Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open.

How do Islamic Banking give loans for housing purposes?
As I understand it, if the "borrower" puts a down payment of 20% and the bank puts down 80%, then the bank and the "borrower" own the home jointly as  tenants in common with a 20%-80% split of the asset amongst them. The  "borrower" moves into the home and pays the bank 80% of the fair rental  value of the home each month.  {Material added/changed in edit: For the purposes of illustration, suppose that the "borrower" and the bank agree that the fair rental per month is 0.5% of the purchase cost. The  "borrower" pays 80% of that amount i.e. 0.4% of the purchase cost  to the bank on a monthly basis.  The "borrower" is not required to do  so but may choose to pay more money than this 0.4% of the purchase cost each month, or pay some amount in a lump sum. If he does so, he will own a larger percentage of the house, and so future monthly payments will be a smaller fraction of the agreed-upon fair rental per month. So there is an incentive to pay off the bank.} If and when the house is sold, the sale price is divided between "borrower" and bank according to the percentage of ownership as of the date of sale. So the bank gets to share in the profits, if any. On the other hand, if the house is sold for less than the original purchase price, then the bank also suffers in the loss. It is not a case of a mortgage being paid off from the proceeds and the home-owner gets whatever is left, or even suffering a loss when the dust has settled; the bank gets only its percentage of the sale price even if this amount is less than what it put up in the first place minus any additional payments made by the "borrower". I have no idea how other costs of home ownership (property taxes, insurance, repair and maintenance) or improvements, additions, etc are handled. Ditto what happens on Schedule A if  such a "loan" is made to a US taxpayer.