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Home ownership in the United States carries a certain honor. In a country where property rights have a hallowed place, to hold title to real estate reflects financial security and civic responsibility. Owners are stakeholders in their communities so, needless to say, proprietorship is a desired status. Few, however, would seek home ownership at any price. This is especially true for Sharia-observant Muslims who eschew, among other haram practices, the payment and collection of interest.

In this review, the central focus is on the following:

  • Information about the Ijara Community Development Corporation (IjaraCDC or, simply, Ijara)
  • Whether or not IjaraCDC’s practices as an Islamic finance company are sanctioned by scholars and religious authorities
  • Ijara’s reputation among Muslim clients and consumers in terms of professionalism, customer service and competitive offerings

About Ijara Community Development Corporation

Based in Ann Arbor, Michigan, IjaraCDC is in its 17th year of service to the Muslim community. On its website, Ijara is careful to market as a “Sharia structuring company,” as opposed to a lender or broker. As a 501(c)(3) non-profit corporation, Ijara provides unique financial services for the edification of communities and families. They conduct business throughout the United States and Canada.

This company represents itself as 1) adhering to Sharia principles, 2) keeping interest out of every financial transaction, 3) complying with banking regulations and 4) offering competitive products and responsive customer service. Again, per its website, IjaraCDC engages in business practices that are strictly halal, with its own unique model as the framework.

Ijara As a Home Finance Provider

IjaraCDC trademarked its own property finance model, a design in full accordance with the principles of Sharia finance. While some Islamic finance concerns act as co-owners with those seeking finance for a house or building – and others leave legal ownership to the buyer – Ijara sets up a trust to own and manage an acquired property. 

A trust is a legal entity set up by a trustor, assigning management power to the trustee and all for the ultimate gain of the beneficiary. The customer assumes the role of renter, who retains the option to purchase. The customer is also the beneficiary of the trust yet, at the outset. The trust is the sole owner, bearing 100 percent of the risk.

After establishing a down payment, the customer submits monthly remittances which cover the rental charge and a percentage of the sales price of the house. In this way, the customer is purchasing the property little by little, over the term of agreement with Ijara, IE. 10, 15, 20 or 30 years. Such an arrangement relieves the renter-buyer of interest (or riba) payments and unfair legal exposure while conveying full ownership at the contract’s expiration. 

The lease portion of the monthly outlay is formulated based on standard amortization schedules. Since, however, the trust owns the home, the lessee does not pay for the use of money, riba, but instead pays the trust for the use of property. As a potential owner, the Ijara customer has perhaps more latitude to utilize the property, contingent on the impact on overall value. Nevertheless, all of the traditional obligations and responsibilities of renters still apply.

How Does Ijara Assure Sharia Conformity?

The lease to purchase format of the Ijara contract was set forth by a panel of notable Muslim scholars in the mid-1990s. This project had three general aims:

1. Create a vehicle for riba-free financing.

2. Secure all the essential rights and obligations found in traditional mortgages.

3. Preserve the income tax benefits of traditional home mortgages.

Those experts involved in the composition of the model contract were:

  • His Eminence Justice Sheikh Muhammad Taqi Usmani – a leading authority on Hadith, Islamic jurisprudence and Islamic finance.
  • Sheikh Nizam Yaquby – an expert in various Islamic sciences. He was trained in the East and the West, winning recognition for his work in Islamic finance.
  • Dr. Abdus Sattar Abu Ghudda – an academic and public servant who wrote extensively in the area of Islamic finance. He served on advisory boards for numerous Islamic banks and for Western financial institutions.
  • Sheikh Abdullah Al Mannae – a member of the Saudi Council of Senior Scholars and an Advisor to the Royal Court

No less credentialed thinkers serve as supervisory agents with IjaraCDC now – or, at least, up until recently:

  • Sheikh Mufti Mohammed-Umer Esmail – a decades-long Imam of Austin, Texas-area mosques
  • Mufti Muneer Akhoon – chair of the IjaraCDC Sharia Advisory Board
  • Imam Mohamed Radwan Mardini – Imam at the American Muslim Center and Honorary Chaplain of the Lebanese-American Chamber of Commerce

Mufti Akhoon issued a fatwa in 2012 declaring that the lease-purchase contract as worked out by IjaraCDC is in complete compliance with Sharia finance guidelines. Referencing other scholars who gave approval to such a document, the company relies on this fatwa to bolster its credentials among Islamic finance businesses.

