Is It Permissible to Buy a House with Usurious Loans?

Answered By Shaykh Dr. Muhammad Abu Bakr Badhib

Question

Is it permissible to buy a house with usurious loans when necessary?

Answer

In the name of Allah, and all praise is due to Allah, and blessings and peace be upon our master Muhammad, the Messenger of Allah, his family, his companions, and those who follow him.

Prohibition

Islam has strictly forbidden usury and has warned against it through verses of the noble book and the Sunna of the Messengers (Allah bless him and give him peace). Allah (Most High) says,

“O believers! Fear Allah, and give up outstanding interest if you are (true) believers. If you do not, then beware of a war with Allah and His Messenger! But if you repent, you may retain your principal—neither inflicting nor suffering harm.” [Quran, 2:278-279]

Jabir (Allah be pleased with him) said: “The Messenger of Allah (Allah bless him and give him peace) cursed the consumer of usury, its payer, its scribe, and its two witnesses, and he said they are all the same.” [Muslim]

This is the ruling on consuming usury and the means leading to it. With changing times, increasing needs of people, and varying livelihoods, Satan extends his traps, enticing people towards the haram under the guise of necessity. Muslims might weaken in the face of life’s temptations and fall into what is legally prohibited, we ask Allah for well-being and safety.

Buying homes is not considered a necessity, as one can live in a rented house, which has been the case for most people, both in the past and presently, especially in major cities where housing units are available at varying prices and accessible to people of different conditions.

Therefore, what is the need for a Muslim to plunge into prohibitions and enter into difficult matters?

Necessity

Yes, there is a group of Muslims who have gone to the extent that if the matter reaches the level of necessity, and not taking the loan would mean the difference between the borrower’s life and death, then the principle “necessities permit the prohibited” applies.

Imam Zarkashi said,

“Necessity reaches a level that if he does not consume the prohibited, he would perish or come close to it, like one forced to eat or dress in such a way that if he remained hungry or naked, he would die, or lose a limb, and this permits consuming the prohibited. And need is like a hungry person who, if he does not find what to eat, will not perish but will face hardship and difficulty, and this does not permit the prohibited.” [Zarkashi, al-Mansur fi al-Qawa‘id]

Coercion is similar to necessity. The basis for this is Allah’s saying,

“But if someone is compelled by necessity—neither driven by desire nor exceeding immediate need—they will not be sinful. Surely Allah is All-Forgiving, Most Merciful.” [Quran, 2:173], and

“He has already explained to you what He has forbidden to you—except when compelled by necessity.” [Quran, 6:119]

The Fatwa issued by the Islamic Research Academy in Cairo (Majama‘ al-Buhus al-Islami) during its second conference held in the month of Muharram 1385 AH / May 1965, states:

“Interest on all types of loans is forbidden riba (usury), regardless of whether it is called a consumer loan or a productive (exploitative) loan. Both large and small amounts of riba are haram (forbidden). Lending with riba is prohibited and is not justified by need or necessity. Similarly, borrowing with riba is also prohibited, and its sin is not lifted except in cases of necessity. Each person is left to their own religious judgment in assessing necessity.” [Majama‘ al-Buhus al-Islami]

“It is permissible for someone in dire need to engage in riba transactions out of necessity, and the lender sins, not the borrower.” [al-Mawsu‘a al-Kuwaitiyya]

Misunderstanding

Many have expanded on the matter of usurious loans, making the purchase of a house, a car, changing home furniture, or buying a mobile phone seem like necessities, which they are not.

Unfortunately, there are those who issue fatwas permitting some of these things! This is due to a misunderstanding of the nature of necessity, even though Islamic law offers many alternatives, including benevolent loans (without interest) from an individual, buying goods in installments, and selling them for cash, with details on these transactions known in their respective contexts.

In Western countries, these cases are frequent, and there’s an increasing demand for solutions to this phenomenon. It’s beneficial for the inquirer to know that a fatwa was issued in the year 1999 (1420 AH) by both “The European Council for Fatwa and Research” and “The Fiqh Council of North America,” permitting Muslims residing in Europe and the United States to take out usurious loans to purchase homes.

