Ijara
إجارة
Pronunciation: ee-JAH-rah
A lease or rental agreement — one of the three main halal home financing structures used in the U.S.
Definition
A lease or rental agreement used in Islamic finance. In the U.S. home financing context, a funding partner purchases the property and leases it to the buyer. Ownership transfers at the end of the lease term (Ijara wa Iqtina). IjaraCDC — a 501(c)(3) nonprofit — is the leading U.S.
Ijara provider, structuring financing through 100+ residential and 200+ commercial funding partners in all 50 states. Monthly payments go to Ijara (an Islamic organization) rather than a conventional bank. The structure avoids interest because payments are classified as rent rather than loan repayments. The lessor retains ownership risk, a key Shariah requirement.
Related Terms
Diminishing Partnershipمشاركة متناقصة
A co-ownership arrangement where the buyer gradually purchases the provider's share — the most common halal mortgage structure in the U.S.
Murabahaمرابحة
A cost-plus sale where the seller discloses the original cost and adds a transparent, agreed-upon markup.
Halal Mortgage
A home financing arrangement structured to avoid interest (riba), typically using diminishing partnership or lease-to-own models.
Musharakahمشاركة
A joint partnership where all parties contribute capital and share profits and losses proportionally.
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See how Ijara is used in real Shariah-compliant financial products available in the U.S.
Further Reading
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Quick Answer
Ijara (إجارة) — A lease or rental agreement — one of the three main halal home financing structures used in the U.S. A lease or rental agreement used in Islamic finance. In the U.S.
Key Takeaways
- A lease or rental agreement — one of the three main halal home financing structures used in the U.S.
- Category: Financing Structures
- Related: Diminishing Partnership, Murabaha, Halal Mortgage, Musharakah
- Compare related Shariah-compliant products on HalalWallet
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This page is reviewed against HalalWallet editorial standards and source documentation.
Reviewed by: HalalWallet Editorial Team
Last reviewed: 2026-03-06
Co-Founder & CTO, HalalWallet
UA Labs Founder · 200+ Projects · Islamic Finance Specialist
Reviewed quarterly and updated for major content changes.