Ijara Financing Programs and Services

Ijara arranges funds for real estate purchases and refinances, residential and commercial, as well as financial assistance for select non-profit businesses in the Muslim community.

Residential Funding


Those seeking to obtain a home would first submit to the Ijara pre-qualification process. It is pre-qualification because it is based largely on stated information conveyed by the client to the title company. To obtain this pre-approval, a home seeker should demonstrate the capacity to pay the Ijara, IE. the cost of the house in installments. In addition, the company needs to know that the client is committed to remitting the monthly rent.

Those who invest in trusts set up by Ijara evaluate income as most banks do. They look at employment status and other streams of revenue. An applicant should be in the current employment position for at least two years and in the current field of endeavor for longer. Income from second jobs and self-employment should demonstrate similar consistency. 

Meanwhile, investors examine the credit report to discern whether an applicant has a record of honoring financial commitments. Unpaid accounts and late payments, especially when sufficient income is established, reveal an unwillingness to meet financial obligations, so a poor credit score will count against an applicant. Still, Ijara can make exceptions if circumstances warrant. The credit report is one of the few pre-qualification tools that come from a third party rather than the applicant’s representations.

Important to remember is that an inquirer is pre-qualified according to the program and rate available. An adjustable lease, for instance, demands payments that change according to the real estate market. So, underwriters will determine a maximum rate and approve/deny the applicant based on that highest rate. A fixed-rate lease, on the other hand, offers payments that are unchanged throughout the course of the lease. 


After a person is pre-qualified and a subject property is designated, the formal application sequence begins. Ijara staff assists the prospective lessee with the application itself, but it is the applicant’s job to submit the supporting documentation. This is the evidence that confirms the statements made at the pre-approval stage: W-2s, pay stubs and/or tax returns based on employment status, statements reflecting current balances in bank, investment and retirement accounts to show available assets along with legal proofs of identification, citizenship etc. The company may need other items specific to each applicant.

Should one wish to replace a current lease contract or mortgage with a new one, refinance, for lack of a better word, an explanation of purpose is also a requirement, especially if the applicant wishes to obtain cash-out proceeds from the transaction. For every prospective lessee, the company may order a second credit report during the application process.

The House

Candidates new to the home finance process are sometimes surprised that, while their creditworthiness is immaculate, there are still problems on the way to closing. This is because the future occupant is only half of the equation, the property must also pass muster. During the application proceedings, IjaraCDC evaluates the home by two means, an appraisal and a title report. The former represents a professional opinion of market value; the latter expresses any encumbrances to free and clear legal ownership.

Two examples: a seller wants thousands of dollars more than market value supports. A trust is not willing to purchase an overpriced house so the transaction falters unless the seller comes down. Alternately, the title examiner finds a judgment against the seller is attached to the property as a lien. The home can not, therefore, change hands unless that court-imposed obligation is satisfied. In short, an Ijara trust will not buy a house that it can not own free and clear.


After both borrower and property are cleared, Ijara directs the closing attorney or settlement agent to schedule a time when the new lessee can sign the loan documents. At this time, the customer brings the down payment and any assigned closing costs in the form of certified funds. When all parties agree to the monetary disbursements, funds are then released for the trust to buy the property. This is when the customer’s lease commences.

Ijara details its lease application process on its websites. An objective observer might notice how similar the acceptance criteria are to those of traditional mortgage lenders. There is a reason to hold these standards. Whether a borrower is renting money with interest or a lessee is renting space from a trust, one party must find the other party reliable. In the case of Sharia lending, where the risk is (or should be) more evenly spread, a customer with a record of financial stability and integrity is always preferable.

