Ijara
إجارة
Pronunciation: ee-JAH-rah
A lease or rental agreement — one of the three main halal home financing structures used in Canada
Definition
A lease or rental agreement used in Islamic finance. In halal home financing, a funding partner purchases the property and leases it to the buyer. Ownership transfers at the end of the lease term (Ijara wa Iqtina).
Monthly payments are classified as rent paid to the funding partner rather than interest to 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 — a common halal home financing structure.
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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Further Reading
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Ijara (إجارة) — A lease or rental agreement — one of the three main halal home financing structures used in Canada A lease or rental agreement used in Islamic finance. In halal home financing, a funding partner purchases the property and leases it to the buyer.
- A lease or rental agreement — one of the three main halal home financing structures used in Canada
- Category: Financing Structures
- Related: Diminishing Partnership, Murabaha, Halal Mortgage, Musharakah
- Compare related Shariah-compliant products on HalalWallet
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Reviewed by: HalalWallet Editorial Team
Last reviewed: 2026-07-01
Editorial Team, HalalWallet
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