When looking at Islamic Home Financing options, it is important to clearly define which issues are relevant and which issues are only put forth to impair your ability to properly judge the validity of a given program. Unfortunately, there are a multitude of ways that people add to the confusion and while we have done our best to address the most common misconceptions, there are bound to be more that are not covered here. The easiest way to sort fact from fiction in those cases is to make a list of the Rights and Responsibilities of each party in any given program. If the rights and responsibilities match those of a lender/borrower relationship then it is a loan; and if the total you are obligated to repay for that loan is more than the original amount you borrowed, then you are dealing with an interest-bearing loan no matter what terms are used.
The purpose of a musharaka (partnership) makes a difference.
While a minority of scholars has delved into this as an academic discourse in islamic financing, there is no shariah basis for such distinction nor are there any provisions in the Quran or Sunnah that allow for alteration of the rights and responsibilities of the parties involved. Why a given party enters a partnership contract is completely irrelevant when it comes to the fulfillment of those rights and responsibilities and does not affect the basic definition of what is allowed by Islamic Law. So the purpose behind a partnership, whether it is contract based or ownership based, is immaterial to the laws that govern it.
Some acknowledgement of shariah through rewording is better than a bank mortgage.
Using the argument "something is better than nothing" is not new when it comes to justifying deviation from what has been set forth in Divine Law. This is the same approach that was used by those who violated the Sabbath, and it is the same idea that the idolaters of Makkah offered the prophet Muhammad when they suggested that they could come to a compromise by worshipping Allah one year and their idols the next. Although, the idolaters thought that worshiping Allah every other year was "better than nothing", the idea was firmly rejected by the Prophet because there are certain things that cannot involve compromise.
While one could argue that there might be instances (such as homelessness) where an interest-based loan could theoretically fall under the umbrella of "darura" (compulsion), they are almost nonexistent since renting, which does not violate any part of Shariah, or a truly Shariah-based partnership program, as offered by Halal Inc, are always options.
There are some issues with the program, but it almost adheres to Shariah.
The word "almost" is one that often only looks good until one examines it more closely. For instance, what could be said about a student who almost passed an exam, or a skydiver whose parachute almost opened? Did that person succeed or fail, survive or perish? Likewise, almost adhering to God's laws can have similarly devastating results since those laws ensure harmony, for the individual and society alike, and following them is in our own best interest.