Financing of Commercial Property

A hallmark of Islamic finance is a commitment to improving the community as a whole. Financing commercial properties in a halal manner is supposed to keep that end in mind. In its partnerships and affiliations, IjaraCDC offers commercial financing products that preserve Sharia standards while investing in a variety of businesses. Types of investments include:

  • Medical and professional buildings, lease terms can extend to 25 years for doctors, dentists, accountants and other learned professionals. Ijara may accept as little as five percent down. If the contract involves construction, lessees can refrain from making payments for up to a year while waiting to occupy the premises.
  • One-to-four family residential properties, where tenants pay rent to a landlord. These must be zoned for residential purposes and a customer/investor can select up to 10 of them for financing. Domiciles with up to four units can count as residential if the owner occupies one of them. In most instances, they are investment properties.
  • Sharia Business Premier 7A . This product is focused on properties where the value can range from $250,000 to $5-million. Such locations are often office buildings, warehouses and restaurants, to name a few. Gas stations and name-brand hotels also receive such financing. Down payment requirements can go as low as five percent, while terms can last up to 25 years. 
  • Sharia Business Plus 7A – Similar to the Premier offering, this product serves as a source of capital for debt refinance, capital improvements and new business acquisitions. However, its down payment floor is at 10 percent, and the financing term seldom exceeds a decade.
  • Sharia Business Fixed 504 – advancing funds up to $15-million, this program targets very well-qualified business partners with uniquely fixed-rate payments and a five-percent minimum for down payment funds. Large warehouse and office facilities in need of restoration and payment restructuring are frequently subject properties for this type of financing.
  • Sharia Investor Gold – focuses on buildings that house long-term “national tenants,” IE. recognizable companies with a reputation for stability. The investors, too, must have established a successful record for consideration. In this case, down payment minimums are higher: 20 percent, and terms are limited to 20 years. Of course, the ceiling on funds is also higher – up to $20 million.
  • Sharia Multifamily – Advancing as much as $25-million, this goes beyond the one-to-four family product to finance apartment buildings of up to 300 units. Financing can extend for up to 25 years and down payments must account for at least 25 percent of property value. Two caveats: the buildings must have 10 percent or less of vacant units. They must also sit in well-populated metropolitan areas.
  • Sharia Investor CRE – is like the apartment program in some respects: a $20-million cap on funds and a vacancy maximum, this time 15 percent. However, this product centers on purely commercial units, IE. offices, industrial space and retail units.

What Makes Commercial Financing Different?

Although there are owner-occupied commercial buildings, they are rarely primary residences. As either income-generating investments themselves or as brick-and-mortar homes for one’s own business, commercial properties are of interest to banks and finance companies for the revenue they produce. Although the dependability and financial integrity of the financing candidates remain important factors for loan approval, the capacity of the building to pay for itself is front and center for IjaraCDC underwriters.

This reality is reflected in the loan-to-value ratio (LTV) thresholds. This figure represents the amount financed when measured against the appraised value – or sales price – of the property. It stands to reason that an underwriter has more confidence in a proposed transaction when the monies advanced represent a lower percentage of the value. For example, a financing amount of $400,000 for a four-family dwelling that appraises at $650,000 represents an LTV of nearly 62 percent. 

This is an attractive LTV for either a residential or commercial transaction. Yet a low LTV is more essential for the latter because default and foreclosure lead to a loss of investment as opposed to the loss of a home. The need for a shelter for self and family is existential and therefore residential lessees are far more eager to maintain consistent payments. Also, some residential financing is guaranteed by the government. So, Ijara requires lower LTVs for commercial real estate.

Such detailed information is included in this review because Ijara is careful to make these explanations on its website. Whereas other halal finance companies simply refer potential customers to a representative, Ijara places this information up front.

