A Clarification: Khums on Money Saved for a First-Home Down Payment
In recent Khums seminars and on our website, we discussed how someone saving for a first-home down payment could, under a specific condition mentioned by Grand Ayatullah Sistani, set aside yearly savings for a home that were exempt from khums.
After recent discussion with the office of Grand Ayatullah Sistani in Najaf, this has been clarified further. The exemption applies only to construction items purchased over successive years to build a home, not to money saved towards purchasing a home, which is the prevalent route in the West. For example, if someone building a home buys the land in the first year, iron and steel in the second, lumber in the third, and bricks in the fourth, the amounts spent on those items are exempt. However, money set aside simply to buy a home is not exempt, whether it is an existing or a pre-construction home you are not building yourself.
This is a clarification of how the ruling was always meant to be understood, not a change to it, so it applies to past savings as well. A ruling that genuinely changed would not apply retroactively; however, a correction in the understanding does apply, including this scenario.
Those who followed the earlier understanding did nothing wrong; this simply brings everyone to the more precise position.
What you owe
Money saved for a down payment has two parts, and khums is handled differently for each:
- The principal (the original amount you set aside as savings). You owe khums on it only if you had not already paid khums on that amount when you first saved it. If you had already paid khums on it before setting it aside, you do not pay again.
- The growth (any gains it has earned). You always owe khums on this.
This is the same whether the money is cash or inside an account such as an FHSA, RRSP, or TFSA. The type of account does not change the ruling.
If you did not track your savings
If you don’t know what you set aside, start with any previous records you may have, such as bank or account statements, or your house purchase paperwork, and calculate khums on whatever down payment portion you can determine from them. For the rest that you cannot work out, or for the entire amount if you have no usable records, pay khums on the full sum as a precaution.
Find your situation
- Currently saving up for a down payment: Total what you have set aside so far, calculate the khums owed on it, and include it in your regular khums calculation going forward.
- About to purchase with a down payment: Total what you have saved, calculate the khums owed, and pay it before you complete the purchase.
- Already paid your down payment: The ruling was already in effect, and this clarification does not change that, so it still applies. Total what you had saved, calculate the khums owed, and settle it.
How to pay it
If you cannot readily pay the full amount because the funds are committed, already spent, locked in an account, or you simply do not have enough on hand:
- Pay from other funds if possible.
- Arrange a payment plan with your marja’s wakil (representative), who can permit paying in installments.
- Pay when the funds become available, such as when a locked investment matures or is withdrawn. If invested, you can also sell part of it to cover the khums.
Your mortgage khums exemption is not affected
This update is only about saving for a down payment. The separate ruling that you remain exempt from khums while your outstanding mortgage or other qualifying loan for a basic need exceeds your accumulated savings still applies as before. You do not owe khums if you meet the mortgage requirements, however you may still owe khums on the down payment you paid for the home you’re now paying a mortgage on.
In summary
| Scenario | Previous understanding | Current (clarified) understanding |
|---|---|---|
| Saving money toward a down payment (cash, FHSA, RRSP, or TFSA) | Exempt from khums | Khums is owed |
| Buying construction materials in stages to build your own home | Exempt from khums | Exempt from khums (unchanged) |
| Khums exemption on savings during a mortgage (while your loan exceeds your savings) | Exempt from khums | Exempt from khums (unchanged) |
If you are saving, or have previously saved, for a down payment on a home, and did not pay khums on it due to the previous understanding of the exemption ruling, you now need to pay khums on that amount in full or in installments over time.
I realize this clarification may cause some inconvenience, and I apologize for the financial strain it will bring. However, once a matter becomes clear, I am duty-bound, in the eyes of Allah, to communicate the proper understanding of a ruling to the community.
Wasalaam,
Syed Muhammad Rizvi
September 23rd, 2026
Seminar and Q&A video
Your Loan Niyyat
Receiving a loan from a non-Muslim financial institution with the condition of ribā (interest) is ḥarām. What does this mean for your mortgage, car loan, student loan, or other debt you may have?
Make the Correct Intention:
For loans, mujtahideen propose that these transactions would be valid if you initiate them with the niyyat (intention) of dhimān – a surety or liability that you intend to pay back, disregarding the interest aspect. Since it is now considered a loan Islamically, then a first-time home buyer would be able to utilize the khums exemption ruling provided by Ayatullah Sistani. (Review the resources on this page for more information on the exemption)
What if I already have a loan?
If you were unaware of this ruling at the time of signing your loan, then you can wait until the next renewal date to adjust your niyyat accordingly.
What about the Niyyat of istinqādh?
Initiating a loan with the niyyat (intention) of istinqādh means having the intention of taking the money without intending to pay the interest. You would be legally obliged to pay this interest, however it isn’t something you intended to do, if you had a choice. The money received from a bank with the intention of istinqādh would be halal, but it would not be considered a loan. Now, your debt is considered halal, however since it’s not a loan, you would not be able to utilize the khums exemption ruling provided by Ayatullah Sistani, unlike the niyyat of dhimān.
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