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Sharia Mortgage Calculator

Simulate Islamic mortgage with Murabahah, Musyarakah Mutanaqisah (MMQ), and IMBT contracts — comparison with conventional mortgage.

FINANCE

Sharia mortgage calculator with three primary contracts: Murabahah (cost-plus sale), Musyarakah Mutanaqisah (diminishing partnership), and IMBT (lease-to-own) — fully riba-free.

Four tabs: Murabahah (fixed margin, fixed installment), MMQ (installment can vary), IMBT (lease ending in ownership), and a side-by-side comparison of Sharia vs. conventional mortgage in total cost paid and transparency.

Disclaimer: Margins and fees differ across Islamic banks. Consult the bank’s Sharia supervisory board for contract specifics.

Sharia Mortgage Calculator

Simulate Islamic home financing with Murabahah, Musyarakah Mutanaqisah (MMQ), and Ijarah Muntahiyah Bittamlik (IMBT) contracts. Compare with conventional mortgage to see the cost difference.

Murabahah: bank buys the house and resells it to the customer at a fixed selling price (cost + margin). Monthly installments are fixed for the entire tenor.

Simulation only. Actual contract terms differ between Bank Syariah Indonesia (BSI), BTN Syariah, Mandiri Syariah, and other Sharia institutions. Each contract must be reviewed by the Sharia Supervisory Board (DPS) and refer to DSN-MUI fatwas. Consult an authorized Sharia bank officer for an official offer.

Calculator information

How to use this calculator

  1. Choose an Islamic finance contract: Murabaha, Diminishing Musharaka (MMQ), or Ijara wa Iqtina (IMBT).
  2. Enter the home price, down payment (minimum 10-20% for Murabaha), and term (1-25 years).
  3. Enter the bank's margin/profit-sharing ratio (typically 7-12% equivalent).
  4. Click Calculate to see the monthly installment, total payments, and total margin paid to the bank.
  5. For MMQ, view the year-by-year breakdown of the bank's declining ownership share (diminishing musharaka).
  6. Use the Comparison tab to see the difference vs. a conventional mortgage at the same parameters.

Islamic Home Finance Contracts (AAOIFI Shariah Standards)

Murabaha: Installment = (Principal + Total Margin) / (term x 12) ; Total Margin = Principal x margin% x term ; MMQ: Installment = Rent + Ownership-share installment ; IMBT: Monthly rent with a purchase option at the end of the term
  • Principal = Home price - Down payment
  • Margin = bank profit agreed upfront (fixed for Murabaha)
  • Rent for MMQ/IMBT = (bank share x price x yield) / 12
  • Term = financing period in years

Murabaha installments are fixed from the start. MMQ installments may fluctuate with market rent. There is no compounding interest - the non-riba principle.

Worked example: Murabaha on a $250,000 home, 20% down, 15-year term, 8% equivalent margin

Given:
  • Home price: $250,000
  • Down payment: 20% = $50,000
  • Financing: $200,000
  • Term: 15 years (180 months)
  • Equivalent margin: 8%/year flat
Steps:
  1. Total margin = 200,000 x 8% x 15 = $240,000
  2. Total payments = 200,000 + 240,000 = $440,000
  3. Monthly installment = 440,000 / 180 = $2,444.44
  4. Total including down payment = 440,000 + 50,000 = $490,000
  5. Compared to conventional 8% effective mortgage: installment ~ $1,911, total ~ $344k + down payment

Result: Fixed installment of $2,444.44/month for 15 years. Total paid: $490,000. Advantage: fixed - unaffected by Fed rate changes.

Frequently asked questions

What is the difference between a Murabaha home finance and a conventional mortgage?
A conventional mortgage uses a floating interest rate tied to benchmarks such as the Fed funds rate; it can rise mid-term. A Murabaha contract uses a sale-based agreement with the margin set upfront and fixed for the entire term - it cannot rise. The Islamic bank buys the home and sells it to the customer with a markup. There are no riba-based late fees; instead, ta'widh (actual damages) may apply.
Why are Islamic home finance installments usually more expensive?
Because the margin is calculated flat (8% x term), while conventional interest is effective (declining balance). An 8% Islamic margin is roughly equivalent to a 13-14% effective interest rate. The upsides are payment certainty, often no prepayment penalty, and Shariah compliance. US Islamic finance providers such as Guidance Residential and University Islamic Financial offer these contracts.
What is Diminishing Musharaka (MMQ)?
MMQ is a declining-ownership partnership: the bank and the customer jointly purchase the home (e.g., bank 80%, customer 20%). The customer pays rent on the bank's share plus installments to buy out the bank's share. Each month the customer's ownership grows and rent drops. Many scholars consider it more Shariah-compliant because it avoids any fictitious sale transactions.
What is IMBT (Ijara Muntahia Bittamleek)?
IMBT is a lease-to-own arrangement: the bank leases the home to the customer for the term, and at the end ownership transfers via gift or a symbolic sale. Legally the customer is a tenant during the lease, not the owner. It suits buyers who want to avoid the complexities of co-ownership while still being assured of eventual ownership.
Are Islamic home finance contracts truly riba-free?
In principle, Islamic home finance is built on contracts permitted by recognized Shariah standards such as AAOIFI and reviewed by each provider's Shariah Supervisory Board. Murabaha, MMQ, and IMBT are all widely accepted. Some scholars view Murabaha as a form of hila (legal stratagem) and prefer MMQ. Choose according to your conviction and consult a trusted scholar.

Last updated: May 11, 2026

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