Financing for Nonprofits

The community-oriented nature of Sharia financing gravitates easily to the needs of non-profit corporations and organizations. Accordingly, Ijara makes provisions to finance the construction and upkeep of mosques, religious schools and community centers. The company works off two financing templates, depending on how well-established an organization is.

1. For those groups that have a record of stability and tenure in the community, Ijara offers terms up to 20 years; a 10 year balloon payment; 30 percent down; and no remittances for up to a year during construction. Qualified clients can receive up to $7-million in financing. In addition, the company forgoes any personal guaranties.

2. Newer organizations need to bring 30 to 40 percent of their own funds to the table. They can receive up to $1-million for projects but personal guaranties are necessary for funding.

IjaraCDC likes to see well-maintained financial records and legal documents for non-profits. Moreover, these organizations should have authoritative governing boards and updated membership lists. Online donation mechanisms and solid fundraising programs are also pluses for non-profit applicants. In short, the non-profit applicants, while not commercial entities, must demonstrate a record of business-like management practices.

IjaraCDC and Technology

Among the array of Islamic finance enterprises, Ijara’s website stands out for ease of navigation and helpful content. Explanations of qualifying criteria are thorough and each of the financial products is covered with substance. 

The process gets its own page with links to the online application and the site has glossaries; links to reference works; and a customer portal to follow application status and to access customer service. Additionally, there is an Ijara calculator for potential applicants to work out financing amounts and lease payments.

What Does the Scholarly Community Say about IjaraCDC?

As noted above, Ijara retains its own experts in Sharia finance. Beyond that, it is careful to reference the scholarly input that gave rise to its present business model. Like most other Islamic finance companies, IjaraCDC wants prospective customers to harbor no doubts about its halal bona fides. In addition to its supervisory body, Ijara credits numerous learned individuals as having had a hand in the development of its lease contract. These experts include:

  • Dr. Ahmed Shleibak – a former academic and prolific writer in Islamic law and financial matters
  • Sheikh Waleed Idrees Meneesee – Vice President at the Islamic University of Minnesota
  • Justice Taqi Usmani – Vice President of Jaria Darul Uloom in Karachi and author of myriad books and articles
  • Sheikh Dr. Yusuf Talal Delorenzo – Special Consultant with the Asian Development Bank and the Islamic Development Bank

Interestingly, some of these men are affiliated with the Assembly of Muslim Jurists of America (AMJA). Yet this very organization took issue with Ijara’s lending design in a 2014 Fatwa on Islamic finance companies. The charge against Ijara is that the customer must first obtain a standard mortgage – complete with interest charges – into which the trust enters. Then, per AMJA, the customer pays the trust on a rent-to-own basis.

Engaging a traditional mortgage lender is nowhere to be found on the IjaraCDC website. The application process laid out above makes no mention of a mortgage loan. Why would AMJA scholars be party to such a contract, only to condemn it later? Alternatively, is Ijara holding fast to the model originally commended by these experts or has the company strayed from it? This discord is worth the scrutiny of every potential applicant for financing with Ijara. 

One explanation may relate to Ijara’s conversion service whereby the company works with a mortgagor (bank) and Mortgagee (borrower) to set up a trust that will receive rent from the customer while satisfying the bank’s outstanding balance. There is little doubt that the bank’s balance due includes interest. In converting the traditional home loan into a halal arrangement, is Ijara or a trust paying riba?

Aside from the critical words from AMJA, what are other professional and religious opinions relative to Ijara Community Development Corporation? Ijara does not hold membership in the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and a survey of the affiliated scholars finds no relationship to AAOIFI. This trade organization seeks to develop standardized Sharia-based regulations for the operation of Islamic financial institutions.

Absent any such affiliations, prospective customers are left to determine whether the AMJA’s objections accurately assess Ijara’s financing model or not. Where do the scholars actually stand vis-a-vis IjaraCDC? This might take some serious research, even sleuthing. Of course, there is one ironclad way to find out if the jurists’ disapproval is grounded in actual practice: find out what the customers are actually saying. If Ijara is making clients get a mortgage first, that kind of news gets around.

