Buying a home is a big commitment that consumes almost half of the salary monthly. Islamic banks in Saudi Arabia have developed several mechanisms to tackle the issue of home financing in ways in line with the Sharicah rulings. Some of the mechanisms are more commonly used than others and banks are trying to move towards more asset-based financing techniques that are believed to be more Islamic than debt-based. The recent ruling by the Islamic Fiqh Academy against organized tawarruq, which has been widely practiced in Saudi Arabia, will push Islamic banks to come up with new products. mushārakah & ijārah for house financing is one way out, a method that is gaining huge support, not only in Saudi Arabia, but all over the world. Joint ownership of a house is accepted by all schools of Islamic jurisprudence since the financier sells its share to the customer.
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