African Development Center

A basic opportunity that many Americans have to own a home has been out of reach for Muslim Americans.

However, it’s not necessarily that they can’t afford it — it’s because of a strict interpretation of Islamic law that prohibits the payment of interest.

But now through a state private partnership, a new type of mortgage is available. Through a partnership between the African Development Center and the Minnesota Housing Finance Agency, Islamic mortgages are available.

An Islamic mortgage is different because the bank purchases the home and rents it back to the family for a fixed monthly payment. At the end of a set period of years, the family owns the home outright.

Hussein Samatar of the African Development Center has only put together one of these mortgages but he has 10 other families who want them. The first family to receive the mortgage closed on a home that had been in foreclosure for $90,000.

While some Muslims are willing to accept conventional loans, religious and community leaders’ estimate at least half of Minnesotan’s estimated 200,000 Muslims would only accept an Islamic mortgage.

In a side by side comparison, the costs are pretty similar for the buyer. For a $90,000 home under both an Islamic mortgage and a conventional mortgage the payments are about $485.

But under an Islamic mortgage the fees and closing costs are about 14 percent higher because the mortgage product is more complex to put together. Muslim clients don’t seem to care.

“They are willing to pay because it’s their beliefs,” said Samatar.

Reporting
Esme Murphy