I am considering to purchase a house in the US. Since it is impossible for me to have $250,000 in cash to buy the house, I only have three options, listed below, that require your guidance.
Option-1: I can take a conventional "home mortgage" bank loan to buy the house. The problem is, it involves interest "Riba" to be paid for the life of the loan (15 or 30 years). Some people have suggested that since we live in a non-Islamic country and that there are no other means and options, except to have cash, to buy a home it is ok to take a mortgage loan. They feel that otherwise we will never be able to buy a home and purchase a property necessary to develop a Muslim community. But in my heart, I am not convinced by this argument and don't want to take a mortgage. What will be your advice?
Option-2: Over the past couple of years, a lot of new financial companies have emerged in the US that are offering "Shariah Compliant Home Ownership Programs". One such popular company is the Guidance Financial Group Many Muslims have obtained home loans from them. However, I am not comfortable with their program either. They also "FIX" the monthly payments over the 15 or 30 years period that are usually same as or higher than the conventional mortgage loan payments mentioned in Option-1, above. Appreciation and Depreciation of the property over time has no impact on the monthly payments. In my view, it is still a conventional mortgage concept, except, with slightly different terminology - and they call it a Shariah Compliant Loan. Can you please review their program on their website and advise your decision?
Option-3: Not take any loans and keep renting until I have cash to buy the home.
I sincerely appreciate your help and guidance. May Allah give you the best.

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger.

First of all, may Allaah reward you greatly for your zeal to adhere to the Sharee'ah fully and completely accepting only that which is lawful and staying away from all kinds of misconceptions. We ask Allaah to ease your matters and provide you with all that is good for you.

As for your question, you should know that the ruling of Riba (interest and/or usury) does not change. It is the same ruling in the land of Islam and in the land of Kufr (non-Muslim land). This is the opinion of the majority of the Muslim scholars including Imaam Malik, Ash-Shafi'i, Ahmad, Ishaq, Al-Awza'e, as well as Abu Yoosuf and Muhammad from the Hanafi School of jurisprudence.

Their evidence for this is the texts of the Quran and the Hadeeth that forbid Riba without distinction between the land of war (Kufr) and the land of Islam, and without the distinction between dealing with a Muslim and another Muslim or with a non-Muslim.

Therefore, your refusal to take a loan with Riba is what the Sharee'ah obliges you to do. So, praise be to Allaah Who guided you to make the right decision.

As for the company you mentioned in the question (Guidance Financial) and their scheme for selling homes, we believe buying under such a scheme is forbidden. Their transaction is based on what they call: "Declining balance co-ownership program," whereby they own, jointly with the customer, the property. The customer then purchases their share and ends up owning the property alone. However, this company adds another charge which they call: "The Charge for exclusive enjoyment and use of property".

This additional charge makes this whole deal unlawful because it is considered as a benefit entailed to this company by the loan they gave to the customer as the name they gave to this charge does not affect the ruling. In fact, the Sharee'ah considers the home as the customer's since it is his home. The company has no right to put any additional charges for enjoyment or use of the property.

So, this matter is either eating people's money without a legal reason or it is Riba or worse, it is both.

The above ruling is true only if the company has sold its share to the customer upon concluding the contract with him.

Nevertheless, if the company sells the customer a portion of its share monthly and rents him the remaining portion, then this is lawful. However, the customer and the company should sign two separate contracts monthly: a contract for selling part of their share and a contract for renting the remaining parts of the share. These contracts should be also separate from one another to avoid the transaction becoming like a deal under the condition of a rent, or vice versa. The Sharee'ah warns against a deal and a condition.

On the other hand, there is no objection to make this deal a (Murabahah). This means that the company buys the home or part of it and after it owns that home, it sells it with a benefit by installments. There in no objection in this case that the company mortgages that home until the customer pays off the whole price.

For more details on Murabahah, please refer to 83725 and 85259.

To conclude, if this transaction is not accepted in the Sharee'ah, you should stay away from it and Allaah will compensate you with something better. In this case, renting is better for you than owning through illegal means.

Allaah Knows best.