Renovation financing exists because the house you can afford often needs work, and most buyers do not have cash for a new roof right after closing. It rolls the purchase price and the repair budget into one financing. The conventional version is an interest-bearing loan. Two halal providers offer it: Ijara Community Development nationwide and UIF in nine states.
UIF's renovation program is available in Alabama, Florida, Georgia, Illinois, Indiana, Michigan, North Carolina, Texas, and Virginia. Everywhere else, Ijara is the published option. Start on the home financing hub.
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Who It Is For
This is for buyers who find a home in the right neighborhood that needs real work. Older homes, estate sales, and houses that have sat on the market often price lower because of their condition. Renovation financing lets you buy them without draining savings on repairs.
- You are buying a home that needs repairs or updates
- You want one financing for the purchase and the work
- You have a licensed contractor or can find one
- You want to avoid an interest-bearing renovation loan
Ijara CDC vs UIF Renovation Financing
| Item | Ijara CDC | UIF |
|---|---|---|
| Where | Nationwide | 9 states |
| Contract | Ijara trust | Musharakah |
| Program types | FHA 203(k) and HomeStyle | Purchase plus renovation |
| Financing | Quoted by lender partner | Up to 75% of combined value |
| Terms | Quoted | 15 or 30 year fixed |
| Credit floor | Quoted | 660 |
| Property | Quoted | 1-2 unit primary, 1-unit second home |
How UIF Renovation Works
UIF combines the purchase and renovation costs into one Musharakah contract. You and UIF co-own the home, and you buy out UIF's share over time. Financing covers up to 75% of the combined purchase plus renovation value.
Money for the work is released in up to five draws as the project is completed. Your own licensed contractor submits bids and plans, and UIF reviews them before closing. Major repairs or projects over $35,000 also need a feasibility study.
How Ijara Renovation Works
Ijara offers renovation financing through licensed lender partners in two versions: FHA 203(k) and HomeStyle Renovation. The purchase and repair costs combine in one financing. The home sits in a single-asset grantor trust with you as trustee and beneficiary. You pay rent on the property, and title transfers to you for $1.00 at the end of the lease.
Terms vary by lender partner, so the numbers come from your individual quote. The FHA 203(k) version generally suits lower down payments and primary homes. The HomeStyle version is usually more flexible on property type.
Before You Apply
- Get a home inspection so the repair list is real
- Get written bids from a licensed contractor
- Add a cushion for surprises. Old houses always have them
- Plan where you will live if the work makes the home unlivable
If you are building from scratch instead of fixing up, that is a different product. See halal construction financing.
How the Process Usually Runs
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- Find the home and get an inspection
- Get licensed contractor bids for the work
- Apply to UIF if you are in one of its nine states, and to Ijara
- The provider reviews the bids and plans before closing
- You close on the purchase. Renovation money is released in draws as work is finished
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Draws mean your contractor is paid as stages are completed, not all at once. Make sure your contractor is comfortable with that schedule before you sign anything.
What to Get in Writing
- Total financing for purchase plus renovation
- How and when renovation money is released
- What happens if the project runs over budget
- Your monthly payment during and after the work
- Who approves contractor changes
Frequently Asked Questions
Is there a halal renovation loan?
Yes. Ijara CDC offers halal renovation financing nationwide through FHA 203(k) and HomeStyle programs. UIF offers renovation financing in nine states using a Musharakah contract.
Can I buy a fixer-upper with halal financing?
Yes. Both programs combine the purchase price and repair costs into one financing. You do not need a separate loan for the work.
What credit score do I need for UIF renovation financing?
UIF publishes a 660 floor on its renovation program. Ijara's floor depends on the lender partner and program type. See the Islamic mortgage credit score guide.
Can I renovate a home I already own with halal financing?
These programs are built around a purchase plus renovation. If you already own the home, look at a halal cash-out refinance or equity product. Start with halal HELOC alternatives.
Can I do the work myself?
UIF requires your own licensed contractor's bids and plans. Expect the same from Ijara's lender partners. Sweat equity is usually not financed.
Compare providers in your state
See side-by-side comparisons of Shariah-compliant products, or let our matcher recommend the best options for your situation.
If you found the right house and it needs work, get a UIF quote if you are in one of its nine states, and an Ijara quote everywhere. Compare them on the home financing hub.
