Answer
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
In this fatwa:
Many scholars state that mortgage and student loan interest do not fall under the Quranic definition of riba, which refers to exploitative debt increases imposed after default. Modern loans are pre-agreed, transparent contracts and are treated differently in Islamic jurisprudence.
In response to this question, Dr. Yasir Qadhi — the Dean of The Islamic Seminary of America and the resident scholar at the East Plano Islamic Center — states:
So we said there were 115 questions; 15 of them were about marital issues, another 15 were about as usual—always around 15 questions about mortgages and Riba and all of this. And brothers and sisters, I need to pause here. In every community around this country, one of the main issues that every sheikh gets asked about is the issue of mortgages. I want you to understand this is a reality that all of us are facing. There is a reason why every time I hold an open Q&A and I’m in your community—now for seven years and still, it’s the seventh year—and still 10% of the questions are about mortgages every single time.
So I want you to please be patient and empathize. I’m gonna say this again and again and again, and I will not, insha Allah Ta`ala, become impatient in this regard.
All too often, a small group of people who are very religious have made up their minds that something might be haram, and they are not willing to even listen to any opinion, and any other opinion is immediately dismissed: “Oh, this guy’s destroying the religion,” “this guy’s watering the deen down,” “this guy’s making the haram halal.”
And if that is your attitude, then okay, fair, good for you. I mean, Allah bless you, but then understand you’ve already made up your mind; you’re not willing to listen.
Please, if you are open-minded, listen to the more detailed discussions that I and many scholars have given.
No scholar wants to make the Haram halal. No person who studies the Quran is out there trying to destroy the religion. But you have to understand so many things, and it is a problem, Wallahi, that we’re in an open, free-for-all market when it comes to fatwas. It’s a problem.
Can you imagine if we had an open free-for-all when it comes to medical procedures? Can you imagine if all of you had to ask 10 different doctors about your problem and then you have to decide based upon your own knowledge? Do you see how much chaos would be caused?
May Allah protect all of you. If your loved one was suffering from cancer and you had to have a free-for-all market—just like now, one fatwa says this, another fatwa says that, another fatwa says this—and the job of the doctor is to convince you, “No, my procedure is right,” can you imagine how chaotic the world would be?
But see, that is the reality of Islamic law in North America. So free for all. So I keep on telling you, you have one decision to make and that’s it, and that is: ask Allah to guide you to the authority you trust the most, and that’s it. Do not believe that you are qualified to get involved debating between doctors if you’re not a doctor. Would you do that? Well, then why do you think you can debate between scholars when you’re not a scholar?
Respectfully, I’m not trying to be elitist and whatnot. I understand there’s this illusion—”this is clear-cut haram“—that’s your understanding. Wallahi, it’s not clear-cut haram, and that’s why there’s so many opinions about it.
That’s why for the last 50 years, you have six or seven opinions about mortgages. You want clear-cut haram? Go get a fatwa about drinking alcohol for no reason. Clear-cut haram? Yes, haram.
Why do you think there’s 7 or 8 opinions about mortgages? Because it’s not clear-cut haram. And if you think it is, with utmost respect, it shows you haven’t studied. There are people who say it’s haram; I respect qualified people. I respect that. Go to those qualified people and they will tell you, “I think it is haram, but I understand why the other scholars are saying Makruh; I understand why the other scholars are saying it is Mubah with those conditions.” Real scholars who say it is haram will actually concede: “I think it is haram, but I understand why they say it is what they say it is.” It’s only people who don’t have knowledge and they automatically presume.
So a lot can be said here, and I’ve given a lot more details. My dear brothers and sisters, when Allah revealed the Quran and Allah said whoever takes Riba he has declared war against Me, go look up the Tafsir of that verse. Go look up what At-Tabari says, go look up what Ibn `Abbas said, go look up what Ibn Taimiyyah, Imam An-Nawawi explicitly says this.
An-Nawawi explicitly says the Riba of Jahiliyah upon which the Quran came down was what? Was that a person gave a loan, and when the time came to repay the loan, the man would say, “I’m sorry, I cannot pay it back.” So the man would say, “Oh, okay, double the amount and you must have the penalty because you couldn’t pay back.” That is the Quranic Riba.
Do you understand this point? This is the Quranic Riba. And that’s why in Surat Al-Baqarah, why does Allah have Riba and then, “Oh you who believe, if you write a loan, write it towards Ajal Musamma“? Why? Why does Allah have, every time Allah mentions Riba, that context is about a loan or forgiving Sadaqah? Why? Because Allah is saying if somebody cannot pay back, be generous, give Sadaqah, right? I repeat: the Quranic Riba—please don’t misquote me, I’m not saying Riba unconditionally—the Quranic Riba is not what we call the mortgage.
Please understand the Quranic Riba. It is: I give you a loan of $10,000, pay me in six months, and the agreement is six months, 10,000. Then six months go by, you say, “Brother, my business didn’t work; Brother, the crops were bad.” “Ah, I don’t care, 15 or 20,000 and pay it back next year.”
This is Quranic; even whatever 10,000, give me 15—you get my point here. I take advantage of a bad situation. This is Quranic Riba, and Allah says what means whoever does so, you are going to wage war against Allah and his messenger.
This is Quranic Riba. And that’s why Allah says very clearly that what is allowed is any transaction that is done by mutual agreement, which clearly indicates the Quranic Riba was not by mutual agreement. You understand here? There was no [agreement].
So again guys, the concept of this modern loan, it didn’t exist in Jahiliyyah. I don’t wanna get too technical, but a certain group in Europe started this—I don’t wanna get too [deep], go do your history okay.
The notion of prearranged loans and whatnot, this is not Jahili Arabs; this is relatively modern. And then to create an institution to do it, not even one person to one person—a company, a for-profit company known as a bank—all of this is modernity. All of this is a modern few hundred years old, that’s it.