Ijara CDC and Customer Response

Ijara offers no shortage of satisfied customers in its archived testimonials. Complements about swift processes, smooth service and courteous professionals abound. Such affirmation is no doubt gratifying and rightly appears on the Ijara website.

As with so many competitor finance companies, Ijara receives a mixed bag of praise and disapproval when interested parties search online opinion. Canada Visa, a forum sponsored by a Canadian immigration law firm, reveals that some clients were satisfied while others were unconvinced that Ijara finance is actually halal.

In the States, islamicfinanceguru.com singles out the conversion product. Without specifically condemning it, the reviewer cites the concept of niyah, implying that if the ultimate intent is to be rid of interest, then accepting a brief relationship with a traditional bank is worth the deviation. This forum names Voro Capital as the mortgage lender.

AskImam.org references a fatwa that answers the questions of past and prospective Ijara customers. The site references a fatwa that declares unequivocally that the company is not halal. Not only, says the fatwa, does it require buying a house using an interest-bearing mortgage, it also burdens the lessee with more risk than is assumed by the company or the trust that owns the property.

What about more widely-known review platforms?

One Facebook reviewer gave IjaraCDC five stars out of five without any further comment. Google reviews range from glowing to disgusted but there were more on the positive side. Notable is the fact that Ijara representatives respond to every critical statement. On the one hand, it is helpful to hear the finance company’s defense; on the other, the response usually indicts the reviewer for not following directions or for trying to sneak something by the underwriters. So, an inquirer is often left with a “he said, she said” scenario.

Birdeye.com assigns four out of five stars to IjaraCDC.

Should I Apply to Ijara Community Development Corporation?

How does one make a wise decision in the face of conflicting information? Should Sharia be a priority or should swift and professional service govern the day. These are but a few questions people on the precipice of home ownership may ask of themselves. At the same time, it is not unreasonable for an observant Muslim home buyer or owner to seek both. In fact, a clear conscience, affordable financing and competent service are all desirable.

Begin with the priority of a halal transaction that meets Sharia demands. As covered above, there are divergent views as to whether customers are getting that with Ijara. Do relationships among Ijara, its trusts and traditional mortgage lenders render its claims to honor Sharia null and void? On the other hand, does, as one reviewer put it, good intention, or niyah, offset interest payments early in the finance chain? Is it simply making the best of it in an economy where riba is so prevalent?

These are difficult issues with which to struggle. Comparison shopping can assist uncertain would-be applicants with such a choice. There may be other Islamic finance companies that are able to bypass the slam against Ijara. At the same time, if the AMJA fatwa is any indication, many of them are vulnerable in other areas. Looking hard enough at any riba-free business model can reveal some defect somewhere. Perhaps any and every Muslim customer reaches a point where they may have to settle; where they do not let the perfect be the enemy of the good.

The other set of questions involves customer service and professionalism. As mentioned, IjaraCDC has a large pool of customers who are pleased with their financing experience. Yet a significant portion complained of poor communication, slowness and wasted time. Again, he said, she said. As with reviews of competitor companies, the discrepancies often come down to what part of the country the reviewer is in and who the representative in question is. This is not infrequent among national lenders.

All of this is to say that experiences with home finance are usually unique to each individual. This means that potential clients have to decide whether the Ijara model – maybe less than ideal – is better than alternative options. Moreover, they should decide in advance that some delays are inevitable; and whether they will be proactive when their finance source is quiet.

Here is a useful tip for comparison shoppers: IjaraCDC is willing to forward a copy of the lease contract for a lawyer to review provided that the prospective customer and attorney sign a non-disclosure agreement. This allows for an examination of the details – where riba might be hiding –while protecting the company’s proprietary information against competitors. This demonstrates a transparency in which a client can take some comfort.