Islamic mortgage calculator UAE: monthly payments on home finance in 2026
An Islamic mortgage calculator works out your monthly home finance payment from the property price, your deposit, the profit rate, and the term. On an AED 2,000,000 home with 20% down, the finance amount is AED 1,600,000, which costs AED 7,797/month at a 3.25% profit rate over 25 years. The maths is the same reducing-balance method as a conventional mortgage. The difference is the structure (Ijara, Murabaha or diminishing Musharaka) and that the bank earns a profit rate, not interest.
Islamic home finance calculator
Calculator uses reducing-balance amortisation, the method UAE Islamic banks apply to Ijara and diminishing Musharaka payments. The profit rate is treated the same as a monthly rate. It does not include the Dubai Land Department 4% transfer fee, mortgage registration, or takaful (Islamic life cover), which sit on top. Confirm exact figures with your bank.
How does an Islamic mortgage calculator work?
Here is the part that surprises people: the monthly payment maths is identical to a conventional mortgage. You take four numbers, the property price, your deposit, the profit rate, and the term, and run the finance amount through the same reducing-balance formula every UAE bank uses. A 3.25% profit rate produces the exact same monthly figure as a 3.25% interest rate would.
What changes is the legal structure underneath and the words on the contract. A conventional bank lends you money and charges interest (riba), which Sharia prohibits. An Islamic bank instead buys the property and either leases it to you, sells it to you at a marked-up price, or co-owns it with you. Its return is rent or profit tied to a real asset, approved by the bank's Sharia board. The payment you make each month covers that profit plus a slice of ownership.
So the calculator above does the same job as a conventional one. It finds your finance amount (price minus deposit), then shows the monthly payment, the total profit you will pay over the term, and the total you repay. The deposit rules are also the same: under CBUAE regulations an expat puts at least 20% down on a first home under AED 5 million, and a UAE national 15% (source: CBUAE mortgage regulations).
What is the monthly payment on an Islamic home finance?
Here are real monthly payments for common finance sizes at June 2026 Islamic profit rates, so you have figures to work from. All assume a 25-year term on a reducing balance.
| Finance amount | 3.25% profit | 3.49% profit | 3.75% profit | 3.99% profit |
|---|---|---|---|---|
| AED 1,000,000 | AED 4,873 | AED 5,001 | AED 5,141 | AED 5,273 |
| AED 1,500,000 | AED 7,310 | AED 7,501 | AED 7,712 | AED 7,909 |
| AED 1,600,000 | AED 7,797 | AED 8,001 | AED 8,226 | AED 8,437 |
| AED 2,000,000 | AED 9,746 | AED 10,002 | AED 10,283 | AED 10,546 |
| AED 2,500,000 | AED 12,183 | AED 12,502 | AED 12,853 | AED 13,182 |
| AED 3,000,000 | AED 14,619 | AED 15,003 | AED 15,424 | AED 15,819 |
All figures: 25-year term, reducing balance, June 2026 Islamic profit rates. Source: MortgageCompare.ae rate tracker. Green = lowest available profit rate. Actual payments vary by individual profile and approved rate.
The lowest Islamic profit rate on our tracker in June 2026 is 3.25%, against 3.70% for the cheapest conventional rate. That does not mean Islamic finance is always cheaper. The gap moves month to month, and the reversion rate after the fixed period matters more than the headline. Compare the all-in cost, not the teaser. Our guide on Islamic vs conventional mortgages runs the full comparison.
Ijara, Murabaha and diminishing Musharaka: which structure are you paying for?
The calculator gives the same number for all three, but the contract behind it changes what happens if you want to sell early, overpay, or fix the price for life. These are the three structures UAE Islamic banks use (source: structures per Islamic finance practice, see the references below).
| Structure | How it works | Best for |
|---|---|---|
| Ijara (lease-to-own) | The bank buys the property and leases it to you. Title transfers when all payments are made. The most common UAE structure. | Most buyers wanting a standard variable home finance. |
| Murabaha (cost-plus sale) | The bank buys the property and resells it to you at an agreed marked-up price, fixed for the whole term. | Buyers who want total price certainty and no rate changes. |
| Diminishing Musharaka (co-ownership) | You and the bank own the property jointly. You gradually buy out the bank's share while paying rent on the part it still owns. | Buyers who want genuine co-ownership and falling rent over time. |
Structures source: Islamic home finance models and Islamic mortgage UAE structures. Always confirm the exact structure named in your offer letter.
The practical split: most UAE Islamic mortgages are Ijara or diminishing Musharaka with a variable profit rate, which behave like a conventional variable loan in your monthly budget. Murabaha is the one that genuinely differs, because it can fix the total price for the entire term. That protects you from rising rates, but the starting rate is usually higher to pay for that certainty.
How much profit do you pay over the term?
The monthly payment is what you budget for. The total profit is what the finance actually costs you. On a AED 1.6M finance over 25 years, the rate decides a six-figure difference in total profit paid.
| Profit rate | Monthly payment | Total repaid | Total profit |
|---|---|---|---|
| 3.25% | AED 7,797 | AED 2,339,118 | AED 739,118 |
| 3.75% | AED 8,226 | AED 2,467,830 | AED 867,830 |
| 4.50% | AED 8,893 | AED 2,667,996 | AED 1,067,996 |
AED 1.6M finance, 25-year term, reducing balance. Source: MortgageCompare.ae calculator, June 2026.
