Islamic financing

Guidance Residential, a sister company of Guidance Realty Homes is the #1 U.S. provider of Shariah-compliant home financing. Our Declining Balance Co-ownership Program is modeled on the Islamic concept of 'Musharakah Mutanaqisa' or diminishing partnership. The program has been certified by an independent Shariah Supervisory Board, which performs an annual audit to ensure absolute compliance with Shariah.

In this model, Guidance Residential and the homebuyer engage in a joint ownership venture where each owns a percentage of the home equal to the equity they each contributed. Homebuyers are required to make monthly payments to Guidance Residential over a predetermined period of time in order to completely buy out Guidance Residential's equity, and own the property outright. The monthly payment consists of two portions; an amount that is allocated for acquisition of Guidance Residential's equity and the other allocated as rent for use of the portion of the home they do not yet own. The acquisition amount helps in buying Guidance Residential's shares of ownership over the predetermined period of time and the rent is the profit Guidance Residential earns from this co-ownership program.

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Guidance Residential, LLC Licensing and Registration Information

Unique benefits of the program

Guidance Residential offers 6 unique benefits that distinguish it from other home financing providers.
These benefits provide a transparent, consumer friendly home financing and is consistent with the Muslim faith’s strict prohibition on riba (usury).



Guidance Residential and home buyers each own a percentage as co-owners. Home buyers increase their share over a period of time through a monthly payment.


Risk sharing

Guidance Residential shares the risk with the home buyer in case of natural disasters, eminent domain or foreclosure.



The Declining Balance Co-ownership Program, does not involve payment of interest. It is 100% riba-free.


No pre-payment penalty

There is no pre-payment penalty required by Guidance Residential when a home buyer wants to pay ahead of the agreed schedule.


Capped late payment fees

In case of late payments, Guidance Residential charges only a capped fee equaling $50 or less, exclusively meant to cover the expenses involved in administering a late payment, rather than the standard 5% penalty.


Non-recourse commitment

In the event of payment default, Guidance Residential does not pursue any of the home buyer’s other assets.

The Guidance Residential Difference

A comparison of musharaka or declining balance co-ownership program to a conventional mortgage.


(Declining balance Co-ownership program)

Conventional mortgages


The home buyer and Guidance Residential agree to be co-owners in the property.


The home buyer arranges a loan from a bank or mortgage company according to a fixed or floating interest rate.


The two parties buy the home, and the ownership of the property is determined by each party's down payment.


The home buyer purchases the home.


The home buyer makes monthly payments to Guidance Residential. Part of the payment is a utility fee for full use of the home, and the rest is a payment to increase the buyer ownership in the property.


The home buyer makes monthly payments to repay principal and interest on the loan.


Over the course of the arrangement, the home buyer purchases all of Guidance Residential's ownership stake and becomes the sole owner of the property.


Over the course of the loan, the home buyer repays the debt in full.