Low money down Sharia compliant loans?

[Mahad Omar]

Hello all! I've been calling up different lenders past few weeks across multiple states to find shariah compliant loans under 20% to house hack a multifamily property, and it's practically impossible. Seeing that I'm looking for FHA level down payments (I'm able to do 3.5% - 5% with my capital) it's super disheartening to hear from basically all 8 lenders I've contacted that I'm looking at 20% - 25% minimum. This is due to the loan technically used for an investment property regardless of it being owner occupied. I've tried to discuss creative financing and seeing if they can budge their percentage down, and no dice.

Anyone have any advice or any lender they may know that has shariah compliant loans close to the FHA level or honestly under 15%? Or have a lender in mind that is willing to work with me to turn one of their loans to a shariah compliant one in my regards (tacking on the initial interest payment onto the total sum of the property purchase price)? I would greatly appreciate some advice/help!

[Account Closed]

Not super familiar with sharia loans, but the super cheap low down payment loans are that way because they are government-entity backed by FHA, USDA, fannie mae, or freddie mac, etc. Everything else is some sort of investor money, such as the bank or whomever would back a Sharia loan. Because its all their money, they have much less risk tolerance and would need more money down.

It's my understanding that Sharia loans are that way because charging interest is forbidden as its exploitative, but if you are a knowledgeable and savvy investor, maybe its not exploitative? Plus when you factor in inflation, the interest rates we have right now almost aren't even charging interest.... Perhaps you could talk to an Imam (or whatever) to get guidance about using a more traditional loan.