So so many issues come into play here. And so bottom line: when some jurists say that the type of Riba that exists in a mortgage—yes, it’s good to avoid, Wallahi, it’s not a good thing to do—but it’s not the Quranic Riba. And given all of these parameters, it becomes permssible with those conditions. This is a very reasonable and realistic fatwa that lots of councils have given.
Lots of councils: the Fiqh Council of North America is one of them, the European Council is another one of them, Sheikh Al-Qaradawi is another one of them, on and on and on.
And so when you hear these fatwas, please do not think, “Oh, these scholars wanna make the Haram halal.” No, it’s not that simple. It is not that simple because even the mortgage, nobody is giving you cash. It’s not even cash actually; the house is a collateral in the middle. It’s even more complicated.
So please understand that the modern contract known as a mortgage, it is a complicated contract that without a doubt has elements that are prohibited by a Hadith, not the Quran.
The Quran Riba is not mortgage; understand this point here. The Quranic Riba is what we explained. The Prophet (peace be upon him) wanted to shut the door to the Quranic Riba, so he even said, for example—there’s in Islamic law it’s allowed, it’s not allowed—the Prophet (peace be upon him)said, “Do not sell one bag of good quality dates for two bags of cheap quality dates.” Rather, sell for the money then use the money to buy this, right? I’m just getting technical here; basically, you cannot barter dates directly of different quantities okay. This is one type of minor Riba. No scholar ever said if you transfer one bag for two bags, Allah’s curse is on you; no scholar said this. No scholar ever said you’re waging war if you substitute one bag of barley with two bags of barley of different quality. The Prophet just wanted to avoid that.
So all of these other things are shut. Similarly, the types of Riba that are present in the modern-day system are these types of secondary Riba, not the actual Quranic Riba. And as a default, we should avoid them without a doubt.
But what if life is very difficult? What if you need to go get a degree and you cannot get a loan or you cannot get an education except through a loan, and the loan will finance that degree? Should you remain uneducated and work a manual job rather than go to medical school because you cannot afford to go?
Does the Shariah say that that Riba—which is coming from, it’s not a person that’s giving you the money, it’s a corporation, and they’re giving it to you trusting that you’re gonna get a nice job and you’re gonna pay it over a period of time, right? It’s done by agreement. Nobody’s taking advantage of your situation; you’re willingly signing yourself in, unlike the guy who took the loan.
So my point is: please, dear brothers especially, because they’ve automatically made up their minds, if you’ve made up your mind, don’t ask the question and don’t listen to the question. Follow your Shaykh; good for you. If you’re willing to listen, understand there is a spectrum of opinion. And I swear to you, even those scholars that are real scholars and they say it’s haram, they will at least say, “Yes, we understand why the other group says other opinions, and we respectfully disagree.” This is what you call knolwedge. No scholar that is a genuine scholar is that simplistic that “Oh, this is clear-cut Riba.” No, they all understand what it is, and now we can disagree about the technicalities.
You ask me the fatwa that I’m following, which is the fatwa of a number of fatwa councils, including Sheikh Al-Qaradawi and others, which is that the type of transaction that the bank does, it is a Riba that is prohibited by the Hadith; it should not be done.
But if circumstances are not necessity—not life and death, but life becomes unreasonably awkward—not life and death, but it’s like you’re not gonna go to medical school and you’re gonna just work a manual job instead. You’re literally giving up a lifetime opportunity because you think that Allah is gonna wage war against you because you went to medical school?
No, I’m sorry. This is wrong. This is wrong. Taking a loan for education, this is not waging war against Allah and his messenger. It’s not, I’m sorry. I’m very blunt—this is my opinion, the opinion of many scholars. If you disagree, fine, but please don’t make the religion unreasonably difficult.
What Allah has forbidden is you take advantage of a poor person’s unfortunate circumstance; that is waging war against Allah and his messenger. A for-profit corporation telling you “we’ll give you a 5% loan” and you willingly enter in and you know what you’re getting into and nobody is taking advantage of anybody—you’re all doing this willingly. Yes, it should not be done because there’s still, just like two bags of dates and one bag of date, right? It goes under that one; it’s best to be the same. But the alternative is you eat nothing. The alternative is you live your whole life in low-class poverty. Does Allah want you to do that? This is not the position many scholars follow.
The same goes for the house. Now you can say—you can make the argument—actually, mortgage is not good for the economy or for your personal wealth; that’s fine, no problem. But don’t bring in Allah and his messenger. I understand there’s an argument to be made renting is better for you—good—but don’t bring in Allah and his messenger.
A mortgage is not the Riba of the Quran. And if you feel “I wanna make generational wealth and I wanna leave something for my kids and I wanna invest in a house for 20-30 years so that when I pass away, my kids have something,” and that’s how generational wealth is built—if that’s the way you feel, it is permissible. And no doubt if you follow the Islamic companies, it is slightly better.
But if you ask me personally, the mortgages of the bank are essentially the same—a little bit better, the Islamic ones, but there’s not that much difference to be honest here. They just—I don’t want to be too much because you know the Islamic companies are trying. I understand it is better, but in case you cannot find one of them, then if you get the regular one, it is not the Riba of the Quran. And that’s why I say it is permissible if you feel so. And again guys, I’m very blunt so please, you know, bear with me.
👉 “Read the detailed Islamic explanations here:
Riba vs. Mortgage: Key Differences in Islam
Do I Have to Pay Zakah If I Have a Mortgage?
Buying House on Mortgage in Islam
Is Being Mortgage Underwriter Halal?
Almighty Allah knows best.
Source: Dr. Yasir Qadhi Youtube Channel