How does Islamic home finance work in the UAE?
Updated: · By Aknaz Mortgages, RERA ORN 48584
Islamic home finance uses Murabaha or Ijara instead of an interest-bearing loan, under the same loan-to-value and debt-burden limits. The 50% debt-burden ratio and the 80% first-home limit below AED 5,000,000 apply as for a conventional mortgage, and the same purchase fees are due.
Who this is for
- Buyers who want a home finance structure that follows Sharia principles.
- Buyers who want to compare Islamic and conventional offers for the same property.
- Owners considering a move from a conventional mortgage to an Islamic one.
Key numbers
| Rule | Value |
|---|---|
| Maximum debt-burden ratio (all monthly repayments ÷ gross monthly income) | 50% |
| Maximum loan-to-value, expat first home below AED 5,000,000 | 80% |
| Maximum loan-to-value, expat first home at AED 5,000,000 and above | 70% |
| Maximum mortgage term | 25 years |
| Minimum borrower age | 21 |
Sources: CBUAE Mortgage Loans Regulation; UAE bank practice (varies by bank). Figures checked on .
What banks look for
- The same limits. The 50% debt-burden ratio, the loan-to-value limits and the 25-year term apply exactly as for a conventional mortgage.
- The same fees at the Dubai Land Department.
- The same checks: income, employment, credit record and the property’s valuation.
Two common structures
- Murabaha. The bank buys the property and sells it to you at a price agreed in advance, paid in instalments.
- Ijara. The bank buys the property and leases it to you; ownership passes to you under the contract.
How to compare offers
Compare the contracts, not the label: the monthly payments, the early settlement terms, the fees, and what happens if you sell or refinance. We show these for each offer.
How long it takes
The steps are the same as for a conventional mortgage: pre-approval, valuation, final offer and transfer at the Dubai Land Department. A pre-approval stays valid for 30–90 days depending on the bank.
Frequently asked questions
What is the difference between Murabaha and Ijara?
In Murabaha the bank buys the property and sells it to you at an agreed price that you pay in instalments. In Ijara the bank buys the property and leases it to you, and ownership passes to you under the contract. Contract terms differ by bank.
Are the fees the same as a conventional mortgage?
The loan-to-value, debt-burden and purchase fee rules are the same. The DLD transfer fee, mortgage registration, agency commission, valuation and trustee office apply as before. A bank's own charges can differ between products, so we list them for each offer and compare them with you.
Can I refinance into Islamic finance?
Some banks offer to take over a conventional mortgage under an Islamic structure, and some do not. The early settlement fee on your current loan, usually 1%, and the new bank's costs still apply, so we price the full switch before you decide.
Related guides and tools
Sources
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