This fatwa was challenged by other Islamic scholars and organizations, and a decision revoking and invalidating this fatwa was issued by “The Fiqh Council of the Organisation of Islamic Cooperation” during its fourth regular session in Ireland, in the month of Rajab 1420 AH/October 1999 CE. The decision concluded with:

“Those who issued this scholarly opinion believe that buying homes with interest-based loans in Europe is not necessary and does not meet a need that justifies it.

They view this method as religiously prohibited and believe it should not be undertaken unless one cannot find a suitable rental property, does not have the funds to purchase the residence, cannot find an interest-free loan, or cannot find another lawful means of assistance in purchasing, such as Murabaha, where the price is increased in exchange for a deferred payment.

Additionally, the home purchased should not exceed the basic need, such as having more rooms and facilities than required or possessing high specifications that demand a higher cost than necessary.” [Salah al-Sawi, Waqfat Hadi’a ma‘ Fatwa Ibahat al-Qurud]

Conclusion

In conclusion, a Muslim should avoid doubtful matters, not take lightly the permissions and fatwas that legalize prohibitions, regardless of their source, and prioritize piety and fear of Allah before proceeding.

As for the one in dire need, under the conditions previously mentioned, when taking the opinion that permits borrowing with usury, it is important to know that alongside the principle “necessities permit the prohibited,” another principle exists: “necessity is measured by its extent.”

It is not permissible for a borrower to buy a home to take more money than needed and to expand in purchasing home luxuries, as this is not a necessity. The borrower (in dire need) should hasten to repay the loan to the bank to avoid the accumulation of usurious interest.

All this is in the case of necessity; otherwise, a Muslim who trusts in Allah’s promise should be patient, turn to Allah (Most High), and supplicate to Him to fulfill his need in a manner that pleases Him. Allah (Most High) says,

“And whoever is mindful of Allah, He will make a way out for them, and provide for them from sources they could never imagine. And whoever puts their trust in Allah, then He (alone) is sufficient for them. Certainly Allah achieves His Will. Allah has already set a destiny for everything.” [Quran, 65:2-3]

We ask Allah (Most High) for assistance and kindness for Muslims and for well-being in religion in both worlds. All praise is due to Allah, the First and the Last. Allah is the Giver of Success and the Guide to the Right Path.

Note that this is a brief answer. The issue has been addressed in many contemporary fatwas, research, and publications, and Allah is the helper.

[Shaykh] Dr. Muhammad Abu Bakr Badhib

Shaykh Dr Muhammad Abu Bakr Badhib is a prominent Islamic scholar from Yemen. He was born in Shibam, Hadhramaut, in 1976. He received his degree in Shari‘a from Al-Ahqaf University, a master’s degree from the Islamic University of Beirut, and a PhD in Usul al-Din from Aligarh Muslim University (AMU).

He studied under great scholars such as Shaykh al-Habib Ahmad Mashhur al-Haddad, Shaykh Fadl Ba‘ fadl, Habib Salim al-Shatiri, Habib Ali Mashhur bin Hafeez, and others. He has served as the Director of Publications at Dar al-Fiqh, the former Deputy Director of Cultural Relations at Al-Ahqaf University, a former Assistant for Employee Affairs at Atiyah Iron Company, a researcher at the Sunna Center affiliated with the Dallah al-Baraka Foundation, and a researcher at Al-Furqan Foundation’s Makka al-Mukarrama and Madina al-Munawwara Encyclopedia branch.

Currently, he is a researcher at Al-Furqan Foundation’s Makka al-Mukarrama and Madina al-Munawwara Encyclopedia branch, teaches traditionally through the Ijaza system at Dar al-Fuqaha in Turkey, supervises the Arabic department at Nur al-Huda International Institute (SeekersGuidance), and is a member of the Board of Trustees of the Manuscript House in Istanbul.

His works include “The Efforts of Hadhramaut Jurists in Serving the Shafi‘i School,” “Contributions of Hadhramaut Scholars in Spreading Islam and its Sciences in India,” and “Hada’iq al-Na‘im in Shafi‘i Fiqh.” He has also verified several books in Fiqh, history, the art of biographies, and Asanid (chains of narration).