What is the ruling on purchasing a house through a bank that operates according to a mechanism involving several steps, including the buyer searching for the house and submitting their documents to the bank for verification, followed by the bank's preliminary approval, which requires the buyer to deposit 20% of the house's price and insure it against fires, as well as insuring the buyer's life? Afterwards, the bank purchases the house to sell it to the buyer at a known price and a known profit, on installments, with the house mortgaged until the full price is paid. In addition, the buyer pays 1% of the house's price as file study fees, with a penalty of 2% of the overdue installment amount to be disbursed to a charity fund?
Source: FtawySummarized from the full answer at Ftawy · reviewed Sep 2, 2026
The aforementioned transaction is impermissible due to its inclusion of Sharia prohibitions, among them: the impermissible commercial insurance requirement, the late payment penalty which is considered usury (riba), and the service fees tied to the transaction amount. It is permissible for the bank to impose service fees, but commensurate with the service provided, not as a percentage of the amount.
Summarized from the full answer at Ftawy · reviewed Sep 2, 2026
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