They do, they just don't call it interest and it isn't figured out the same way as a normal mortgage.    Type 1 -  Murabahah In this type of transaction, the bank purchases the property and then re-sells it to the buyer at a fixed profit. The property is registered in the buyer's name from the beginning, and the buyer makes installment payments to the bank. All costs are fixed at the time of the contract, with the agreement of both parties, so no late payment penalties are permitted. Banks usually ask for strict collateral or a high down payment in order to protect against default.  I emphasized fixed profit, as that's what the bank's profit is on a regular mortgage. Type 2 -   Ijarah This type of transaction is similar to real estate leasing or rent-to-own contracts. The bank purchases the property and retains ownership, while the buyer makes installment payments. When payments are complete, the buyer gains 100% ownership of the property.  Here's my source - https://www.learnreligions.com/islamic-mortgage-2004112 It sounds like a much better deal if you can get one of those types of mortgages.