is generally structured as money lent to a borrower with interest charged on the debt. Murabaha is structured as a purchase and resale of the home: the financier acquires the property and then sells it to the buyer for a disclosed cost plus an agreed profit.
While parts of the homebuying experience may appear similar, the underlying contracts and transaction structure are different.
Does faith-based home financing take longer?
Not necessarily.
A Murabaha transaction includes specific sequencing because Barakah Mortgage must acquire the property before completing the sale to the homebuyer.
Barakah combines this structure with experienced Mortgage Advisors, streamlined technology and modern mortgage operations designed to keep the process moving efficiently.
Actual approval and closing timelines depend on the buyer, property, documentation, underwriting and other transaction-specific requirements.
Who reviews Barakah Mortgage’s Murabaha structure?
Barakah Mortgage maintains a Resident Advisory Board of scholars with backgrounds in Islamic jurisprudence and finance who provide guidance regarding the Murabaha program.
Homebuyers who want to understand the scholarly basis of the program can review the scholars, their credentials and additional information about Barakah Mortgage’s Murabaha structure on our Fatwa and Resident Advisory Board page.
Faith-Based Financing. A Modern Homebuying Experience.
Choosing Murabaha does not mean giving up the speed, technology, communication or personal guidance today’s homebuyer expects.
Barakah Mortgage combines a scholar-guided Murabaha structure with experienced Mortgage Advisors, streamlined digital tools and the technology and operational support of RATE.