Half a percentage point on the rate (3.25% to 3.75%) adds AED 128,712 in profit over 25 years. This is why the headline rate matters so much, and why locking a low fixed profit period is worth chasing. One lever cuts the total profit fast: overpayment. Most UAE Islamic banks allow partial early payments each year, which shrink the finance balance and the profit charged on it.
Early settlement is capped. If you settle an Islamic mortgage early, the CBUAE caps the fee at 1% of the outstanding finance amount or AED 10,000, whichever is lower (source: CBUAE). That same cap applies to conventional mortgages. It means selling or refinancing later will not trigger a huge penalty, unlike some markets.
What happens to my payment after the fixed period?
Most Islamic mortgages in the UAE fix the profit rate for 1 to 5 years, then move to a variable rate of EIBOR plus the bank's profit margin. The 3-month EIBOR is 3.69% (source: CBUAE, June 2026), so once the fixed period ends your payment tracks EIBOR. Here is what different EIBOR levels do to a AED 1.6M balance with 23 years left, on a margin of EIBOR plus 1.25%.
| Scenario | EIBOR | Rate (+1.25%) | Monthly payment | vs base |
|---|---|---|---|---|
| EIBOR falls 1% | 2.69% | 3.94% | AED 8,824 | −AED 888/mo |
| Base (current) | 3.69% | 4.94% | AED 9,712 | baseline |
| EIBOR rises 1% | 4.69% | 5.94% | AED 10,644 | +AED 933/mo |
| EIBOR rises 2% | 5.69% | 6.94% | AED 11,619 | +AED 1,909/mo |
AED 1.6M outstanding, 23 years remaining, margin EIBOR + 1.25%. Source: MortgageCompare.ae calculator, June 2026.
The payment climbs from the 3.25% fixed rate (AED 7,797) to AED 9,712 at the current base reversion, before EIBOR moves at all. Budget for the reversion payment, not the teaser. If a rise of AED 2,000/month would break your budget, either fix for longer, choose a Murabaha that fixes the total price, or borrow less. To understand how EIBOR drives this, read our EIBOR explainer.
What the calculator doesn't include
The calculator covers the monthly payment and the total profit. Three other costs sit outside it:
- Dubai Land Department fee. In Dubai, a 4% transfer fee applies on the purchase price, the same for Islamic and conventional buyers (source: Dubai Land Department). On a AED 2M home that is AED 80,000, paid in cash at transfer. See the full Dubai cost stack in our Dubai mortgage calculator.
- Takaful (Islamic life cover). The Sharia-compliant version of mortgage life insurance, mandatory at most banks, usually 0.3% to 0.5% of the outstanding balance per year. On a AED 1.6M finance that is roughly AED 400 to AED 670/month in year one, falling as the balance drops.
- Processing and valuation fees. Typically 0.5% to 1% of the finance amount plus a fixed valuation fee around AED 3,000. Paid once, upfront.
Add those in and your true monthly housing cost runs several hundred dirhams above the headline payment. For a full picture across Islamic and conventional banks, use the main mortgage calculator and compare live offers on the rates page.
Frequently asked questions
How do I calculate an Islamic mortgage payment in the UAE?
Find your finance amount first: price minus deposit. An expat puts at least 20% down on a first home under AED 5M, so a AED 2M property means a AED 1.6M finance. Then run it through the reducing-balance formula, or use the calculator above. At a 3.25% profit rate over 25 years, AED 1.6M costs AED 7,797/month. The maths is the same as a conventional mortgage; only the rate is called profit, not interest.
Is an Islamic mortgage cheaper than a conventional one in the UAE?
Profit rates usually sit within a few basis points of conventional interest rates, and are sometimes slightly lower on the fixed period. In June 2026 the lowest Islamic profit rate on our tracker is 3.25%, against 3.70% conventional. The gap moves month to month, so compare the all-in cost and the reversion rate, not just the teaser.
What is the difference between Ijara, Murabaha and diminishing Musharaka?
Ijara is lease-to-own, the most common UAE structure: the bank leases the property to you and title transfers at the end. Murabaha is a cost-plus sale at a price fixed for the whole term. Diminishing Musharaka is co-ownership where you gradually buy out the bank's share. The monthly payment maths is the same; the structures differ on early sale, overpayment, and whether the price is fixed for life.
Does the profit rate change after the fixed period on an Islamic mortgage?
On a variable Islamic mortgage, yes. After the fixed period of 1 to 5 years, the rate becomes EIBOR plus the bank's profit margin, so your payment adjusts with EIBOR. A Murabaha can fix the total price for the entire term, removing that risk but usually at a higher starting rate. Check whether your offer is fixed-for-term or fixed-then-variable before signing.
Do Islamic mortgages have early settlement fees in the UAE?
Yes, but they are capped. The CBUAE limits the early settlement fee to 1% of the outstanding finance or AED 10,000, whichever is lower (source: CBUAE), the same as conventional mortgages. Many Islamic banks also allow fee-free partial overpayments each year, which cut the total profit you pay.
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See the Islamic rate you'd actually get
The calculator gives you the payment. The eligibility check tells you which Islamic banks will approve you, and at what profit rate, so the numbers above become your numbers.