Murabaha
مرابحة
Pronunciation: moo-RAH-bah-hah
A cost-plus sale where the seller discloses the original cost and adds a transparent, agreed-upon markup.
Definition
A cost-plus sale. The seller purchases an asset and resells it to the buyer at a disclosed, agreed-upon markup. The buyer pays the total amount in installments.
The price, markup amount, and payment schedule are fixed and transparent at the time of the contract — the buyer knows exactly what they are paying and why. The key difference from a conventional loan is that the financier takes actual ownership of the asset (however briefly) before selling it, creating a genuine sale transaction rather than a debt relationship. Commonly used for home financing, auto financing, business equipment purchases, and commodity financing.
Related Terms
Commodity Murabahaمرابحة السلع
A Murabaha transaction using commodities (often metals) as the underlying asset to facilitate cash financing.
Bay'بيع
A sale contract — the foundational transaction type in Islamic commercial law.
Ijaraإجارة
A lease or rental agreement — one of the three main halal home financing structures used in the U.S.
Halal Mortgage
A home financing arrangement structured to avoid interest (riba), typically using diminishing partnership or lease-to-own models.
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Further Reading
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Quick Answer
Murabaha (مرابحة) — A cost-plus sale where the seller discloses the original cost and adds a transparent, agreed-upon markup. A cost-plus sale. The seller purchases an asset and resells it to the buyer at a disclosed, agreed-upon markup.
Key Takeaways
- A cost-plus sale where the seller discloses the original cost and adds a transparent, agreed-upon markup.
- Category: Financing Structures
- Related: Commodity Murabaha, Bay', Ijara, Halal Mortgage
- Compare related Shariah-compliant products on HalalWallet
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Reviewed by: HalalWallet Editorial Team
Last reviewed: 2026-03-06
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