Short answer
A conventional mortgage is a loan with interest, so the mainstream Hanafi position, followed by the Deobandi fatwa bodies, is that it is haram, in the West as elsewhere. A minority of scholars allow it on grounds of necessity or a classical view about non-Muslim lands. Renting, saving or Islamic home finance are the halal routes.
Taking a conventional interest-bearing mortgage is haram. Owning a home is not a necessity that permits riba, because renting meets the need for shelter. The classical dar al-harb opinion does not permit a Muslim to pay interest.
The four schools agree on this.
Explanation
With a conventional mortgage, a bank lends you the money to buy a house and you repay it with interest over 25 or 30 years. That is a loan with a stipulated increase, and the hadith curses the one who pays riba as well as the one who takes it.
Two minority views are often quoted, and both deserve a calm answer:
- Necessity. A council of scholars in Europe allowed a conventional mortgage for a first family home where no Islamic option existed, treating lifelong renting as a serious hardship. Most Hanafi muftis reply that renting is a real way to have shelter, so the strict condition of necessity is not met.
- Dar al-harb. Imam Abu Hanifa and Imam Muhammad held that riba rules do not apply between a Muslim and a non-Muslim in a land at war with Muslims. Mainstream Hanafi muftis do not apply this to mortgages: the view was about a Muslim receiving extra, never paying it; Imam Abu Yusuf and the other three schools rejected it; and many scholars do not count countries where Muslims live as citizens and residents as dar al-harb in that sense.
The four schools agree that interest on a loan is riba. The differing views come from contemporary scholars weighing necessity, not from a school's settled position.
What you can do:
- Rent while you save for a larger deposit, or buy outright.
- Use Islamic home finance that is properly structured.
- Buy with family members as partners, each owning a share.
- If you already have a mortgage, repent, pay it down early where you can, and look into refinancing with a halal provider. Your ownership of the house is valid; the sin lies in the interest contract.
Ask a mufti about your own case. This answer explains the general ruling. When the details of your situation matter, as they do here, ask a qualified mufti and give them the full facts. Where to ask a scholar.
The evidence
Quran, Surah Al-Baqara 2:275
ٱلَّذِينَ يَأْكُلُونَ ٱلرِّبَوٰا۟ لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ ٱلَّذِى يَتَخَبَّطُهُ ٱلشَّيْطَٰنُ مِنَ ٱلْمَسِّ ۚ ذَٰلِكَ بِأَنَّهُمْ قَالُوٓا۟ إِنَّمَا ٱلْبَيْعُ مِثْلُ ٱلرِّبَوٰا۟ ۗ وَأَحَلَّ ٱللَّهُ ٱلْبَيْعَ وَحَرَّمَ ٱلرِّبَوٰا۟ ۚ فَمَن جَآءَهُۥ مَوْعِظَةٌۭ مِّن رَّبِّهِۦ فَٱنتَهَىٰ فَلَهُۥ مَا سَلَفَ وَأَمْرُهُۥٓ إِلَى ٱللَّهِ ۖ وَمَنْ عَادَ فَأُو۟لَٰٓئِكَ أَصْحَٰبُ ٱلنَّارِ ۖ هُمْ فِيهَا خَٰلِدُونَ ﴿٢٧٥﴾
Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein.
Interest is forbidden while trade is allowed, which is why sale-based home finance is acceptable.
Quran, Surah Al-Baqara 2:279
فَإِن لَّمْ تَفْعَلُوا۟ فَأْذَنُوا۟ بِحَرْبٍۢ مِّنَ ٱللَّهِ وَرَسُولِهِۦ ۖ وَإِن تُبْتُمْ فَلَكُمْ رُءُوسُ أَمْوَٰلِكُمْ لَا تَظْلِمُونَ وَلَا تُظْلَمُونَ ﴿٢٧٩﴾
And if you do not, then be informed of a war [against you] from Allah and His Messenger. But if you repent, you may have your principal - [thus] you do no wrong, nor are you wronged.
The warning applies to every interest contract.
Sahih Muslim 1598
Sahih... آكل الربا وموكله وكاتبه وشاهديه ...
"He cursed the one who consumes riba, the one who pays it, the one who writes it and its two witnesses."
The borrower who pays interest shares in the curse.
Where the ruling is recorded
- al-Hidaya, Kitab al-Buyu', Bab al-Riba. Records the view of Abu Hanifa and Muhammad on riba in dar al-harb and Abu Yusuf's disagreement.
- Mufti Taqi Usmani, An Introduction to Islamic Finance, Chapter on house financing. Explains why conventional mortgages are riba and sets out halal alternatives.
This answer is pending review by the scholars on our team. Quran translation by Sahih International. Hadith Arabic from the standard editions of the six books and the Muwatta, with gradings as recorded there; the English is our own rendering. Spotted a mistake? Tell us.