Halal Mortgages: A New Opportunity for Muslim Canadians

Halal Mortgages: A New Opportunity for Muslim Canadians
April 20, 2024

In a move to increase access to home ownership, the Trudeau government has announced plans to introduce "halal mortgages" as part of the 2024 federal budget. This initiative aims to enable Muslim Canadians and other diverse communities to participate more fully in the housing market.

What are Halal Mortgages?

Halal mortgages are Sharia-compliant financing products that avoid charging interest, which is prohibited under Islamic law. Instead, they use alternative payment structures to facilitate home ownership. There are three common types of halal mortgages:

  • Ijara: A rent-to-own model where the bank buys the asset and leases it back to the customer over a set period.
  • Musharaka: A partnership between the financier and customer, where both parties own the property until the equity is gradually transferred.
  • Murabaha: A credit system where the ownership is immediately sold to the customer, with profits included in the final offer.

Why are Halal Mortgages Needed?

Currently, Canada's big banks do not offer halal mortgages, leaving many Muslims to rely on smaller firms or wait for alternative financing options. This lack of access has limited the ability of Muslim Canadians to invest in homes and participate in the housing market. The introduction of halal mortgages aims to address this gap and promote greater financial inclusion.

What's Next?

The government has begun consultations with financial services providers and diverse communities to explore measures such as changing the tax treatment of these products or creating a new regulatory sandbox for financial service providers. A detailed plan is expected to be announced this fall.


The introduction of halal mortgages is a significant step towards increasing access to home ownership for Muslim Canadians and other diverse communities. By providing alternative financing options that align with Islamic principles, the government aims to promote greater financial inclusion and equality in the housing market.

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